Ihrm KMBN HR05

IHRM OVERVIEW( KMBN HR05)
BY-PRAGYA SINGH
IHRM Definition
 International Human Resource Management (IHRM) can be defined as a
set of activities targeting human resource management at the
international level. It strives to meet organizational objectives and
achieve competitive advantage over competitors at national and
international level.
 IHRM comprises of typical HRM functions such as recruitment, selection,
training and development, performance appraisal and dismissal done at
the international level and additional exercises such as global skills
management, expatriate management and so on.
IHRM
 In short, IHRM is concerned with handling the human resources at Multinational
Companies (MNCs) and it includes managing three types of employees -
 Home country employees: Employees residing in the home country of the

company where the corporate head quarter is situated, for example, an Indian
working in India for some company whose headquarters are in India itself.
 Host country employees: Employees residing in the nation in which the
subsidiary is located, for example, an Indian working as an NRI in some foreign
country.
 Third country employees: These are the employees who are not from home
country or host country but are employed at the additional or corporate
headquarters.
 For example, an Indian MNC, which has its corporate office in America, may
employ a French person as the CEO to the subsidiary. The Frenchman
employed is a third country employee.
IHRM vs. HRM
There are many similarities between HRM at the national as well as
international level. However, let us have a look at the differences
between them with the help of points given below -
 Domestic HRM takes place at the national level, that is, within a country
and IHRM takes place at the international level, that is, in between two or
more than two countries.
 Domestic HRM is bothered about managing employees belonging to one
nation and IHRM is bothered about managing employees belonging the
home country and host country as well as third country employees.
IHRM vs. HRM
 Domestic HRM is concerned with managing limited number of HRM activities
at the national level and IHRM is concerned with managing additional
activities such as expatriate management.
 Domestic HRM is less complicated due to less imprint from the external
environment. IHRM is comparatively more complicated, as it is deeply
affected by the external factors such as cultural distance and institutional
factors.
 We can conclude that both IHRM and HRM share some grounds of similarities
as well as dissimilarities, but both have their own importance. Further, they
contribute to the development of a country in a combined manner.
Major functions of International Human Resource Management
 In International human resource management, there are five functional areas

that include recruitment and selection, development and training,
performance evaluation, remuneration and labor relations. In the first
function of IHRM, Recruitment and selection, company employs new qualified
candidates for international operations.
 The Selection requires choosing from this pool the candidate whose
qualifications most closely match the job requirements. Staffing is a complex
function of international human resource management.
 In the global firms, the managing and staffing approach strongly affects the
type of employee the company prefers. In a company with an ethnocentric
approach, parent country nationals usually staff important positions at
headquarters and subsidiaries. In recruitment and selection methods, firms
consider both headquarters’ practices and those widespread in the countries
of its subsidiaries. Local culture also have great impact on recruitment and
selection practices, and in some countries, local laws require a specific
approach.
Major functions of IHRM (cont)
 Remuneration and benefits is other functional approach of IHRM.
Remuneration of employees plays an important role in hiring new
employees because pay is the major source of people to live in
the world. To develop an international system of compensation
and benefits, firms have two primary concerns.

 The first is comparability. A good compensation system
disperses salaries to employees that are internally equivalent and
competitive within the marketplace The international
organization must also consider the salaries of people who may
transfer from other locations. The second major concern is cost.
Organizations struggle to reduce all expenses, and payroll is one
of the largest.
 Another significant function of IHRM is Development and training which is aimed
to offer sufficient training to personnel in a company and enable them to fulfill
their goals, as well as show better performance and growth with their work.
 At global level, human resource development experts must have responsibility for
training and development of employees located in subsidiaries around the world,
specialized training to prepare expatriates for assignments abroad, and lastly
development of a special group of worldwide minded managers.
 International HR development programs may be done in two ways such as
centralized and decentralized. In a centralized approach, training originates at the
headquarters and corporate trainers travel to subsidiaries, often adapting to local
situations. This fits the ethnocentric model. A geocentric approach is also
centralized, and trainers could be sent from various positions in either the
headquarters or subsidiaries to any other location in the company. In a
decentralized approach, training is given locally, following a polycentric model.
When training is decentralized, the cultural backgrounds of the trainers and
trainees are usually similar. Local people develop training materials and
techniques for use in their own area. It is important that trainer must be qualified.
 Performance evaluation is the effective function of international human
resource management. In companies, the performance evaluation is
regularly performed for administration or development intentions.
Usually, administration conduct evaluation when there is doubt of
performance of candidate and there is a need of performance evaluation
on work conditions of employees, promotions, rewards and/or layoffs. In
multinational companies, performance appraisals are usually done
annually and use a standardized evaluation form.
 Performance evaluation is complex task for International HR managers
because the organization must evaluate employees from different
countries working in different subsidiaries. Performance evaluation
depends on the organization’s overall human resource management
strategy.

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IHRM OVERVIEW( KMBN HR05)

 Home country employees: Employees residing in the home country of the

 In International human resource management, there are five functional areas

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