GHRM- Module 1

INTRODUCTION
 2
Topics to be covered

1. Introduction to IHRM Definition, The drivers of internationalization of business.

2. The different setting of International Human Resource Management.
Development of IHRM.
3. Difference between IHRM and Domestic HRM.
4. Models of IHRM-Matching model, Harvard Model, Contextual Model, 5P Model
European Model.
5. SHRM: Evolution of MNE‘s, Business strategies, IHRM Strategies, SIHRM.
6. Barriers in effective global HRM. Sociocultural context,
7. Organizational dynamics and IHRM:
8. Role of culture in International HRM, Country and Regional Cultures, Country
Culture versus MNE Culture. Culture and employee management
9. issues/ impact of Country culture on IHRM.
Dr.Meera Uday 08/13/2024
 3
Introduction to IHRM Definition

 The process of procuring, allocating and effectively utilising human resources in

an international business is called international human resources management
(IHRM).
 It is an art which helps to manage different people. It's not only about managing people
but also people who hold different culture.
 International Human Resource Management (IHRM) is the process of:
 acquiring,
 designating, and
 effectively using the human resources
 in a multinational company or organization, while trying and maintaining
 the balance of integration and differentiation of HR activities in the foreign
locations
Dr.Meera Uday 08/13/2024
 4
Morgan’s Model of IHRM

Dr.Meera Uday 08/13/2024

 5
Morgan’s Model of IHRM-contd..

 The three categories of employees

 The national or country categories  Host country nationals (HCNs): host-
involved country nationals, these employees are
 The host country where subsidiary hired for jobs in their own country. For
example, a Indian who is employed at
country may be located Eg: coco Coca Cola's India.
cola in India
 Parent country nationals (PCNs): eg: a
 The home country where the firm is PCN is a person whose nationality is the same
headquartered. Eg: Infosys in India as that of the firm, but different from
 the country in which they are working:
Other countries that may be the Indians working in Wipro London
source of labor, finance and other
 Third country nationals (TCNs): is a term
inputs. Eg: An Indian working for
often used in the context of migration,
American Company in Germany
referring to individuals who are in transit
and/or applying for visas in countries that are
Dr.Meera Uday not their country of origin.eg: A Chinese in
08/13/2024
 6
IHRM is an interaction between- HR Activities,
Types Of Employees And Countries

Dr.Meera Uday 08/13/2024

 7
What is an expatriate?

 An employee who is working and temporarily residing in

a foreign country
 Some firms prefer to use the term ‘international assignees’
 Expatriates are PCNs from the parent country operations, TCNs
transferred to either HQ or another subsidiary, and HCNs
transferred into the parent country

Dr.Meera Uday 08/13/2024

 8
Expatriate Assignment Life Cycle
Determining Crisis & Reassignme
the need for Adjustme nt Abroad
an expatriate nt

Repatriatio
Post-
n&
arrival
Departure Adjustment
Orientation
& Training

Pre- Crisis &

Selection
assignment Failure
Process
training

Dr.Meera Uday 08/13/2024

 9
The drivers of internationalization of business.

 Globalization of Markets: eg: Walmart, Metro(Germany)

 Globalization of Production: American products are manufactured in
India & china
 Falling Barriers to Trade and Investment: business rules are more
easier & friendly, eg Japanese bullet train in India
 Technological Innovation: Internet, Facebook , video conferencing &
others

Dr.Meera Uday 08/13/2024

 10
The different setting of International Human Resource Management

 Stage 1: Domestic Operations

 Stage 4: Multinational Operations
 Firms offer products or services that are designed to primarily
serve consumers in  Much more prevalent international dispersion of production
and service provision facilities.
 the domestic market (e.g., law firms)
 Decentralization of decision-making more prevalent, but
 Stage 2: Export Operations major personnel decisions still made within home country.
 Products and services are opened up to markets in other  Expatriates still primarily manage foreign facilities.
countries, but production facilities remain in Canada (e.g.,
McCain Foods).  Stages of Internationalization. Eg: colgate – U.S
 HRM: Provides sales force with skills and motivation to succeed  Stage 5: Transnational Operations
in these foreign markets. eg: MTR foods
 Little allegiance to the firm‘s country of origin.
 Stage 3: Subsidiaries or Joint Ventures
 Large-scale decentralization of decision-making.
 Some operational facilities (e.g., parts assembly) are
physically moved to other countries.  Dominant role of expatriates is removed.
 Corporate headquarters in home country has high control over  Each business unit across the globe has the freedom to
foreign operations.
make and implement its own HRM policies and practices.
 HRM: Provides expatriates and local employees with  Diversity as an Organizational and HR Challenge in
knowledge and skills to succeed in the foreign country.
MNE
 Stages of Internationalization .Eg: Maruti Suzuki
 Eg: General Electric,(GE) ,Nestle & Vodafone
Dr.Meera Uday 08/13/2024
Development of IHRM - 11
Reasons

 Global competition  Levels of competition are increasing

with the spread and diversity of
 Growth in mergers, acquisitions and international business.
alliances
 Issues related to business ethics and
 Organization restructuring social responsibility has become major
 Advances in technology and concern for HR managers.
telecommunication  Growth of mergers, acquisitions, and

alliances
Global competition
 Cross cultural issues
Eg: Coco cola- US
 Work practices
 Downsizing

Dr.Meera Uday 08/13/2024

 12
Difference between IHRM and Domestic HRM.

1. More HR activities
2. The need for a broader perspective
3. More involvement in employees’ personal lives
4. Changes in emphasis as the workforce mix of expatriates and locals
varies
5. Risk exposure
6. Broader external influences

Dr.Meera Uday 08/13/2024

 13
Variables that moderate differences between domestic and international HRM- eg: BATA-
Switzerland

Dr.Meera Uday 08/13/2024

 14
Models of IHRM- Matching model

Eg: MC
Donalds
-US

Dr.Meera Uday 08/13/2024

 15
Matching model

 An employee selection approach should match with the applicant’s

attempt to match each others interests ,needs and values.
 Highlights the resource aspect of HRM
 Emphasize on efficient utilization of human resources to meet
organizational objectives.
 Right fit between organizational strategies, organizational structure
and HRM systems will result in success.

Dr.Meera Uday 08/13/2024

 16
Harvard Model

 Focuses on Human, Soft aspect of HRM

 It emphasizes in employee-employer relationship
 Also highlights the interests of different stakeholders of organization-
shareholders ,management, employee groups, government, community,
unions
 How these interests can be related to objectives of management?
 The model illustrates the influence of situational factors on stake-holder
interests, and their impact on human resource policy choices which are
destined to deliver a raft of predetermined human resource outcomes such as
commitment, competence, congruence and cost-effectiveness
 Eg: TESCO- UK

Dr.Meera Uday 08/13/2024

 17
Harvard Model-contd..

Dr.Meera Uday 08/13/2024

 18
Contextual Model

Dr.Meera Uday 08/13/2024

 Contextual Model- 19

contd..
 Organizations may follow a number of different means to achieve same
results.
 This is due to existence of linkage between external environment
context
 Socio-economic,
 technological,
 political-legal and competitive, and
 internal organizational context-culture,
 structure, leadership, task, technology, and business output.

Dr.Meera Uday 08/13/2024

 20

Best
employer
s in India
-2015
India's best
companies to work
for 2015: Industry
wise winners
ET Bureau Jul 13,
2015, 08.53AM IST

Dr.Meera Uday 08/13/2024

 21
5P Model
 Philosophy
 Practices
Statements of how organization values
and treats employees; essentially HR practices motivate behaviors that
culture of the organization allow individuals to assume roles
consistent with organization‘s strategic
 Policies objectives
Expressions of shared values and  Three categories of roles:
guidelines for action on employee-  Leadership
related business issues  Managerial
  Operational
Programs
 Processes
Coordinated and strategized
approaches to initiate, disseminate, Continuum of participation by all
and sustain strategic organizational employees in specific activities to
change efforts necessitated by facilitate formulation and
strategic business needs implementation of other activities
Dr.Meera Uday 08/13/2024
 22
European Model
 It is based on the argument that  In the European Community, there are significant differences in
human resource practices.
European organizations are constrained  For example, in many Italian organisations recruitment is often
based on the contacts of family and friends
at both international (European Union)  Such practices do exist in Northern Europe, they are generally
and national level by national culture frowned on as a form of favoritism.
 In France the use of graphology is widely used in the selection
and legislation. process

 They are also constrained at the  in Scandinavia or the UK there is more of bureaucracy.
 In the UK they are more likely to have accountancy backgrounds.
organizational level by patterns of  In Germany and Sweden there are large numbers of directors and
senior executives who have engineering qualifications
ownership and at the HRM level by trade
 In addition labour market policies differ widely across Europe and
union involvement and consultative there can be significant variance in policies and practices between
countries which appear similar in their socio-economic and political
Dr.Meera Uday 08/13/2024
arrangements. structures ,for example between Denmark and Sweden
 23
SHRM: Evolution of MNE‘s
Three Stages of Evolution
 1. Export stage: initial inquiries => firms rely on export agents. expansion
of export sales further expansion þ foreign sales branch or assembly
operations (to save transport cost)
 2. Foreign Production Stage: Once the firm chooses foreign production as
a method of delivering goods to foreign markets, it must decide whether to
establish a foreign production subsidiary or license the technology to a foreign
firm.
Licensing: e.g.: Kentucky Fried Chicken in the U.K.
 3. Multinational Stage: The company becomes a multinational enterprise
when it begins to plan, organize and coordinate production, marketing, R&D,
financing, and staffing. For each of these operations, the firm must find the
best location.
Eg: Yardley London soaps marketed by Wipro
Dr.Meera Uday 08/13/2024
 24
Business strategies
 A business strategy is the means by which it sets out
to achieve its desired ends (objectives).
 It can simply be described as a long-term business
planning. Typically a business strategy will cover a
period of about 3-5 years (sometimes even longer).

Dr.Meera Uday 08/13/2024

 25
IHRM Strategies
 Transnational
 Geographical context within which all major decision are made
 Transnational representation
 Multinational composition of the managers and executives
 Transnational process
 Firm‘s ability to include representatives and ideas from many
countries

Dr.Meera Uday 08/13/2024

SIHRM-Strategic International
26
HRM

 Broadly speaking, strategic international

human resource management (SIHRM) is
about the management of human
 The purpose of SIHRM is to enable the
resources consistent with the strategic
direction of the multinational firm, the multinational enterprise
enterprise in a dynamic, (MNE) regardless of size, to be
interconnected, and highly successful globally.
competitive global environment.  SIHRM for many firms can be critical to
 More specifically, SIHRM is about their success, and effective SIHRM can
understanding, researching, applying, make the difference between survival
and revising all human resource and extinction for many MNEs.
activities in their internal and external
contexts since they impact the processes
of managing human resources in
organizations throughout the global
environment to enhance the experience of
multiple stakeholders.
Dr.Meera Uday 08/13/2024
 27
Barriers in effective global HRM.

 1. Political & Legal Factors

 2. Cultural factors
 3. Economic Factors
 4. Labor/Management Relations Factor

Dr.Meera Uday 08/13/2024

 28
Sociocultural context

 A key factor in the increasing

internationalization of employment is that there  An awareness of cultural differences is
are cultural differences between nations – therefore an essential part of an

international HR manager‘s brief.
Differences in national values and
attitudes. Many of us have stereotypes of  The normal HR activities such as
reserved Finns, cheerful Spaniards, work- recruitment and selection, training and
obsessed Americans, polite Japanese, development, reward and performance
modest Malays, etc. appraisal, may all be affected by cultural
 values and practices in the respective host
These are stereotypes: even though the
next Finn we meet may be loud and
countries.
confident, the next Spaniard quiet and  As a result, great care must be taken
reserved, and so on, they indicate real, when deciding whether or not to adopt
general, truths. standardized HR policies and practices
 There is now plenty of research evidence that throughout the world.
different nationalities do have different values
and that these affect the way people organize,
Dr.Meera Uday 08/13/2024
conduct and manage work.
 Organizational dynamics and IHRM 29

 Cross-cultural leadership looks at differences and similarities across

cultures, research into global leadership ―suggests a different way of
thinking, with an emphasis on managing in a global context.
 HR departments of multinational organizations invest a lot of Miss New
resources and effort into selecting and training expatriates, and most York Nina
concentrate on knowledge training and behavior modification training Davuluri
relevant for specific cultures, according to the report. poses for

photograp
They are guided by a cross-cultural perspective that ―emphasizes
hers
differences and similarities of values and behaviors among countries.
following
 However, because multicultural teams operate in a global context, with people her
from different nationalities working together to accomplish a global mission, crowning
comparisons between two national cultures can be meaningless. as Miss
America
Dr.Meera Uday 2014.
08/13/2024
 30
Country and Regional Cultures.

Nation :
 A society with similarity among people a cause - and effect -of
national boundaries – Way to bound and measure culture for
conduct of business
 culture is a key characteristic of society
 can differ significantly across national borders – also within
national borders
 laws are established along national lines
 Culture is both a cause and an effect of economic and political
factors that vary across national borders

Dr.Meera Uday 08/13/2024

 31
Country Culture versus
MNE Culture
 Dimensions
 Family Ties
 Training
 Unified Culture

Dr.Meera Uday 08/13/2024

 32
Culture and employee management issues /
impact of country culture on IHRM

 Managing the expatriate‘s adjustment process is a primary focus

of IHRM
 The difficulty of this task has increased because sales and
production shifted closer to markets.
 There is higher use of host country and third country
management.
 There is a concurrent increase in the number of inpats
 Both inpats and expats can have a difficult time adapting to
their new surroundings

Dr.Meera Uday 08/13/2024

 33
Question Bank

1. Define IHRM. Briefly explain 6. Explain the Development of IHRM.

IHRM 7. Differentiate between IHRM and
2. Explain the drivers of Domestic HRM.
internationalization of business. 8. Enlist different Models of IHRM.
3. Who is an Expatriate? Explain the 9. Explain Matching model of IHRM
cycle of expat. 10. Explain Harvard Model of IHRM
4. Explain Morgan’s Model of IHRM. 11. Explain Contextual Model of IHRM
5. Explain the different setting of 12. Explain 5P Model
International Human Resource
Management.
Dr.Meera Uday 08/13/2024
 34
Question Bank-contd..

13. Explain European Model. 19. Examine the relationship between

Organizational dynamics and IHRM
14. What is SHRM? Explain Evolution of
20. Scrutinize the Role of culture in
MNE‘s. International HRM
15. What is the meaning of Business 21. Study the relationship of Country and
strategies, &IHRM Strategies? Regional Cultures.
16. Write a short note on SIHRM. 22. Compare Country Culture versus MNE
Culture.
17. Describe various Barriers in effective
23. Identify the relation of Culture and
global HRM. employee management issues
18. Explain the Sociocultural context in 24. Examine the impact of Country culture on
IHRM IHRM.

Dr.Meera Uday 08/13/2024

 35
End of Module 1

Dr.Meera Uday 08/13/2024