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DOMESTIC VS
INTERNATIONAL HUMAN
RESOURCE
MANAGEMENT
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INTRODUCTION
Despite the fact that the core principlesof SHRM also apply to Global HRM, GlobalHR presents some unique contingencies.
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1.Managing People in Global
Settings This requires Human Resources to address
a broader range of functional areas.
These areas include:
Clarifying Taxation Issues
Coordinating Foreign Currencies
Exchange Rates
Compensation Plans Working Directly With The Families of
Employees Who May Be Accepting Overseas
Assignments.
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2.Involvement In Employees
Personal Life Global Hr Requires More Involvement In
The Employees Personal Life
The Employee Is Usually Assisted With:
Acquiring Housing In The Host Country Selling Or Leasing Domestic Accomodation
Locating Recreational & Cultural Opportunities
For Employees & FamilyArranging & Paying for School for the
Employees Children
Locating & Securing Domestic Help For The
Employee
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Unique HR Contingencies.
3. The Organization Must often SetupDifferent HRM Systems for DifferentGeographic Locations
4. The Organization is often Forced to Dealwith More Complex External
Constituencies, including ForeignGovernments & Political & ReligiousGroups
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Exposure To Risks
Global Assignments often involve AHeightened Exposure to Risks.
These Risks Include:
Health & Safety of Employees & Family
Legal Issues in Host Country
Possible Tourism
Human & Financial Consequences of Mistakes,which may Greatly Exceed The Costs of Thosemade Domestically.
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Threat of Terrorism
The Threat of Terrorism has added tomany of the anxieties employees facewhen considering & undertaking a Global
Assignment.
A Recent Survey found that expatriatesneed & want more support from Head
Quarters than they are receiving regardinghealth & safety concerns;
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Major differences between
domestic HRM and IHRM Business activities e.g. taxation, international relocation,
expatriate remuneration, performance appraisals, cross-cultural training and repatriation
Increased complexities e.g. currency fluctuations, foreign
HR policies and practices, different labor laws Increased involvement in employees personal life e.g.
personal taxation, voter registration, housing, childrenseducation, health, recreation and spouse employment
Complex employee mix cultural, political, religious,ethical, educational and legal background
Increased risks e.g. emergency exits for serious illness,personal security, kidnapping and terrorism
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Myths about globalization
Myth #1: Global = International Myth #2: Global strategy means doing same
thing everywhere Myth #3: Globalizing = stateless corporation,
no national/community ties Myth #4: Globalization requires abandoning
country images and values Myth #5: Globalizing means tackling on
acquisitions or alliances in other countries,without much integration/change
Myth #6: A strategy must involvessales/operations in another country
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Strategies of international, multinational,global & transnational organizations
Internationalcompany transports its businessoutside home country; each of its operations is areplication of the company's domesticexperience; structured geographically; andinvolves subsidiary general managers
Companies offering multiple products often findit challenging to remain organized e.g. need tohave a common information systems foraccounting, financial and management controls,and marketing. Most evolve to becomemultinational companies
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Strategies of international, multinational,global & transnational organizations
Multinationalcompany grows and defines itsbusiness on a worldwide basis, but continues toallocate its resources among national or regional
areas to maximize the total.
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Strategies of international, multinational,global & transnational organizations
Globalorganizations treat the entireworld as though it were one large country;may be the entire company or one or
more of its product lines; may operatewith a mixture of two or moreorganizational structure simultaneously.
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Strategies of international, multinational,global & transnational organizations
Transnational organization - Usespecialized facilities to permit localresponsiveness; more complex
coordination mechanism to provide globalintegration
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Global efficiency and local responsiveness
of different types of firms
Global Transnational
International Multinational
Globalefficiency
HighLow
High
Local responsiveness
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Orientation to international
operations
(1) Australian organization with internationaloperations
All senior and many middle management positions
held by Australians Highly centralized in Australia, large head office
Instruction and advice from Australian head office tosubsidiaries
HR policies and practices are predominantlyAustralian with some modification to satisfy foreignrequirements
Australian corporate culture
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Orientation to international
operations
(2) Australian multinational organization
Localization of some management positions but alltop corporate positions held by Australians
Some decentralization to regional or areaheadquarters
Regional headquarters is the main source ofcommunications; instructions from Aust head office to
regional headquarters HR policies and practices are mixed
Mix of Australian and host country culture
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Orientation to international
operations
(3) Australian global organization
All management positions are open toeveryone regardless of nationality
Decentralized decision making
Two-way or multiple-way communicationbetween headquarters
HR policies and practices are benchmarked onbest international practices
International corporate culture
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Example from Japanese MNCs
Campbell, N. (1991). How Japanese multinationals work so well. Prism, 4, 61-69.1. Borderless structure and bottom-up decision-making processes
that encourage communication and information flow among allcomponents of the company and extend the network to its key suppliers,distributors, and other business partners.
2. Custodial leadership that emphasizes values and vision and is skillfullyunassertive, while energizing and challenging middle managers withdemanding targets.
3. Human resource management, including socialization, training, andpromotion via a hierarchy of ranks, job rotation, and appraisal systemsthat promote hard work, commitment, and competition among peers.
4. Incremental planning and control that help a company expand littleby little, focusing on new products and the relentless pursuit ofoperating improvements, rather than "grand designs" for competitiveadvantage.
5.An extended family model that encourages and rewards commitment.
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IHRM - a shift in thinkingLaurent (1986)
Explicit recognition by parent org of theexistence of assumptions and values ofhome & host cultures
Explicit recognition by parent orgethnocentrism is neither good/bad, hasstrengths and weaknesses
Explicit recognition of subsidiariespreferences which may be different
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IHRM - a shift in thinkingLaurent (1986)
Willingness to acknowledge culturaldifference discuss and learn
Genuine belief in creative and effectiveways of managing people through cross-cultural training/learning
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Important lessons for global firms
The need to manage change
The need to respect local cultures
The need to understand a corporationsculture
The need to be flexible
The need to learn
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Main challenges in IHRM
High failure rates of expatriation and repatriation Deployment getting the right mix of skills in
the organization regardless of geographicallocation
Knowledge and innovation disseminationmanaging critical knowledge and speed ofinformation flow
Talent identification and development identifycapable people who are able to function
effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body)
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Main challenges in IHRM
Different labor laws Different political climate Different stage(s) of technological advancement
Different values and attitudes e.g. time,achievement, risk taking Roles of religion e.g. sacred objects, prayer,
taboos, holidays, etc Educational level attained Social organizations e.g. social institutions,
authority structures, interest groups, statussystems
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Strategies for managing a global
workforce
(1) Implement the aspatial career strategy
Get people from everywhere (geocentric approach)
Expats work in multiple countries during the course of
their career Gain a lot of knowledge about different cultures &
operations
Develops in-depth knowledge
Use previous knowledge for new assignment Extremely high cost
Mainly managers, not technicians
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Strategies for managing a global
workforce
(2) Implement the awareness-building assignmentstrategy
Expose a candidate to cultural training exercises
Usually for short term (3 months to one year) Family members usually not required to relocate
Usually used to train candidates for futureassignments
Learn from foreign assignment and bring experienceback to HQ
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Strategies for managing a global
workforce
(3) Implement the SWAT team strategy Highly mobile teams for short term
assignments
Deployed throughout the organization todifferent parts of the world
No development agenda, plaintroubleshooting
Transfer technical knowledge to locals as theyfix problems
E.g. technical troubleshooters
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Strategies for managing a global
workforce
(4) Implement the virtual solutions strategy
Collection of practices that exploit electroniccommunication
E.g. internet, intranet, videoconferencing,electronic databases, email, electronic expertsystems
Low cost and very fast in terms ofdisseminating knowledge
Used by Xerox and Ford
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