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7/29/2019 IHRM in ERM

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An Introduction to IHRM

Dr.Yogananthan


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Content

Introduction

Ice breakerMyths!!!

International orientation (IB?)

Strategic IHRM Reasons to go for IHRM

IHRM model

Differences between HRM & IHRM

Challenges of IHRM


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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 corporations

culture

The need to be flexible

The need to learn

Copyright 2003-2006, Chris Chan 3


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Increasing Importance of Global Human Resource

Understanding

International

Mergers and

Acquisitions

Importance of

Global Human

Resources

Management

Foreign Human

Resources

Global

Competition

Market Access

Opportunities


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Figure 151 Types of Organizations


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Managing Across Borders

International corporation

Domestic firm that uses its

existing capabilities to

move into overseasmarkets.

Multinational corporation

(MNC)

Firm with independentbusiness units operating in

multiple countries.

Global corporation

Firm that has integrated

worldwide operations

through a centralized homeoffice.

Transnational corporation

Firm that attempts to

balance local

responsiveness and global

scale via a network of

specialized operating units.


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Approaches To International Human Resource

Management

Ethnocentric: Highly centralized. HQcontrols PCNs dominate.

Polycentric: Decentralized. Each subsidiaryhas some degree of decision makingautonomy. HCNs manage subsidiaries.

Geocentric: Ignores nationality in favor ofability and competence needs in aworldwide integrated business strategy.


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Choosing an Approach to IHRM

Corporate International Strategy

Political and Legal Concerns

Level of Development in Foreign Locations

Technology and the Nature of the Product

Organizational Life Cycle Cultural Differences


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Convergence or Divergence?

Large corporations

preference for

consistent worldwidesystems

Smaller companies

desire for more

professional systems

Need to follow localHRM laws

Development of

unique techniquesand practices to suit

local cultural and

legal requirements


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Reasons for IHRM


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Forces for Change

Global competition:

Growth in mergers, acquisitions and alliances:

Organization restructuring:

Advances in technology and

telecommunication:

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Impacts on Multinational Management

Need for flexibility:

Local responsiveness:

Knowledge sharing:

Transfer of competence:


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Managerial Responses

Developing a global mindset:

More weighting on informal control

mechanisms:

Fostering horizontal communication:

Using cross-border and virtual teams:

Using international assignments:


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Factors that Influence the Global Work Environment

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What does IHRM add into the Traditional

Framework of HRM? Types of employees

Within and cross-cultural workforce diversity Coordination Communication

Human resource activities Procurement Allocation Utilization of human resources

Nation/country categories where firms expand andoperate Host country Parent country Third country

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A Model ofIHRM

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Some Terms Defined

Host Country National (HCN): Belongs to

the Country where the subsidiary is located

Parent Country National (PCN): Belongs tothe Country where the firm has its

headquarters

Third Country Nationals (TCN): Belongs toany other country and is employed by the

firm


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What is an expatriate?

An employee who is working and temporarily residingin 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, andHCNs transferred into the parent country

Global flow of HR: more complexity in activities and

more involvement in employees' lives

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Models of IHRM


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Matching ModelFomburn,

1984 Highlights the right fit between Human

resource systems with organizational

strategy, structure.


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Harvard ModelBeer et al, 1984

Stresses Human

Concerned about employeremployee

relationship

High lights the interests of various

stakeholders both internal and external

Match between stakeholders interest and

organizational objective


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Contextual modelHendry &

Pettigrew, 1988 It concentrates on organizations may follow

no of pathways in order to achieve results.

External environmentsocio economical,politico legal, technological & competitive

Internal enviornmentculture, structure,

leadership, technology & business output.


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5 P model- Schuler, 1992

Five HR activities

Philoshopy

Policy

Programmes

Practices

Processes with strategics needs of

organization


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European modelBrewster, 1993

&1995 Constrained between internatioanl

(European union) and national level by

national culture and legislation. Patterns of ownership, HRM practices in

union, consultative arrangements.


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Choosing an Approach to IHRM

Corporate International Strategy

Political and Legal Concerns

Level of Development in Foreign Locations

Technology and the Nature of the Product

Organizational Life Cycle

Cultural Differences


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Main challenges in IHRM

High failure rates of expatriation and repatriation

Deploymentgetting the right mix of skills in theorganization regardless of geographical location

Knowledge and innovation disseminationmanagingcritical knowledge and speed of information flow

Talent identification and developmentidentifycapable people who are able to function effectively

Barriers to women in IHRM International ethics

Language (e.g. spoken, written, body)



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Major differences between domestic

HRM and IHRM Business activities e.g. taxation, international relocation,

expatriate remuneration, performance appraisals, cross-culturaltraining 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, childrens education,health, recreation and spouse employment

Complex employee mixcultural, political, religious, ethical,

educational and legal background Increased risks e.g. emergency exits for serious illness, personalsecurity, kidnapping and terrorism



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Differences between Domestic HRM and

IHRM More HR activities: taxation, culture orientation,

administrative services The need for a broader perspective: cater to multiple

needs More involvement in employees personal lives:adjustment, spouses, children

Changes in emphasis as the workforce mix ofexpatriates and locals varies: fairness

Risk exposure: expatriate failure, terrorism Broader external influences: government

regulations, ways of conduct

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Variables that Moderate Differences between

Domestic HR and IHRM

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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, status systems



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Reference

Chris Chan, Introduction to IHRM,

BUSN3025 seminar, 2003.

Peter J Dowling, Denice EWelch,International Human Resource

Management, Cengage Learning.

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