INTERNATIONAL HUMAN

RESOURCE MANAGEMENT
 CONTENTS………

• Introduction to IHRM
• Challenges to IHRM
• Equal employee opportunity
• Network organizations
Human Resource Management

• Human Resource Management (HRM)

involves all management decisions
and practices that directly affect the
people who work for the
organization.
• Human Resources the people who
work for the organization.
 What is IHRM?

• International HRM (IHRM) is the

process of:
– procuring,
– allocating, and
– effectively utilizing human resources
– in a multinational corporation, while
– balancing the integration and
differentiation of HR activities in
foreign locations.
 OBJECTIVES of IHRM

• To reduce the risk of

international human
resource
• To aviod cultural risks
• To aviod regional
disparities
• To manage diversifies
human capital
P.Morgans Model of IHRM
Human resource activities

– Procurement
– Allocation
– Utilization of human resources
 Nation/country
categories where firms expand and operate

– Host country
– Parent country
– Third country
Categories of employees in an MNE
• Parent-country
nationals (PCNs) 
– Employees who were
born and live in a parent
country.
• A parent (or home) country:
the country in which a
company’s corporate
headquarters is located.
Categories of employees in an
MNE
• Host-country nationals
(HCNs) 
– Employees born and raised
in a host country.
• Host country: a country in
which the MNE seeks to
locate or has already located
a facility.
• Third-country nationals
(TCNs) 
– Employees born in a
country other than a parent
or host country.
 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
 Global flow of HR: more complexity in
activities and more involvement in
employees' lives
International Assignments Create
Expatriates
Reasons for Expatriate Failure
1. Inability of spouse to adjust
2. Manager’s inability to adjust
3. Other family problems
4. Manager’s personal or emotional
maturity
5. Inability to cope with larger overseas
responsibility
6. Lack of technical competence
7. Difficulties with new environment
Why IHRM

?
Factors that Influence the Global Work
Environment
 Forces for Change
• Global competition:
• Growth in mergers, acquisitions
and alliances:
• Organization restructuring:
• Advances in technology and
telecommunication
 Impacts on Multinational
Management
•Need for flexibility:
•Local responsiveness:
•Knowledge sharing:
•Transfer of competence:
 Managerial Responses
• Developing a global “mindset”
• More weighting on informal control
mechanisms
• Fostering horizontal
communication
• Using cross-border and virtual
teams
• Using international assignments
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 of
expatriates and locals varies: fairness
 Risk exposure: expatriate failure, terrorism
 Broader external influences: government
regulations, ways of conduct
Differences between Domestic HRM
and IHRM: variables

• Complexity involved in operating in

different countries, varied nationalities of
employees
• The different Cultural Environment
• The industry or industries with which the
MNC is involved
• Attitudes of Senior Management
• Extent of reliance of MNC on home country
domestic market
Variables that Moderate Differences
between Domestic HR and IHRM
Qualities of Global Managers

• Understand the worldwide business

• Learn about many cultures
• Work with many types of people
• Create cultural synergy
• Adapt to living in many cultures
• Use cross-cultural skills daily
• Treat foreign colleagues as equals
• Use foreign assignments as career
development
 Main challenges in IHRM
• High failure rates of expatriation and
repatriation
• Deployment – getting the right mix of skills in
the organization regardless of geographical
location
• Knowledge and innovation dissemination –
managing critical knowledge and speed of
information flow
• Talent identification and development – identify
capable people who are able to function
effectively
• Barriers to women in IHRM
• International ethics
• Language (e.g. spoken, written, body)
 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
EQUAL EMPLOYEE OPPORTUNITY

• Equal Employment
Opportunities (EEO)
means eliminating
barriers to ensure
that all employees
are considered for the
employment of their
choice and have the
chance to perform to
their maximum
potential.
EQUAL EMPLOYEE OPPORTUNITY

• EEO practices include:

• fairness at work,
• hiring based on merit and
• promotion based on talent.
It concerns all aspects of
employment including recruitment,
pay and other rewards, career
development and work conditions
 OBJECTIVES
• To promote recognition and acceptance of
everyone's right to equality of opportunity
• TO eliminate, as far as possible,
discrimination against people by
prohibiting discrimination on the basis of
various attributes
• TO eliminate, as far as possible, sexual
harassment
• TO provide redress for people who have
been discriminated against or sexually
harassed.
EQUAL EMPLOYEE OPPORTUNITY

Discrimination on the basis of:-

• Disability
• Race
• Age
• Minority
• Marital status
Equal employment opportunity act is
implemented by many countries to stop
these discriminations.
 Diversity in workforce

Differences among people in age, gender,

race, ethnicity, religion, sexual
orientation, socioeconomic background,
capabilities/disabilities and in the
thought process.
management system which incorporates the
differences found in a multicultural
workforce in a manner which results in the
highest level of productivity for both the
organization and the individual.
 Diversity Wheel

Diversity is the mixture of people in business, with their variety of

backgrounds, experiences, styles, cultures, skills and competencies.
 Learning’s from the Wheel
• As individuals, we are all diverse
• As organizations and work groups,
some are more diverse than others
• Important to understand your mix
(customer’s, employees &
stakeholders) now both current state
and desired state
• People are both similar and different
among a variety of dimensions
• Need to understand the impact of
culture
NETWORK ORGANISATIONS

• International Division Structure

• Global Product Division
• Global Area Division
• Global Functional Division Structure
• Multinational Matrix Structure
International Division Structure
Structural arrangement that handles all
international operations out of a division
created for this purpose
• Assures international focus receives top
management attention
• Unified approach to international operations
• Often adopted by firms still in
developmental states of international
business operations
• Separates domestic from international
managers (not good)
• May find it difficult to think and act
strategically, or to allocate resources on a
global basis
International Division Structure
 Global Product Division

Structural arrangement in which domestic divisions are given

worldwide responsibility for product groups
• Global product divisions operate as profit centers
• Helps manage product, technology, customer
diversity
• Ability to cater to local needs
• Marketing, production and finance coordinated on
product-by-product global basis
• Duplication of facilities and staff personnel within
divisions
• Division manager may pursue currently attractive
geographic prospects and neglect others with long-
term potential
• Division managers may spend too much time tapping
local rather than international markets
Global Product Division
 Global Area Division
• Structure under which global operations
organized on geographic basis
– International operations put on same level as
domestic
– Global division mangers responsible for all business
operations in designated geographic area
– Often used by firms in mature businesses with narrow
product lines
– Firm is able to reduce cost per unit and price
competitively by manufacturing in a region
– Difficult to reconcile a product emphasis with
geographic orientation
– New R&D efforts often ignored because divisions are
selling in mature market
Global Area Division
 Global Functional Division
Structure
Structure that organizes worldwide operations
primarily based on function and secondarily on
product
– Approach not used except by extractive companies such as
oil and mining
– Favored only by firms needing tight, centralized
coordination and control of integrated production processes
and firms involved in transporting products and raw
materials between geographic areas
– Emphasizes functional expertise, centralized control,
relatively lean managerial staff
– Coordination of manufacturing and marketing often difficult
– Managing multiple product lines can be very challenging
because of separation of production and marketing into
different deparments.
Global Functional Division
Structure
Multinational Matrix Structure

Structure is a combination of global

product, area, or functional
arrangements
– Allows organization to create specific
type of design that best meets its needs
– As matrix design’s complexity increases,
coordinating personnel and getting
everyone to work toward common goals
often become difficult
– Too many groups to their own way
Multinational Matrix Structure
Transnational Network Structures

Multinational structural arrangement

combining elements of function, product,
geographic design, while relying on
network arrangement to link worldwide
subsidiaries
– At center of transnational network structures
are nodes, units charged with coordinating
product, functional, and geographic
information
– Different product line units and geographic
area units have different structures
depending on what is best for their particular
operation
Transnational Network Structures
Control Mechanisms