International HRM

Prof.T.N.Krishnan
OBHR Area
IIM Kozhikode
Differences between Domestic HRM and
IHRM
 More HR activities: taxation, culture
orientation, administrative services
 More involvement in employees’ personal
lives: adjustment, spouses, children
 Changes in emphasis as the workforce mix
of expatriates and locals varies:
 Risk exposure: expatriate failure, terrorism
 Broader external influences: government
regulations, ways of conduct
Challenges in IHRM
 Cultural diversity: Working with people from
different cultural backgrounds
 Talent gaps: Demographic dividends in some
countries; Local vs parent company talent; finding
and retaining talent that can traverse boundaries
 Organizational structure: ability to balance
standardised global practices vs adapting to local
conditions
 Handling different legal, economic and social
differences at workplaces across countries
Mr.Gopalakrishnan, Tata Sons on
difference in culture
Ways to understand societal culture
(Hall, 1976)

 Understanding general cultural tendencies

would be beneficial
 One way to understand this is to differentiate
high context and low context cultures
 High context cultures  situation cues for
making meaning when perceiving and
communicating with others.
 Low context cultures  written and spoken
words convey the primary conversational
meaning.
High context culture features (Hall, 1976)

Possible situation cues are age, gender,

official position or status.
Agreements generally involve a prolonged
trust building period
Negotiation process is relatively slow and
ritualistic.
Greater emphasis on personal relations
and goodwill.
Low context culture features

Business agreements generally require a

specific legalistic contract.
Individuals prefer to immediately “get
down to business”
Greater emphasis on one’s expertise and
ability to perform the job
Context and view of time
 Another dimension on which cultures differ is their
perception of time

 Time may be represented as a continuum with a

monochronic view of time at one extreme and a
polychronic view of time at the other.
 In monochronic view, time is seen as linear, limited,
divided into precise segments and strongly schedule
driven. Individuals in this, would prefer to do only one
thing at a time.
 In polychronic view, time is seen as fluid, flexible and
multi-dimensional, individuals with this orientation prefer
to do more than one thing at a time.
 Individuals with low-context cultures tend to have a
monochronic view while those from high-context cultures
tend to have a polychronic view of time.
Culture and view of time (Hall, 1976)

MONOCHRONIC POLYCHRONIC
view of time view of time

Precise
fluid
Segments

Linear flexible

multi-
limited
dimensional •Prefer to do
•Prefer to do one
multiple things at
thing at a time
a time
•Corresponds
•Corresponds
with low context
with high context
cultures
cultures
Context and inter-personal distance

Inter-personal distance refers to the

amount of physical space that’s necessary
between individuals so that they feel
comfortable when holding a conversation.
People from high context culture tend to
stand closer while those from low context
prefer a greater inter-personal distance
Hofstede’s Cultural Dimensions Defined
 Power Distance
 Extent to which less powerful members of institutions expect and accept
that power is unequally distributed.
 Individualism - Collectivism
 Strength of relation between an individual and others in society
 Degree to which people act as individuals rather than members of a
group
 Masculinity - Feminity
 Extent of division of roles
 Acceptance of masculine/competitive traits or feminine traits.
 Uncertainty Avoidance
 How do people deal with the fact that the future is not perfectly
predicable
 Comfortability with structured/ Unstructured situations
 Time orientation
 Actions directed to the future vs. present
The greatest differences with the world
average are in power distance and
uncertainty avoidance
Types of International Employees
 An expatriate is an employee sent by a company
in one country to manage operations in a different
country.
Parent-country nationals (PCNs) are employees who
were born and live in a parent country.
Host-country nationals (HCNs) are those employees
who were born and raised in the host country, as
opposed to the parent country.
Third-country nationals (TCNs) are employees born in
a country other than the parent country or host country
but who work in the host country.
International Assignments
 Approaches To International Human
Resource Management

Ethnocentric: Highly centralized. HQ controls

PCNs dominate.
Polycentric: Decentralized. Each subsidiary
has some degree of decision making
autonomy. HCNs manage subsidiaries. All
local country citizens
Geocentric: Ignores nationality in favor of
ability and competence - Citizenship is
ignored in favour of “best person for the job”
Use of Expatriates
Use of expatriates increases when:
 Poor or insufficient local talent
 There is a need to ensure a strong corporate-
wide vision (and culture).
 When domestic and foreign operations are
highly interdependent.
 The political situation in the foreign country is
unstable
 To create globally competent managers
Use of Expatriates

Challenges
 Career blockage (“the home office has
forgotten about me”)
 Culture Shock, resulting in frustration and poor
cooperation abroad.
 Family problems, due to poor adjustment
and/or lack of contact if family is left behind.
 Inability to cope with larger overseas
responsibility
Use of Expatriates

Challenges (con’t)
Over-emphasis on technical qualifications.
Use of Expatriates

Difficulties upon Return Home

20-40% of repatriates quit after returning
home. Why?
Lack of respect for acquired skills/knowledge
Loss of status
Poor planning for return position
Reverse culture shock
Use of Expatriates
The Role of HRM

Selection
 Provide realistic country preview.
 Measure ability to be sensitive to different
cultures and/or comfort with specific foreign
country’s culture.
 Have successful expatriates make the selection
decisions.
 Require previous international experience (pay
attention to specific country worked in).
 Assess family’s willingness to live or work
abroad.
Use of Expatriates
The Role of HRM

Training
Cross-cultural training, which can address:
 Major cultural differences
 Foreign expectations regarding polite behaviour

→Video and role-play approaches to training

delivery are valuable for cross-cultural training.
Use of Expatriates
The Role of HRM

Career Development
Ensure expatriates know that an international
assignment helps in terms of advancement
within the firm

Compensation
 Disposable income abroad should be the same
(if not more) than what is given at home.
 Provide incentive to work abroad
 Ensure pay equity within foreign facilities.