PROF.

MURALI KRISHNAMURTHY
 What is IHRM?
•   IHRM can be defined as set of activities aimed
at managing organizational human resources at
international level to achieve organizational
objectives and achieve competitive advantage over
competitors at national and international level.

•   IHRM includes typical HRM functions such

as recruitment, selection, training and
development, performance appraisal and
disengagement done at international level and
additional activities such as global skill
management etc.
 OBJECTIVES OF IHRM
• Create a local appeal without compromising
upon the global identity.
• Generating awareness of cross cultural
sensitivities among managers globally and
hiring of staff across geographic boundaries.
• Training upon cultures and sensitivities of the
host country.
 NEED FOR IHRM
•   Managing expatriates
• Globalization has forced HRM to have
international orientation
• Effectively utilise services of people at both
the corporate office and at the foreign plants
FUNCTIONS OF IHRM
RECRUITMENT
SELECTION
EXPATRIATES
PERFORMANCE APPRAISAL
TRAINING AND DEVELOPMENT
COMPENSATION
WOMEN IN INTERNATIONAL BUSINESS
DUAL CAREER GROUPS
INTERNATIONAL INDUSTRIAL RELATIONS

TRADE UNIOUNS

PARTICIPATIVE MANAGEMENT
 Characteristics of IHRM
More HR activities

Need for a broader perspective

More involvement in employee personal lives

Changes in emphasis as the workforce mix of

expatriates and locals vary

Risk exposure

More external influences

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More Human Resource Activities

Human • Difficulty in implementing HR in host

countries
Resource • Developmental opportunities for
international managers.
Planning
• Ability to mix with organisation’s culture
Employee • Ethnocentric, polycentric or geocentric
staffing approach
Hiring • Selection of expatriates
• Managing repatriation process

• Emphasis on cultural training

Training & • Language training
Development • Training in manners & mannerisms 7
 • Devising an appropriate strategy to compensate
expatriates
• Minimising difference in pay between parent,
Compensation host & third country nationals
• Issues relating to the re-entry of expatriates into
the home country

• Constraints while operating in host

countries need to be considered.
Performance
• Physical distance, time differences & cost of
Management reporting system add to the complexity.

• Handling industrial relations problems in a

subsidiary.
Industrial
• Attitude of parent company towards unions
Relations in a subsidiary
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 Need for Broader Perspective

Pay issues
• Different countries, different currencies
• Gender based pay in Korea, Japan, Indonesia

Health insurance for employees & their families

Overtime working – Korean & Japanese firms

Promotions based on seniority or merit

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 • More involvement for both parent-country &
More third-country nationals
Involvement in • Housing arrangements
• Health care
Employee’s • Remuneration packages
Personal Lives • Assist children left behind in boarding schools

Changes in
emphasis as • Need for parent-country & third-country
the workforce nationals decrease as more trained locals
become available.
mix of • Resources reallocated to selection, training &
expatriates and management development
locals vary
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 • Physical safety of the employees.
Risk
• Failure of expatriates to perform well 
Exposure financial losses to the firm

• Dealing with ministers, political figures,

economic & social interest groups
External • Hiring procedures dictated by host
country.
Influence • Catch up with local ways of doing
business.
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Reasons for Growing Interest in IHRM

Effective HRM 
Globalisation of determinant of
Business success in
international business

Movement to network
organisations from Significant role in
traditional hierarchical implementation &
structures control of strategies

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 STAFFING POLICIES IN IHRM
•   Ethnocentric: Here the Key management positions are
filled by the parent country individuals.
•   Polycentric: In polycentric staffing policy the host
country nationals manage subsidiaries whereas the
headquarter positions are held by the parent company
nationals.
•   Geocentric: In this staffing policy the best and the most
competent individuals hold key positions irrespective of
the nationalities.
 Recruitment & Selection
Ethnocentric Polycentric Regiocentric Geocentric
Approach Approach Approach Approach
• Key • Host-country • Variation of • Seeks best
management nationals hired staffing policy to
suit particular
people for key
positions held to manage jobs,
geographic areas
by parent- subsidiaries
irrespective
country • Provides a
nationals • Parent-country of nationality
'stepping stone'
nationals for a firm wishing
• Appropriate occupy key to move from an • Underlying
during early positions at ethnocentric or principle of a
phases. corporate HQ. polycentric global
approach to a
corporation
geocentric
approach

categories of employees can be hired – parent country nationals (PCNs), host country
nationals (HCNs) & third country nationals (TCNs)

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IHRM MODEL
 How It Is Different from
Domestic HRM
• Domestic HRM is done at national level and IHRM is done
at international level.
• Domestic HRM is concerned with managing
employees belonging to one nation and IHRM is concerned
with managing employees belonging to many nations
(Home country, host country and third country employees)
Domestic HRM is concerned with managing limited number
•
of HRM activities at national level and IHRM has concerned
with managing additional activities such as
expatriate management.
• Domestic HRM is less complicated due to less influence
from the external environment. IHRM is very complicated
as it is affected heavily by external factors such as cultural
distance and institutional factors.
ACTIVITIES INVOLVED IN IHRM
 ISSUES IN IHRM
•   Managing International Assignments
•   Employee and Family Adjustments
• Selecting the right person for foreign
assignments
•   Culture and Gauge
•   Language and Communication
 EFFECTIVE IHRM
IMPLEMENTATION
The following checklist gives some if the critical decisions/issues that
need to be addressed in the formulation and implementation of an
effective IHRM policy.
 Ascertain the current and intended nature of international
operations in the organisation. (multi domestic, international, global
or transnational)
 Determine the extent to which the HR policies and practices need to
be standardized or localised in accordance with overall
organizational strategy.
 Assess the extent to which the local cultural, social, political,
economic and legal factors will impinge on any attempts to
standardize the HR policies if integration is a key factor in
organizational strategy.
 4. Ensure a computerised database of global
human resources is used if integration is
desired.
5. Work with the senior management team to
identify the competencies required to achieve
global organisational objectives.
6. Work with national HR and line managers to
formulate IHR policies and practices in the key
areas of sourcing, development and reward
which will embed a transnational mindset in
the organisation.
 Expatriate Assignment Life Cycle
Determining the
Crisis & Reassignment
need for an
Adjustment Abroad
expatriate

Repatriation &
Post-arrival
Adjustment
Departure Orientation &
Training

Selection Pre-assignment
training Crisis & Failure
Process

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 Expatriate Failure

Premature return of expatriates to their home country

Reasons
• Inability to adjust to host country culture  leads to culture shock
• Personal & emotional problems
• Difficulties with the environment
• Inability to cope with larger international responsibilities
• Other family reasons

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