International HRM for business Students.

International Human Resource Management (IHRM) refers to the strategies and practices used to manage a company's workforce across different countries and cultures. It involves recruiting, training, and developing employees in a global context, addressing diverse legal, cultural, and economic environments. IHRM includes managing expatriates, implementing global talent management strategies, and ensuring compliance with various international labor laws. The goal is to align human resource practices with the organization's international objectives while fostering cross-cultural understanding and optimizing global workforce performance.

1. International Human Resources Management 1

2. IHRM The process of procuring, allocating and effectively utilizing human resources in an international business is called international human resources management (IHRM). This is the HRM issues and problems arising from the internationalization of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalization process IHRM is the management of HR in business operations in at least two nations Need for IHRM Managing expatriates Globalization has forced HRM to have international orientation Effectively utilize services of people at both the corporate office and at the foreign plants 2

3. Differences between Domestic HRM and IHRM More HR activities: taxation, culture orientation, administrative services The need for a broader perspective: provide to multiple needs More involvement in employees’ personal lives: adjustment, spouses, children etc. 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 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 3

4. Major Diffe. 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 employee’s personal life e.g. personal taxation, voter registration, housing, children’s education, 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 4

5. Main challenges in IHRM High failure rates - 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 – identifying capable people who are able to function effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body) 5

6. 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. holy objects, prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest groups, status systems 6

7. Models of IHRM 7

8. Reason for Growing interest in IHRM 8

9. Indicators of Globalization International trade is growing at a more rapid rate than world output Foreign direct investment (FDI) flows have set record levels in recent years Cross- border inter-firm agreements have rise dramatically during the last 20 years Social, economic, and political developments throughout the world have changed the way global business is conducted. 9

10. Pressures of globalization Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure. The advent of the era of globalization along with the advancements in information technology (IT) has transferred the world around us. It has brought to centre stage the importance of human resources, more than ever before. The pressures it poses on IHRM include: Remaining competitive throughout the world Efficient Locally Responsive Flexible and adaptive Capable to transforming learning across their globally dispersed units. 10

11. Global Challenges International companies face many challenges when try to make HR Practices consistent across all the locations/offices. Top Three challenges included : Variations in social, political and economic circumstances. Different locations/offices have their own way of doing things are resistant to change. The perceived value of the HR function varies across locations/offices. 11

12. Characteristics of IHRM mix of More involvement in employee personal lives More HR activities Need for a broader perspective Changes in emphasis as the work force expatriates and local vary Risk exposure More external influences. 12

13. More HR activities 13

14. More HR activities ... 14

15. Need for a Boarder Perspective 15

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18. Types of International Organizations There are four types of International Organizations: International Corporations Multinational Corporations Global Corporations Transnational Corporations International Corporations Domestic firms that builds on its existing capabilities to penetrate overseas market. Example : Honda, General Electric Multinational Corporations - MNCs have operating units (subsidiaries) located in foreign countries - Subsidiaries function as autonomous units Examples : Shell, Philips 18

19. Types of International Organizations … 3.Global Corporations operations Maintains control over its worldwide (subsidiaries) through a centralized home office. They treat the entire world as a single market Examples : Matsushita –Panasonic Global Transnational Corporations Provides autonomy to independent country operations but bring these operations together into an integrated whole through networked structure They combines the local responsiveness of an MNC and the efficiency of a global corporation Examples : Ford & Unilever 19

20. Major Factors Affect IHRM 20

21. IHRM Planning 21

22. IHRM Recruitment and selection 22

23. Hiring PCNs 23

24. Hiring HCNs 24

25. Hiring TCNs 25

26. Different Approaches in Global Compensation The “Balance Sheet Approach” Home- country groups of expenses—income taxes, housing, goods and services, and discretionary expenses—are the focus of attention. The employer estimates what each of these four expenses is in the expatriate’s home country, and what each will be in the host country. The employer then pays any differences such as additional income taxes or housing expenses. 26

27. Different Approaches in Global Compensation Local Going Rate Approach This can be desirable in high- paying countries such as the US of Switzerland The market rate is also preferred when the assignment is likely to be long term or permanent. The main advantage of this method that it is administratively simpler than the balance sheet. Hybrid Approach This approach refer variation of the greater of home or host system where a balance sheet is compared to local market rate equivalent. 27

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