module -1 IHRM.pptx International Resource Management

International Resource Management

1. International Human Resource Management Module-1

2. Meaning of IHRM IHRM is defined as, performing HRM and its related activities and arranging for related and necessary cultural and immigration facilities for prospective and current employees, by organizations operating in domestic and/or foreign countries.( Subba Rao Pulapa , 2007). International Human Resource Management is the procurement, allocation, utilization, and motivation of human resources in international business.

3. A Model of IHRM (Morgan)

4. Types of Organizations Domestic organizations employing foreigners Parent companies Subsidiary companies Joint Ventures Other types of organizations operating in foreign countries

5. Types of Organizations Domestic human resources/Nationals of the Host country Parent country Nationals Third country Nationals Other types of foreign employees

6. International HR Activities Procuring Developing Compensating Utilizing Immigration/Migration Socialization Services Security Repatriation/Deportation Cross-cultural management

7. International HR Activities Procuring Developing Compensating Utilizing Immigration/Migration Socialization Services Security Repatriation/Deportation Cross-cultural management

8. Important Terminologies…. Multinational Corporation (MNC): MNC is an organization which operates in more than one country. Transnational Corporation (TNC): TNC is an organization, that produces, markets, invests and operates across the world. Home Country/Parent Country: Home country/parent country is the one where the headquarters of an MNC or TNC is located. Host Country: Host the country is the one where the subsidiary/branch of an MNC/TNC is located.

9. Important Terminologies…. Parent Country Nationals/ Home Country(PCNs ): Parent country nationals/ home country nationals are employees of an MNC/TNC who are the citizens of home country/parent country of that MNC/TNC. Host Country Nationals (HCNs): Host country nationals are employees of an MNC/TNC's subsidiary/branch who are the citizens of the country where the subsidiary/ branch of the MNC/TNC is located. Third Country Nationals (TCNs): Third country nationals are employees of an MNC/TNC or their subsidiaries/branches, and are citizens of those countries other than the MNC/TNC's home country and/ or host country.

10. DIFFENCE BETWEEN DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS Approach Domestic business’s approach is ethnocentric. It does mean that domestic companies formulate strategies, product design etc. towards the national markets, customers and competitors. International business’s approach can be polycentric or regiocentric or geocentric. International business under polycentric approach enters foreign markets by establishing foreign subsidiaries. Under the regiocentric , they export the product to the neighbouring countries of the host country. Under the geocentric approach,they treat the entire world as a single market for production, marketing, investment and drawing various inputs Geographic Scope Domestic business’s geographic scope is within the national boundaries of the domestic country. Geographic scope of the international business varies from the national boundaries of a minimum of two countries up to a maximum of the entire globe Operating Style Domestic business’s operating style including production , marketing, investment, R&D, etc.is limited to the domestic country Operating style of the international business can be spread to the entire globe. Environment Domestic business mostly analyses and scans the domestic environment. International business analyses and scans the relevant international environment.

11. DIFFENCE BETWEEN DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS Quotas The quotas imposed by various countries on their exports and imports not directly and significantly influence domestic business. The international business has to operate within the quotas imposed by various countries on their exports and imports. The tariff rates The tariff rates of various countries do not directly and significantly influence the domestic business. The tariff rates of various countries directly and significantly influence the international business. Foreign Exchange Rates Foreign exchange rates and their fluctuations do not directly and significantly affect the domestic business. Foreign exchange rates and their fluctuations directly and significantly affect the international business Culture Mostly domestic culture of the country affects the business operations including product design. Mostly culture of various countries affects the business operations including product design of international business.

12. DIFFENCE BETWEEN DOMESTIC BUSINESS AND INTERNATIONAL BUSINESS Human Resources Domestic business normally employs the people from the same country. Therefore, the task of human resource management is not much complicated. International business normally employs the people from various countries. Therefore, the task of human resource management is much complicated. Export-Import Procedures Domestic business is not normally Influenced by export-import procedures of the country. International business is significantly influenced by export-import procedures of various countries. They need to follow those procedures. Markets and Customers Domestic companies meet the needs of the domestic markets and customers. As such, it would be appropriate for them to understand the domestic markets and customers. International business should understand markets and customers of various countries.

13. Major Dimensions of IHRM – causing Differences from Domestic HRM

14. Major Dimensions of IHRM – causing Differences from Domestic HRM Wider Nationalities : IHRM deals with the employees drawn from a number of nations in contrast to domestic HRM, where employees are drawn from one nation. People from different nations come with a variety of cultures, values, ethnical interpretations, religion beliefs and the like Importance of work goals Need fulfillment and job satisfaction Managerial and organization variables Work Role and interpersonal orientation

15. Broader Relations and Complexities Organizations seek the information on broader aspects of employees, and their family members while recruiting and selecting employees from foreign countries. These aspects include: age, health, educational qualifications, driving skills criminal record of employee and his/her family members. Organizations arrange for work permit for employee, visas and resident permits or different kinds of visas for employee and family members, air tickets and all other logistics etc.

16. Broader Relations and Complexities In addition, organization arrange for socialization of employee and family members with the local community, facilities in the country/city like health, shopping, hotels, housing, entertainment, educational and religious places/places of workshop etc. In addition, other employees both nationals and foreigners do also arrange socialization activities at the personal and family levels. These activities invariably build the relationships on broader aspects among the expatriates and their family members and national employees and their family members.

17. Broader Relations and Complexities Further, employees pay additional attention to understand each other's culture, habits, behaviour , language, ascent, way of presentation, meanings for their body language/non-verbal communication, eating and drinking habits, interpretations for ethnical issues, social issues and practices and the like. This process and emphasis invariably result in understanding each other on wider and broader issues.

18. Influence of International Environment Strides in Business Processes Influence of Information Technology Political Liberalizations Differences in Influences

19. Enduring Complexities of IHRM Activities Discriminative Remuneration and Employee Frustration: Counseling to Reduce Frustration

20. Variety of Functions Additional Information Additional Techniques of Recruitment: Checking the Record of Terrorist and Criminal Activities On-Line Selection Immigration Information Fulfilling Immigration Formalities Air Tickets Arranging for Receiving the Candidates Introduction Conducting Language Classes Designing Attractive Pay Package within the Tax Laws of the Country:

21. The drivers of internationalization of business Globalization of Markets Globalization of Production Falling Barriers to Trade and Investment Technological Innovation

22. The drivers of internationalization of business Globalization of Markets Globalization of Production Falling Barriers to Trade and Investment Technological Innovation

23. Objectives It enhances to develop managerial skills, organizational knowledge and technical abilities of HR managers and employees; • To develop more and better handle of global business operations; • To manage and secure the performance, compensation and career path of employees

24. Objectives The important objectives such as : Creating International talent acquisition model Creating International compensation & benefits Creating International work culture Creating International performance & career management system Creating International employee relations framework Creating International separation management

25. Challenges of international Human Resource Management Variation in country environment Perception of HR Attitudes and Actions Resistance to Change Balance

26. IHRM Versus Single Nation-centric HRM Profile of workforce. Administrative overload. Macro perspective. HR framework. External influence. Geo perspective. Risk factor.

27. The reasons that IHRM is more complex than domestic HRM 1. International HRM addresses a broader range of activities than domestic HRM. These include international taxation, coordinating foreign currencies and exchange rates, international relocation, international orientation for the employee posted abroad, etc. 2. Human resource managers working in an international environment face the problem of addressing HR issues of employees belonging to more than one nationality. Hence, these HR managers need to set up different HRM systems for different locations. Human resource managers in a domestic environment administer HR programmes to employees belonging to a single nationality.

28. The reasons that IHRM is more complex than domestic HRM 3. International HRM requires greater involvement in the personal life of employees 4. There is heightened exposure to risks in international assignments. 5. International HRM has to deal with more external factors than domestic HRM 6. International HRM Addresses a broad range of HRM activities. Whereas domestic HRM deals with issues related to employees belonging to single nationality. 7. Greater exposure to risks in international assignments; human and financial consequences of mistakes in IHRM are very severe.

29. Common activities between Domestic HRM and IHRM

30. Emergence of Global HR Manager IHRM Global mindset. Knowledge of International business. Knowledge of labour markets. Knowledge of labour regulations. Knowledge of macro societal changes. Cultural perspective

31. Organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations. Organizational culture

32. Culture is shared by the members of the organization. Culture helps members of the organization solve and understand the things that the organization encounters, both internally and externally. Because the assumptions, beliefs, and expectations that make up culture have worked over time, members of the organization believe they are valid. Therefore, they are taught to people who join the organization. These assumptions, beliefs, and expectations strongly influence how people perceive, think, feel, and behave within the organization. Characteristics of Organizational culture

33. The former influence comes from the fact that national culture exerts a powerful influence on the system of values, attitudes and behaviour of people in a particular country and, among the other things, on the preferences for policies and procedures in the field of human resources management. What is the role of culture in international human resource management?

34. Cross-cultural management describes organizational behavior within countries and cultures; compares organizational behavior across countries and cultures; and seeks to understand how to improve the interaction of co–workers, managers, executives, clients, suppliers, and alliance partners from around the world. What is the role of culture in international human resource management?

35. Get to Know Each Team Member. Adopt Flexibility. Promote Open Communication. Encourage Team Building Activities. Listen Actively. Create a Structure for Success Address Conflict Immediately How to Manage a Cross-Cultural Team?

36. Clarify Get into the details Summarize Simplify Cross-cultural training MANAGING CROSS CULTURAL ISSUES Other techniques · Building a Shared Culture · Consensus Agreement on Important Matters · Building an Understanding Climate · Identify / Use the Rich points of each culture · Concentrate on the things you know · Understanding various religious practices

37. Globalization: Doing business in more than one country Operating and expanding the business throughout the world Establishing manufacturing and distribution facilities in any part of the world Global organizational structures, organizational culture & strategies Globalization

38. Cheaper Products for Consumer: Mass production leads to availability of products at low price. Consumers get the product they want at more competitive prices. Consumers to get much wider variety of products to choose from. Globalization leads to Outsourcing in some cases which can increase of job in other countries. Eg : Moving call centers to India. The international barrier gets reduced between counties which fosters the relation among nations. Globalization- Advantages

39. Better qualities of products are available due to standard norms set for production across the globe. Helps prevent market saturation in a specific market i.e it reduces too much competition in one place. For e.g too much call centers were existing in UK market which moved to India Standardization of product: The same products can be seen in some many places – e.g coke and McDonalds Companies get access to much wider markets which give a scope of further development of organisations Globalization- Advantages

40. Better qualities of products are available due to standard norms set for production across the globe. Helps prevent market saturation in a specific market i.e it reduces too much competition in one place. For e.g too much call centers were existing in UK market which moved to India Standardization of product: The same products can be seen in some many places – e.g coke and McDonalds Companies get access to much wider markets which give a scope of further development of organisations Globalization- Disadvantages

41. Better qualities of products are available due to standard norms set for production across the globe. Helps prevent market saturation in a specific market i.e it reduces too much competition in one place. For e.g too much call centers were existing in UK market which moved to India Standardization of product: The same products can be seen in some many places – e.g coke and McDonalds Companies get access to much wider markets which give a scope of further development of organisations Globalization- Disadvantages

42. Companies face much greater competition. This can put smaller companies, at a disadvantage as they do not have resources to compete at global scale. It can increase spread of communicable diseases. Economic depression in one country can trigger adverse reaction across the globe. Widening of Gap between rich and poor countries Exploitation of workers: Paying the workers in less economic developed countries a fraction of what would be paid to the parent citizen workers Globalization- Disadvantages

43. Indian consumers are availing cheaper products due to globalization Indian consumers have more choices to choose from. Indian consumers have an access to better quality of products due to global standardization. Indian consumers now have a better standard of living due to the easy access of products Due to globalization the concept of outsourcing is made possible. Any Indian company can dream now to become a Indian MNC due to globalization. Impact of Globalization in India:

44. Increased flow of skill and non skilled jobs and workers which enables better employment conditions across the countries. Impact of Globalization in India:

45. Managing Cultural Diversity Managing Expatriates Difference in the Employment Laws Managing Outsourcing of employees Managing virtual employees Coping with flexible working hours Evolution of more part-time and temporary work (especially among women, the elderly and students) Coping up with emerging technologies & quality measures The impact of globalization on HRM

46. Ethnocentric Approach Poly-centric Approach Regino - centric Approach Geo- centric Approach Approaches of IHRM