406C-International Human Resource Management - Chapter 1 Notes
406C-International Human Resource Management - Chapter 1 Notes
SEMESTER IV
International Human Resource Management (IHRM) can be defined as a set of activities targeting
human resource management at the international level. It strives to meet organizational objectives
and achieve competitive advantage over competitors at national and international level.
International Human Resource Management (IHRM) is the term used for organisations that manage
their human resources activities at an international level. IHRM includes ‘typical’ HR functions
such as recruitment, selection, performance management, training and development, and
remuneration, however these are analysed or managed at an international level (e.g. companies may
advertise positions globally or update their policies following a review of international best
practice).
Furthermore, IHRM may also encompass additional activities such as expatriate management,
multiple industrial relation activities (e.g. varying international collective agreements/employment
contracts to meet differing country legal and tax requirements), global succession planning and so
on.
Comparative IHRM: any organisation seeking, describing, comparing and analysing HRM
systems and practices in various countries (e.g. review of industrial relations or HRM theories to
assist in HR policy development)
Multinational enterprises (MNE) focus: management of HR activities for organisations that have
offices, and employees or representatives spread across two or more countries.
Boxall, P. (1992) defined International Human Resource Management (IHRM) as ‘concerned with
the human resource problems of multinational firms in foreign subsidiaries (such as expatriate
management) or more broadly, with the unfolding HRM issues that are associated with the various
stages of the internationalisation process.
In short, IHRM is concerned with handling the human resources at Multinational Companies
(MNCs) and it includes managing three types of employees −
There are many similarities between HRM at the national as well as international level. However,
let us have a look at the differences between them with the help of points given below −
Domestic HRM takes place at the national level, that is, within a country and IHRM takes
place at the international level, that is, in between two or more than two countries.
Domestic HRM is bothered about managing employees belonging to one nation and IHRM
is bothered about managing employees belonging the home country and host country as
well as third country employees.
Domestic HRM is concerned with managing limited number of HRM activities at the
national level and IHRM is concerned with managing additional activities such as
expatriate management.
Domestic HRM is less complicated due to less imprint from the external environment.
IHRM is comparatively more complicated, as it is deeply affected by the external factors
such as cultural distance and institutional factors.
It can be concluded that both IHRM and HRM share some grounds of similarities as well as
dissimilarities, but both have their own importance. Further, they contribute to the development of
a country in a combined manner.
IHRM and organisational structure
The type of international organisational structure adopted by the MNE will provide the context for
many of the IHRM issues faced by the company.
The five readily identified ‘types’ of organisational structure include: – International division
structure – International geographic/regional structure – International product structure –
International functional structure – Matrix or mixed structure.
The functional structure is the most common model found in most organizations. Organizations
with such a structure are divided into smaller groups based on specialized functional areas, such as
operations, finance, marketing, Human Resources, IT, etc.
This is another commonly used structure, where organizations are organized by a specific product
type. Each product category is considered a separate unit and falls within the reporting structure of
an executive who oversees everything related to that particular product line. For example, in a
retail business the structure would be grouped according to product lines.
Organizations that cover a span of geographic regions structure the company according to the
geographic regions they operate in. This is typically found in organizations that go beyond a city
or state limit and may have customers all across the country or across the world.
It brings together employees from different functional specialties and allows geographical division.
The organization responds more quickly and efficiently to market needs, and focuses efforts solely
on the objectives of each business unit, increasing results.
Though this structure increases efficiency within each business unit, it reduces the overall
efficiency of the organization, since geographical divisions duplicate both activities and
infrastructure. Another main challenge with this model is that it tends to be resource intensive as it
is spread across and also leads to duplication of processes and efforts.
This type of structure brings together employees and managers across departments to work toward
accomplishing common organizational objectives. It leads to efficient information exchange and
flow as departments work closely together and communicate with each other frequently to solve
issues.
This structure promotes motivation among employees and encourages a democratic management
style where inputs from team members are sought before managers make decisions.
406C International Human Resource Management
Dr. Anubhuti P. Shinde
Godavari Institute of Management and Research, Jalgaon Page 7
Objectives of IHRM