406C-International Human Resource Management - Chapter 1 Notes

GODAVARI’S FOUNDATION
GODAVARI INSTITUTE OF MANAGEMENT AND RESEARCH,

JALGAON
406 C- INTERNATIONAL HUMAN RESOURCE MANAGEMENT
SEMESTER IV
Dr. ANUBHUTI P. SHINDE

Chapter 1
International Human Resource Management (IHRM)
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.
Essentially, IHRM concerns the global understanding or management of HR activities within an

organisation. More specifically there are three broad approaches that relate to IHRM:
Strategic or cross-cultural IHRM: managing HR practices within any organisation from an

international perspective (e.g. consideration of global trends, talent etc)
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 −
406C International Human Resource Management

Dr. Anubhuti P. Shinde
Godavari Institute of Management and Research, Jalgaon Page 2
 Home country employees − Employees residing in the home country of the company
where the corporate head quarter is situated, for example, an Indian working in India for
some company whose headquarters are in India itself.
 Host country employees − Employees residing in the nation in which the subsidiary is
located, for example, an Indian working as an NRI in some foreign country.
 Third country employees − These are the employees who are not from home country or
host country but are employed at the additional or corporate headquarters.
For example, an Indian MNC, which has its corporate office in America, may employ a French
person as the CEO to the subsidiary. The Frenchman employed is a third country employee.
IHRM vs. HRM
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.

Barriers to Global HRM
Recruiting from other countries.
Communicating well overseas.

Liaising with line managers, senior executives and locally-based HR colleagues becomes much
harder when you’re separated by thousands of miles.
Encouraging feedback.
Being geographically dispersed can mean not only less frequent catch-ups but also a less open,
trusting dynamic when you are communicating.
Getting the HR function structure right
Implementing the best structure globally is a case of getting the balance right between plenty of
expertise on the ground and maintaining a good level of central control and consistency.
Managing different, culturally influenced, career ambitions
A key challenge for Creditsafe has been inspiring employees in some European countries to aim for
management level, while managing the expectations of the typically highly ambitious American
staff. “In the UK and US people are very hungry to develop their careers in the way they’re perhaps
not in some European countries.
Maintaining a sense of brand identity and loyalty.
MAJOR CHALLENGES IN GLOBAL HRM

Employee and family adjustments: More involvement for parent-country & third-country
nationals, Housing arrangements, Health care, Remuneration packages, assist children left behind in
boarding schools and local regulation and tax policies. Selecting the right person for the foreign
assignments: International placements should involve right person with KSAA (Knowledge, skill,
attitude, ability) to adapt and to manage International assignments
Communication: HR Managers crucial role is to help employees deployed in the foreign country
learn the local language and also assist them to learn the gestures and body language. Handling
Multicultural / Diverse Workforce: Dealing with people from different age, gender, race, ethnicity,
educational background, location, income, parental status, religious beliefs, marital status,
geographical locations, ancestry and work experience can be a challenging task for HR managers.
With this, managing people with different set of ideologies, views, lifestyles and psychology can be
very risky. Effective communication, adaptability, agility and positive attitude of HR managers can
bind the diverse workforce and retain talents in the organization.

Managing Change: Bringing change in organizational processes and procedures, implementing it
and then managing it is one of the biggest concerns of HR managers, as the ideology and mindsets
of employees are affected by change. Business environment is so volatile. Technology keeps
changing every now and then. All thanks to globalization. Upgrading the existing technology and
training people for them is a real headache for HR department. The success rate of technology
change depends how well HR Department can handle the change and manage people issues in the
process.
Retaining the Talents: Globalization has given freedom to working professionals to work
anywhere in the world. Now that they have endless lucrative opportunities to work, hiring and
retaining the best industry talent is no joke. Maintaining harmonious relations with them, providing
excellent work environment and offering more remuneration and perks than your competitors can
retain and motivate them.
Conflict Management: HR managers may it be domestic or global HRM should know how to
handle employee-employer and employee-employee conflicts without hurting their feelings.
Although it is almost impossible to avoid conflicts among people still handling them tactfully can
help HR managers to resolve the issues. They should be able to listen to each party, decide and
communicate to them in a convincing manner in order to avoid future conflicts. Managing
Attrition: Attrition has become a major global challenge for companies like the IT major, Infosys
that has seen unprecedented attrition among its employees in recent months. The situation has
deteriorated to the extent that the company is having to address investor and analyst queries about
this issue and has had to come up with a plan to tackle the same. The point here is that attrition in
well-known companies affects their brand value and their brand image and considering the fact that
companies like Microsoft and Unilever as well as P&G are respected globally for their HR
practices, attrition in these companies dents the carefully crafted image of being people friendly.
Functional Organization 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.

Product Organizational Structure
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.

Geographic Organizational Structure
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.
Matrix Organizational Structure
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.
Objectives of IHRM
1. It enhances to develop managerial skills, organisational knowledge and technical abilities of HR

managers and employees;
2. To develop more and better handle of global business operations;
3. To manage and secure the performance, compensation and career path of employees;
4. To manage and organise cross cultural counselling and language training programme;
5. To develop more feasible understanding of work practices at global levels;
6. To raise and develop better and new performance management of human resources;
7. To get more and more opportunities within global HR scenario;
8. To develop better and competitive HR strategies in global competitive scenario;
9. To reduce the cultural differences as amicable for cultural environment.


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GODAVARI’S FOUNDATION

GODAVARI INSTITUTE OF MANAGEMENT AND RESEARCH,

406 C- INTERNATIONAL HUMAN RESOURCE MANAGEMENT

Dr. ANUBHUTI P. SHINDE

International Human Resource Management (IHRM)

Essentially, IHRM concerns the global understanding or management of HR activities within an

Strategic or cross-cultural IHRM: managing HR practices within any organisation from an

406C International Human Resource Management

IHRM vs. HRM

406C International Human Resource Management

Recruiting from other countries.

Communicating well overseas.

MAJOR CHALLENGES IN GLOBAL HRM

406C International Human Resource Management

Functional Organization Structure

406C International Human Resource Management

406C International Human Resource Management

Matrix Organizational Structure

1. It enhances to develop managerial skills, organisational knowledge and technical abilities of HR

406C International Human Resource Management

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