What is IHRM?
corporation, While balancing the integration and differentiation of HR activities in foreign locations.
Managerial Responses
Developing a global mindset More weighting on informal control mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments
Encompasses more functions, More heterogeneous functions, Involves constantly changing perspectives, Requires more involvement in employees personal lives, Influenced by more external sources Involves a greater level of risk than typical domestic HRM.
TRENDS
Integration of the worlds economies and business globalization continues unabated International trade is growing more rapidly than world output Foreign direct investment (FDI) flows are increasing The number of cross-border, inter-firm agreements has risen dramatically Social, economic, and political developments throughout the world changed the way global business is conducted
contd.
The external environment greatly influences HRM activities Each country has its own:
Laws
Business customs
Workforce characteristics Political climate The most difficult challenge to overcome is the
people challenge
Issues in IHRM
Managing international assignments Employee and family adjustment Selecting the right person for a foreign assignment Culture, communication and gauge Language and communication
Clarifying taxation issues Coordinating foreign currencies, exchange rates Compensation plans Working directly with the families of employees More involvement in employees personal life, facility etc. Different HR systems for different geographic locations More complex external constituencies, foreign Governments, political and religious groups Heightened exposure to risks such as health, terrorism, legal issues, human and financial consequences of mistakes
Variations Perception of HR Attitude and actions of headquarters towards HR Resistance to change Cultural differences in learning and teaching styles
High failure rates of 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 identify capable people who are able to function effectively Barriers to women in IHRM International ethics Language (e.g. spoken, written, body)
contd.
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. sacred objects, prayer, taboos, holidays, etc Educational level attained Social organizations e.g. social institutions, authority structures, interest groups, status systems
Individualism versus collectivism Power distance Avoidance of uncertainty Masculinity Long-term versus short-term orientation
Fit is the degree to which HRM policies are congruent with the: Strategic plan of the organization Work-related values of the foreign culture Internal fit: making sure HRM policies facilitate the: work values and motivation of employees External fit: the degree to which HRM matches the: context in which the organization is operating
Discrepancies in International compensation: The discrepancies most cited are listed in the order of how often they were mentioned as being major problems:
Base Salary
Overseas Premiums Housing Allowances Education Allowances Cost of Living Allowances Tax Equalization Repatriation Allowances Performance Based Incentive
The biggest HR challenge facing any globally oriented corporation is finding competent managers An expatriate manager (PCN) comes from the corporations home nation Relocation can be troublesome, regardless of the managers country of origin The challenge is to capitalize on the diversity of a global workforce without suppressing cultural heritage
Managing the expatriates adjustment process is a primary focus of GHRM The difficulty of this task has increased because sales and production shifted closer to markets There is higher use of host country and third country management There is a concurrent increase in the number of inpats Both inpats and expats can have a difficult time adapting to their new surroundings
contd.
Regulations regarding employment discrimination vary from country to country Ethical dilemmas between profits and the preservation of basic human rights may also exist Resolving ethical issues is not an easy task
in HRM policies
contd.
There is no simple solution to the labor relations problems with which MNCs and GCs are confronted
Labor has been trying to establish global labor
organizations