SHRM & GHRM

Introduction to SHRM
SHRM= Strategic + Human Resource Management
Strategic: means devising a comprehensive decision plans that sets critical
direction for an organization and guides the allocation of resources.

HRM: means an integrated strategy and planned development process for

effective utilization of Human Resources for the achievement of
organizational mission and objectives.

According to Wright and Mcmahan,

SHRM is the pattern of planned human resources actions and deployments
intended to enable the firm to achieve its goals.

Strategic Role of HRM

SHRM

ADMINISTRATIVE
EXPERT

STRATEGIC PARTNER
CHANGE AGENT
HRs Role in Formulating
Strategy
HRs

in

Executing

Strategy
HR & Technology

Help in creating

learning orgn

EMPLOYEE
CHAMPION

Traditional versus Strategic HRM

Traditional Human Resource
Management

Strategic Human Resource

Management

It aims at developing functional It aims to develop overall strategic

competencies pertaining to HR Aspects
competencies of the organization from HR
Aspects.
HRM is reactive in nature & follows the SHRM is proactive in nature & it sets the
trends in the market.
trends in the market.
HRM focus on operational level outcome.

SHRM focus in Business level outcomes.

Managing Human is primary objective.

Gaining Competitive Advantage is primary

objective.

HR Manager function at relatively lower Strategic HR Manager operates at the

levels of the organization.
higher level of management.
HRM merely accomplish the HR goals & In SHRM, HR strategies and Business
targets set by Business Strategy.
Strategies effectively supplement each
others in their formulation.

Domestic HRM V/s International HRM

Domestic HRM

International HRM

Routine work pattern.

Need more attention on adjustment matters

and work ethics.

No Administrative support required.

Require for visa, driving license, banking, etc

Communication is normal.

Different media and peoples used.

Employees are within 1 national Employees are from various countries.

boundary.
Not
much
compensation.

differences

Organization do not normally care

about children & family members.

in Compensation will be designed based on

taxation matters & parity of emoluments in
orgn.
HR Department will bother about housing,
entertainment, communication of foreign
nationals.

Global / International HRM

International human resource management is a process of procuring, developing,

compensating and retaining people in organizations operating beyond national
boundaries at the global level.

2 Basic Objectives of Global HRM:

To integrate HR Policies & Practices across a number of subsidiaries in different

countries,
To make HRM Practices sufficiently flexible to accommodate different business and
cultural settings.

According to Morgan:
International HRM is the interplay among these 3 dimensions Human Resource
Activities, types of employees, and countries of operation.

Features Of Global HRM

IHRM involves employment of the right people at the right positions,

irrespective of geographic locations.

It requires the development of a diversified range of skills for employees.
It requires the creation of centralized reporting relationships around the world

for faster information sharing.

It requires the development of a well-organized evaluation system to assess the
performance of employees across different locations and nations.

It is essential to maintain good communication among all the parts and people
of the organization at the global level.

Objectives of Global HRM

To reduce the risk of international human resources.

To avoid cultural risk.

To manage diversifies human capital.
Remaining competitive throughout the world.
Capable of transferring learning across globally dispersed units.

Needs/ Reasons for Global HRM

Rapid Growth of Internationalization and Global Competition
Need of Effective Management
Strategic Alliances, Cross Border Mergers & Acquisitions are increasing
Need of Effective Management
Developing different Organizational Culture

Challenges/Barriers Facing IHRM

Management of cultural diversity

Management of the complexity of the workforce

Management of communication channels

Management of divergent economic systems

Management of legal and industrial relations issues

Difference Between Domestic HRM &

Global HRM
1. Encompasses More Functions
2. More Heterogeneous Functions: have to deal with issues like:
International Taxation: expatriate have home country & host country
liability.
International Relocation & Orientation
Various other Administrative services for Expatriates
Maintaining & Managing Host-Government relations in a number of
countries around the world

3. Involves constantly changing perspective: in America providing

Family Insurance is compulsory, Family means spouse & Children.
But in India it include spouse, parents & Children.

4. Requires more involvement in employees personal lives

5. Influence by more external factors
6. Involves of Greater level of risk than typical Domestic HRM:
Human & financial consequences of failure in the international arena are
more severe than in domestic business.
EXAMPLES:

Expatriate Failure: Premature return from assignment means additional cost.

Direct cost: Salary, Training Expenditure, traveling & relocation expenses.

Indirect Cost: Poor International Customer Relationships.

Why Go International?

Profit Advantages
Growth Opportunities
Domestic Market Constraints
Competition
Government Policies & Regulations

How Inter-Country Differences Affect HRM?

Companies which operates in only one country they will feel less problems.

Cultural
Factors

Economic
Systems

International
Human Resource
Management

Legal and Industrial

Relations Factors

 Culture Factors: it differ from many dimensions.

Ex: 1 survey shows how it differs??
U.S. Managers tended to be most concerned with getting the job done.
Chinese Managers were most concerned with maintaining a harmonious

environment.

A classical Study done by Professor Geert identified culture

differences and it is based on power distance.
EX: In Mexico Power Distance will be high & In Germany it is low.
Such cultural differences influence HR policies & Practices.
Ex: in countries with a history of autocratic rule, employees often had a divulge
information about their coworkers. Here, whistleblower rules, popular in
America, are frowned upon.

International HRM Practices

International Human Resource Planning

While estimating the supply of labor with requisite skills,
international companies should consider both their own
internal sources and the local and international labour markets.
Retention and utilization of universal talents are also essential

in IHRM.

International Recruitment
International HR managers must identify the global competitiveness of the
potential applicants at the time of the recruiting process.
International HR managers must keep international knowledge and
experience as criteria in the recruitment and selection process.
International HR department must have a fairly good idea about the skills

and availability of human resources in different labour markets in the world.

International HR department must have a fairly good idea about the skills
and availability of human resources in different labour markets in the world.

Staffing the Global Organization

International staffing: Home or local?
Expatriates (expats): Noncitizens of the countries in which
they are working.
Home-country nationals: Citizens of the country in which the
multinational company has its headquarter.
Third-country nationals: Citizens of a country other than the
parent or the host country.

Approaches / Policies to recruitment in IHRM

Ethnocentric approach
Polycentric approach
Geocentric approach

Ethnocentric approach
When an international company follows the strategy of choosing only from the
nationals of the parent country, it is called an ethnocentric approach.
The general rationale behind the ethnocentric approach is that the staff from
the parent country would represent the interests of the headquarters
effectively and link well with the parent country.
Advantages:
1.

Candidates for overseas positions may be better known at headquarters.

2.

Allows for relatively rapid employee selection.

3.

Provides global experience for home country managers.

4.

Support Centralized decision making.

Polycentric approach

When a company adopts the strategy of limiting recruitment to the nationals of the
host country, it is called a polycentric approach.

The purpose of adopting this approach is to reduce the cost of foreign operations
gradually.

The companies that adopt this method normally have a localized HR department,
which manages the human resources of the company in that country.

Advantages:
1.

Provide knowledge of PESTEL for different country and reduce the training &

development cost, May create local career options for host country nationals.
Disadvantages:
1. Increase coordination cost, Home country nationals will be having less opportunities

for overseas assignments.

Geocentric approach
When a company adopts the strategy of recruiting the most suitable persons for the
positions available in it, irrespective of their nationality, it is called a geocentric
approach.
Advantages:
1. Creates greater career options at home & abroad for all employees.

2. Increases applicant pools and support company which really wanted to go global.

Disadvantages:

1.

Increase recruitment & coordination cost & employee adjustment problems also.

2.

May cause firms to experience local resistance to bringing in outside managers.

3.

More cost In handling employees personal issues.

International selection
The selection criteria for international jobs usually revolves around the five core

areas of behaviour, attitudes, skills, motivation and personality.

The focus of selection for international operations normally includes cultural
adaptability, strong communication skills, technical competence, professional

expertise, global experience, interpersonal skills, language skills and family

flexibility.

Expatriates
From Ancient Times, Businesses have been sending members of their own
groups to other parts of the mind.
All of these people can be sub named under the generic term Expatriate
Expatriate Means Individuals who go overseas to accomplish a job-related
goal.

Who can be Expatriates???

An employee who is working & temporarily residing in a foreign country.
Expatriates are:

Employees from Parent Country.

Host Country Nationals
TCNs

Staffing the Global Organization

(contd)
Inability of Spouse
to Adjust

Personality

Personal
Intentions

Why Expatriate
Assignments
Fail

Lack of
Cultural Skills

Family
Pressures

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Inability to Cope
with Overseas
Responsibilities

2009 Dorling Kindersley (I) Pvt. Ltd. All

rights reserved.

International Training and Development

International companies usually aim at standardizing business and HR practices
across the world through necessary employee training and development

programmes.
IHRM can provide training to expatriate employees in three stages.
TYPES OF TRAINING & DEVELOPMENT INTIATIVES FOR INTERNATIONAL HRM

Pre-move training- This refers to training the employees who are selected
for foreign assignments.

Cultural Briefing
Assignment Briefing
Shipping Requirement

 Continual training- Continuous training to the expatriates even after

they have joined duty in the foreign country.

Repatriation training- Refers to a brief training provided to

expatriates when they are ready to return to their home country.

IMPORTANCE OF ORIENTATION:
Promotes a feeling of Belongingness
Provides Company information to new employees

Introduces new workers

Avoids cost of replacing

International compensation Definition

International compensation is the provision of monetary and non-monetary
rewards including base salary, benefits, and perquisites, long- and short-term
incentives, valued by employees in accordance with their relative contribution
to MNC performance

-Anne-Wil Harzing and J. van Ruysseveldt

Salary of Expatriate usually begins at the home-based one. But other factors
which also operate when decision has to be taken for how much to pay to
Expatriates?
Reason for the Assignment
Nationality of expatriates and developing countries to which they are sent
Duration of Assignment

Objectives for the compensation policy of global concerns are

Attracting and retaining employees who are qualified for overseas service.
Ensuring a consistent relationship between the compensation of employees of
all affiliates, both at home and abroad.
Should facilitate the transfer of international employees in the most cost

effective manners for the firm.

It should be consistent & fair in its treatment (Equity Element).
Should be consistent with overall strategy, structure and business needs of

multinationals.

International compensation approaches

Balance sheet approach
Going rate approach

1. Balance Sheet Approach:

The basis of this approach is that the expatriates pay must equalize the
purchasing power across countries and they continue to enjoy the same

standard of living they would have enjoyed in their parent nation..

In this approach, the company compares four groups of expenses (income
taxes, housing, goods and services and discretionary expenses) between the
home country and the host country and compensates the expatriates if they
are adversely affected by the differences in these expenses.
The employer then pays any differences such as additional income taxes or
housing expenses.

TABLE 172

The Balance Sheet Approach (Assumes Base Salary of $80,000)

Annual Expense
Housing & utilities

Chicago, U.S.

Brussels, Belgium
(U.S.$ Equivalent)

Allowance

$35,000

$67,600

$32,600

6,000

9,500

3,500

Taxes

22,400

56,000

33,600

Discretionary income

10,000

10,000

$73,400

$143,100

$69,700

Goods & services

Total

Source: Joseph Martocchio, Strategic Compensation: A

Human Resource Management Approach, 2nd edition (Upper
Saddle River, NJ: Prentice Hall, 2001), Table 12-15, p.
294.
2009

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rights reserved.

2. Going rate approach

When the compensation packages of the expatriates are determined on the

basis of the salary structure prevailing in the host nation, it is called the going
rate approach.

Typically, the salary in this method is decided on the basis of the survey
undertaken in the host country where the business is located.

Base Pay and benefits may be supplemented by additional payments for lowpay countries.

International Employee Benefits

Many international companies usually adopt the Best-of-Both-Worlds

benefits model.

Under this model, an expatriate employee is given home-country benefits

coverage. However, if any benefit is not available in the home-country

plan, he or she may join the host-country plan.

International Performance Evaluation

International performance evaluation primarily aims at evaluating the
expatriates and foreign employees of third countries and the host country.
Besides evaluating the general performance, it should asses the ability of
expatriates to manage a workforce with sharp cultural differences.
Understand the complexities of international business.

3 Key Issues are to be identified for PA in IHRM

Specifying Performance Criteria
Identifying the Appraisers
Deciding on the Frequency of Appraisal

International Employee Safety & Health

Employee safety and healthcare facilities in plants often differ from one
country to another in their state of condition and modernization, depending
upon local laws and regulations.

The multinational companies may either follow local laws in providing health
and safety facilities or adopt consistent health and safety policies across all
locations without violating the prevailing laws.

Repatriation
Returning home may evoke mixed feelings on the part of the expatriate and the
family. At worst, reverse culture shock may emerge.
The most Professional issue is finding a proper place in the corporate hierarchy.
If no provision has been made, a returning manager may be caught in holding
for an intolerable length of time.
Additional Planning for Housing & Accommodation facility.
Thus Planning for Repatriation is necessary.

Repatriation Problems
A) General Cultural Readjustment:
Lifestyle has been changed as they live in host country which is having different
lifestyle.

They might be problem for children schooling also.

There may be unexpected financial pressures as salaries revert to domestic levels
and allowances disappear.

B) Job Readjustment:
Employees performance are often ordinary as it give secondary importance.

High performer will perform at home and occupy the best job, thus limiting the
positions available to returning expatriate.
Opportunity are less as orgn want that expatriate start their role from the position
he hold before going to international assignment.

Authority & responsibility problems at domestic level.

C) Financial & Psychological Shock:

D) Lack of Career Development: The problem of Brain-Drain arise.
This loss was multiplied when others saw that international assignments
might be risky for ones long-term career, and they became unwilling to go.

E) Extended Family Concern:

Solutions to Repatriation Problems

Organizational Strategies for Effective Repatriation: Company can
leverage technology. They can send periodic E-Mails about changes & Career
Opportunities, having a special website that can help companies remain in
constant touch with expatriates.

Linking overseas Assignments to career plans: overseas assignments

must be linked to long-term career plans so length & flexibility of time period
will increase.

Support & Coping: Apart from job, social & emotional support, support
should be provided to expatriate & their family.
Company should talk with those expatriate who have successfully transit to
home country to understand problems encounter by them.
Recorded videos can be shown to expatriate in understanding others.