International Human

Resource Management
A presentation by
Mr. Indranil Mutsuddi

What is IHRM?

IHRM is the process of employing and developing people

in the international organizations.

It involves managing human resources working across

national boundaries

It involves formulating & implementing activities

concerned with the Resourcing, Development , Career
management and Remuneration strategies, policies and
practices which can be applied to an international
workforce.

Some Important Terms used in IHRM

PCNs

or Parent Country Nationals

HCNs or Host Country Nationals
TCNs or Third Country Nationals
Expatriates
Repatriates

What is an expatriate?

An employee who is working and temporarily residing in

a foreign country

Some firms prefer to use the term international

assignees

Expatriates are PCNs from the parent country

operations, TCNs transferred to either HQ or another
subsidiary, and HCNs transferred into the parent country

Figure : International assignments create expatriates

Figure: Expatriation includes repatriation

Figure The repatriation process

Differences between domestic and

international HRM
More

HR activities
The need for a broader perspective
More involvement in employees personal
lives
Changes in emphasis as the workforce
mix of expatriates and locals varies
Risk exposure
Broader external influences

More HR activities
International

taxation
International relocation and orientation
Administrative services for expatriates
Host-government relations
Language translation service

The need for a broader perspective

Face

problems of designing and

administering programs for more than one
national group of employees, need to take
a broader view of issues.

Figure 1: Inter-relationships between approaches in the field

Figure : A model of IHRM

Challenges of IHRM

Managing the complexity involving Workforce Mix

Managing Diversity
Managing people globally & maintaining effective
communications at the organizational level.
Resourcing International Operations with people with the
right caliber & talent.
Preparing executives for foreign assignments
Support & training for expatriates.
More involvement with the personal lives & the well
being of the employees.

International HR activities

Human resource planning at International Level

International Resourcing activity:

Recruitment
Selection
Placement

International Training and development

International HR activities

International
Compensation
(remuneration)
and benefits

Industrial
relations at the
International
level
Figure : Stages of
internationalization

Figure : Linking operation mode and HRM

Figure : Variables that moderate differences between domestic and

international HRM

Figure : Factors influencing the global work environment

Impacts on multinational
management in HR activities
Need

for flexibility
Local responsiveness
Knowledge sharing
Transfer of competence

Managerial responses
Developing

a global mindset
More weighting on informal control
mechanisms
Fostering horizontal communication
Using cross-border and virtual teams
Using international assignments

Types of IHR Staffing Policy

Ethnocentric

Polycentric

Geocentric

Key management
positions filled by
parent-country
nationals

Host-country
nationals manage
subsidiaries,
parent company
nationals hold key
Headquarter
positions

Seek best
people, regardless
of nationality

Ethnocentric Approach
Strategic

decisions are made at

headquarters
Limited subsidiary autonomy
Key positions in domestic and foreign
operations are held by headquarters
personnel; PCNs manage subsidiaries

Polycentric Approach
Each

subsidiary is a distinct national entity

with some decision-making autonomy
HCNs manage subsidiaries who are
seldom promoted to HQ positions
PCNs rarely transferred to subsidiary
positions

Geocentric Approach
A global

approach - worldwide integration

View that each part of the organization
makes a unique contribution
Nationality ignored in favour of ability:
Best

person for the job

Colour of passport does not matter when it
comes to rewards, promotion and development

Regiocentric Approach
Reflects

a regional strategy and structure

Regional autonomy in decision making
Staff move within the designated region,
rather than globally
Staff

transfers between regions are rare

Figure: Determinants of IHRM approaches and activities

Figure: The linkage between culture and behaviour

Figure: The phases of cultural adjustment

Retaining local staff

The

paradox expense of cheap labour

Poaching of key subsidiary staff
Access to skilled labour as important as
unit cost (eg. attraction of India for the IT
industry)
The amount and quality of training is an
important consideration

Developing staff
Investing

in human capital
Providing training and career development
can assist in retaining good local staff
A fair environment and good management
practices play an important role in
countries such as China

Retrenching staff
The

reverse of the employment coin

Strategic decisions regarding foreign
operations have HR implications, including
retrenchment
Not confined to subsidiary operations but
may affect home base - eg. transferring
call centres from UK and US to India

HR implications of language
standardization
Adopting

a common corporate language

puts pressure on employees to become
competent in the corporate language
Affects
Promotion
Ability

to attend corporate programs and

meetings
Availability for international assignments

HRs role
Drawing

up and reviewing codes of conduct

Conducting a cost-benefit analysis to justify an
expatriate as a monitor
Championing local operators as monitors
Being a member of the team who conducts
periodic checking visits
Overseeing external monitors and auditors where
used
Checking rewards and performance systems take
compliance into consideration

Figure: A model of strategic HRM in multinational enterprises