International Human Resource

Management
MGMT414
Assoc. Prof. Dr. Cem Tanova
1. Bic pens are 1. French, Bic;

2. Godiva chocolate is 2. American, Campbell Soup;

3. Algida’s owner is 3. Anglo-Dutch, Unilever

4. Haagen-Dazs ice cream is made 4. British, Grand Metropolitan;

by a(n) company

5. Firestone (Bridgestone) tires 5. Japanese, Bridgestone Corp;

are
6. RCA televisions are made by 6. French, Thompson;
a(n) company

7. Atari Video games are 7. American, Atari Corp;

8. Jaguar cars made by a(n) 8. American, Ford Motor Co.;

company
9. Holiday Inns are owned by 9. British, Bass;

10. The parent company of Braun 10. American, Gillette Co.;

household products is
 Introduction to International Human
Resource Management
• How the world is changing,
• Importance of globalization,
• IHRM as a key factor in the success of
international business.
• An overview of domestic HRM and discussion
on what is different in IHRM.
 Questions to consider
• What are the key elements of “best practice”
in HRM?
• Can the best practices be applied on a global
level?
• To what extent are the principles of managing
people universal and to what extent culture
specific?
• Inter-cultural or International? What is the
difference? (Our focus will be international)
Motivations and Perspectives Shaped by Administrative Heritage
Inter War Period

- National market differences

- Transport/communication barriers
- Rising protectionism
* Internationalize through rationally differentiated and responsive strategies
- European MNC expansion

Immediate Post-War period

- Post-war reconstruction
- Transfer of new technologies
- Leverage management skills
* Internationalize through transfer of technological and managerial innovations
- American MNC expansion

Mid 1960s to late 1970s

- Falling trade barrier

- Homeogeniziing markets
- Improved transport, communications
* Internationalize by capturing global scale advantages and global competitive games
Irwin/McGraw-Hill
- Japanese MNC expansion
 STRATEGIC PERSPECTIVES IN MNCs

AN EVOLVING MANAGEMENT MENTALITY

• “ INTERNATIONAL” PERSPECTIVE
- DOMESTIC COMPANIES WITH FOREIGN APPENDAGES
- OPPORTUNISTIC APPROACH TO FDI
- PORTFOLIO APPROACH TO MANAGEMENT OF FOREIGN OPERATIONS

• “ MULTI-NATIONAL” PERSPECTIVE
- INCREASED REALIZATION OF IMPORTANCE OF INTERNATIONAL MARKETS
- MANAGE OVERSEAS OPERATIONS AS A FEDERATION OF INDEPENDENT COMPANIES

• “ GLOBAL” PERSPECTIVE
- GROWING CONCERN ABOUT INTERNATIONAL COMPETITION AND INEFFICIENCIES
OF MULTI-NATIONAL RESPONSE
- DRIVE FOR COST COMPETITIVENESS THROUGH PRODUCT STANDARDIZATION AND
ORGANIZATIONAL CENTRALIZATION
- MANAGE WORLWIDE OPERATIONS AS SINGLE ENTITY

• “ TRANS-NATIONAL” PERSPECTIVE
- NEED TO RESPOND TO HOST COUNTRY PRESSURES AND GLOBAL COMPETITIVE
DEMAND SIMULTANEOUSLY
- MANAGEMENT CHALLENGE TO COORDINATE RESPONSIVE NATIONAL UNIT IN A
Irwin/McGraw-Hill
GLOBALLY EFFICIENT SYSTEM
 Strategies of international, multinational,
global & transnational organizations
• International company – transports its business
outside home country; each of its operations is a
replication of the company's domestic experience;
structured geographically; and involves subsidiary
general managers
• Companies offering multiple products often find it
challenging to remain organized e.g. need to have a
common information systems for accounting,
financial and management controls, and marketing.
Most evolve to become multinational companies

Copyright 2003-2006, Chris Chan 8

 Strategies of international, multinational,
global & transnational organizations
• Multinational company – grows and defines its
business on a worldwide basis, but continues to
allocate its resources among national or regional
areas to maximize the total.

Copyright 2003-2006, Chris Chan 9

 Strategies of international, multinational,
global & transnational organizations
• Global organizations – treat the entire world
as though it were one large country; may be
the entire company or one or more of its
product lines; may operate with a mixture of
two or more organizational structure
simultaneously.

Copyright 2003-2006, Chris Chan 10

 Strategies of international, multinational,
global & transnational organizations
• Transnational organization - Use specialized
facilities to permit local responsiveness; more
complex coordination mechanism to provide
global integration

Copyright 2003-2006, Chris Chan 11

Global efficiency and local responsiveness of
different types of firms

High

Global Global Transnational

efficiency
International Multinational
Low Local responsiveness High

Copyright 2003-2006, Chris Chan 12

 Evolving Motivations: Changing Perspectives

High
Global Trans-
National

Global
Coordination
Integration

Multi-
International
Low National

Low High
National differentiation,
Irwin/McGraw-Hill Responsiveness
 MNC’s STRATEGIC AND ORGANIZATIONAL TASK: DEVELOPING
MULTIPLE CAPABILITIES
NEED FOR GLOBAL
COORDINATION,
INTEGRATION TOYOTA

- DRIVEN BY SCALE
AND
TECHNOLOGY
- REINFORCED BY
GLOBAL
COMPETITION G.M
FIAT

- DRIVEN BY SCOPE NEED FOR NATIONAL

AND MARKETS DIFFERENTIATION,
RESPONSIVENESS
- REINFORCED BY
Irwin/McGraw-Hill GOVERNMENTS
 Key Trends
• 63,000 transnational companies account for
more than half (2/3) of world trade.
• The top 100 companies account for 14% of
worldwide sales, 12% of assets, and 13% of
employment.
• Physical location of value creation is very
difficult to determine.
• Much of the force of globalisation comes
through mergers and acquisitions.
 Impact of globalisation on the nature
of work
• Outsourcing to low labor countries
– First manufacturing, then processing services, now
white collar work.
 Questions for HR professionals
• Do we have a strategy for becoming an international firm?
• What type of managers will we need to be successful?
• How can I find out about the way that HRM is conducted in
other countries (laws, trade unions, labor market).
• What will be the impact of cultural norms on our HR
policies.
• How will we choose whether to send expatriates or use
local employees.
• How do we move people to different locations
• How do we manage transfer of knowledge across borders
 Parent-country Nationals
Advantages
 Control and co-ordination by
HQ is maintained.
 Promising managers get
international experience.
 PCNs may be the best
people for the job.
 Assurance that the
subsidiary will comply with
company objectives
policies etc.
Disadvantages
 HCNs promotion
opportunities are limited.
 Adaptation to host country
may take a long time.
 PCNs may impose an
inappropriate HQ style.
 Compensation differences
between PCNs and HCNs
may cause problems.
 Host-country Nationals
Advantages
• No problems with
language and culture.
• Reduced hiring costs.
• No work permits required.
• Continuity of management
improves since HCNs stay
longer in positions.
• Govt. policy may force
hiring of HCNs.
• Promotional opportunities
not limited - so higher
morale among HCNs.
Disadvantages
• HQ may have less control
over operations.
• HCNs may still have
limited career
opportunities outside the
subsidiary.
• Hiring HCNs limits
opportunities for PCNs to
gain overseas experience.
• Hiring HCNs may
encourage a federation of
disintegrated national
units rather than one
integrated global unit.
 Third-country Nationals
Disadvantages
• Transfers must
Advantages
consider national
• Salary and animosities.
compensation may be • Host government
lower than for PCNs. may resent TCNs as
• May be more familiar much as PCNs.
with host country than • TCNs may not comply
the PCNs. with HQ style of
management.
• TCNs may not want to
return after
assignment.
 International Recruitment and
Selection

• A selection program for international assignments

involves assessing prospective candidates on certain
criteria thought to be associated with assignment
effectiveness.
• In order to have a successful selection program there
needs to be a broad range of prospective candidates
from which to choose criteria of effectiveness and
valid procedures for assessing candidates on them.
• empathy ability to handle alcohol
• curiosity
flexibility
positive regard for others
• patience acceptability of assignment
• openness desire to be abroad
• non ethnocentrism
reliability
high motivation
• confidence courtesy
• emotional stability adaptability
tolerance for ambiguity
• communication skills
language skills
• tolerance for differences interest in host culture
• humor
• resourcefulness
• sensitivity
• teaching skills
 International Training and
Development
• Empirical literature give guarded support to the proposition
that cross cultural training has a positive impact on cross
cultural effectiveness.
• Cultural awareness training is not just for the employee
going overseas. It has numerous applications domestically
that will increase organizational effectiveness. Findings
indicate that it should be a regular part of personnel training
especially management development. The realities of a
more pluralistic society and international business make this
a necessity.
International Training and
Development
Area studies programs 
Culture assimilator programs 
Language training programs 
Sensitivity training programs
Field experience programs
 International Compensation
• If compensation is high then problems may
be encountered on return to head office.
• If compensation is not adequate then there
may be no incentive to go for the
international assignment given the
hardships that are usually involved in doing
so.
International Compensation

Expatriation Premium
Cost of Living Allowance  
Swamp Pay Allowance
Shelter Allowance
Educational Allowance
Home Leave
 Repatriation
• Virtually all repatriated personnel experienced
some personal difficulty in reintegrating on
return home. The main complaints were loss
of status loss of autonomy lack of recognition
of the value of the experience and lack of
career direction.
 Repatriation: Reverse Culture-
shock
JOB RELATED FACTORS
• “Out of sight out of mind”
• International experience
devalued
• Loss of status and pay relatively
peaking
• Changes in the HQ
SOCIAL FACTORS
• Expat assignment - different type
of social interaction (going from
a very close expat community to
where everyone is very busy
with their own lives)
• Problems of spouse returning to
the workforce
• Lack of peer support for
teenagers