International Human Resource Management

UNIT-I
IHRM- Introduction, differences between domestic and international Human Resource
approaches of International Human Resource Management, Challenges in international labour
market, Linking HR strategies to international expansion strategies, multiculturalism: nature of
culture, cultural dimensions, managing across cultures: strategies, cross cultural differences
and similarities.

❖ INTRODUCTION: -
International human resource management is the process of employing, training and
developing and compensating the employees in international and global organizations. An
international company is one which has subsidiaries outside the home-county which rely on
the business expertise or manufacturing capabilities of the parent company. Generally, an
MNC is considered to have a number of businesses in different countries but managed as a
whole from the headquarters, located in one country.

According to Pigors and Myers, “International or domestic human resource management is a

method of developing the potentialities of employees, so that they get maximum out of their
work and give best efforts to the business organization”.

In the words of Edwin B. Flippo, “International or domestic HRM involves the planning,
organizing, directing and controlling of the procurement, development, compensation,
integration and maintenance of people for the purpose of contributing to organizational,
individual and social goals.”

1. It enhances to develop managerial skills, organizational 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 organize cross cultural counseling and language training programme;

❖ Difference between Domestic and International HRM

It emerges that international HRM practices have to be different from those of domestic
HRM. It is characterized by more and varied HR activities, need for broader perspective,
more involvement in employees’ personal lives, high emphasis on change in employee
mix, high risk exposure, and more external influences. Let us go through the discussion
of these characteristics and identify how international HRM differs from domestic HRM.

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1.More and Varied HR Activities: -

As compared to domestic HRM, in international HRM, there are more and varied HR
activities. In international HRM, the volume of the same HR activities which are relevant
for domestic HRM too increases because these activities have to be performed in a
different context.

For example, when employee is chosen for an international assignment, he needs

additional training which would enable him to adjust in the new environment. This
training will be in addition to training meant for skill development for performing the
job effectively.

2. Need for Broader Perspective:

As compared to domestic HRM, international HRM requires much wider perspective in
respect of almost all HR activities. It implies that HR managers have to consider a
variety of factors in making decisions on any issue of international HRM. Many of these
factors are not relevant in the case of domestic HRM.

For example, while fixing international compensation packages, HR managers have to

take into account the cost of living of different international locations to bring some kind
of parity among employees working at different locations. Similarly, fringe benefits have
to be provided to suit conditions of different locations.

3. More Involvement in Employees’ Personal Lives:

As compared to domestic HRM, HR managers are required to have more involvement in
employees’ personal lives in the case international HRM. This higher level of
involvement is required to ensure that the employees are suitably placed in an
international location with which they are not well familiar. This lack of familiarity may
be on a number of factors like housing, health care practices, meeting of legal
requirements of host country, etc.

4. High Emphasis on Change in Employee Mix:

In international HRM, high emphasis is placed on change in employee mix particularly
in terms of nationality of employees. Very often, it happens that when an organization
establishes a business in a foreign country, it recruits more number of employees from
the country of its origin.

However, in order to have a favourable image in the country of its operations, it recruits
and develops local (host country) personnel. As a result, over the period of time, the
proportion of local employees becomes sizeable. This strategy is adopted by most of the
multinationals. This process is taken on gradual basis.

5. High Risk Exposure:

There is high risk exposure in international HRM as compared to domestic HRM. The
risk involved may be of different types (political, regulatory, etc.) in an international
business. However, HR-related risk may be in the form of lack of suitable HR practices
meeting local requirements, social-cultural risk in the form of non-acceptance of parent
country nationals as employees, etc.

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6. More External Influences:
A maxim of managing a business is- farther away a business goes, more influences it has
to face. This is true for international HRM too. As compared to domestic HRM,
international HRM activities are influenced by a variety of external factors. HR
managers are required to deal with a new set of socio-cultural milieus, political and legal
system, etc.

Not only they have to change their mind set to work in this new set but they have to train
the employees to adjust with the new set. In fact, effectiveness of HR depends to a very
great extent on the degree of such an adjustment.

❖ Challenges in International Labour Market

1. Staff shortages

Businesses worldwide are still grappling with the global staff shortage with

millions of vacancies left unfilled despite high unemployment levels. Although

reasons for the shortage vary between geographies, many cite the changing

expectations of would-be employees following the pandemic, along with country-

specific policy changes.

2. Failed expatriate assignments

According to a recent survey by advisory firm Willis Towers Watson, 31% of multinationals
plan to send staff on international assignments in 2022, meaning international HR teams will
have their work cut out recruiting, onboarding, and supporting new overseas employees.
While this investment offers huge benefits for businesses looking to take advantage of the
global economy, it also comes with significant risk as expatriate failure rates remain high.
Allianz Global has reported on research by INSEAD that indicates failure rates span 10% to
50%, with expats sent to emerging economies experiencing higher rates of failure than those
relocating to developed countries.

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3. Localisation vs. standardisation of HR practices

One of the biggest issues facing multinational corporations is the tension between
standardisation versus localisation. And for HR professionals, this means trying to strike a
balance between promoting global values while recognising the need to adapt certain HR
practices and policies to local markets, cultures, and institutions.

4. Ethical challenges in multinational corporations

Linked to the localisation versus standardisation dilemma, establishing and maintaining one
overarching ethical code across various jurisdictions remains one of the key challenges
of International HRM.
We know organisations with strong ethical track records are viewed as desirable places to
work (and increasingly so by millennial and Gen-Z generations). Promoting a global code of
conduct and set of values is therefore an important strategy to attract and retain talent.

5. The evolution of digital HRM

Digital HR, including digital platforms, tools, and cloud-based technologies, is increasingly
used to automate daily processes and acquire data to create predictive models for better
strategic decision-making.
While there are numerous benefits to the rise of digital HR, including increased productivity
and efficiency, it can also pose several challenges to HR line managers who must engage
with these systems, as well as the workers.

❖ Linking HR strategies to international expansion strategies

The business of HR is an increasingly interesting and often complex environment. The

level of time and resources allocated to the HR function within an organization varies
dramatically. This article explores a few different aspects around the connection between
a company’s Human Resource Management policies and the organizations business
strategy.

An increasing number of studies demonstrate the importance of linking business strategy

with deployment of human resources within an organization. A company’s pool of human

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resources and talent are arguably some of its most valuable assets. A company which
links it HRM with its strategic business plan stands to gain a strong competitive
advantage in the marketplace.

Strategic decision making is about considering both the internal and external factors and
the context around them. The internal factors could be the company’s mission statement,
the organizational structure and whether it is a large multi divisional organization or a
smaller single product company. This would usually impact on how the selection,
appraisal and development of employees is structured. The external factors could be the
political, cultural and economic force which may impact the business.

The human dimension of the Company’s strategy refers to the key subject of employees
and employment relations. This resource represents the potential value of workers for
achieving goals and gaining organizational success. Management of this includes decision
making, implementation and taking actions aimed at employee attitudes and behaviours to
achieve the organizational goals.

Strategic HRM can be very effective in organizations when implemented correctly. It

benefits the organization in several ways. It can be a very useful tool to help identify and
analyse both internal and external threats as well as opportunities. It also helps to provide
a clear business vision and strategy. It is an important influence in the approach to the
recruitment and selection process to get the right people with the right skillset into the
most effective positions to maximise their potential within the organization.

A key component of linking business strategy to HRM is a culture of clear

communication and trust within an organization. When employees are encouraged to
become involved in various aspects of the business strategy it develops higher levels of
trust and respectability between employees and the management team. This trust is built
on the knowledge sharing which allows employees to also share in the vision and goals of
the organisation. The right strategy therefore helps to retain talent and develop highly
competent employees.

The Michigan model is often referred to in discussion around strategic HRM. The model
is based on strategic control, organization structure and people management processes.
While it focuses on reward systems for motivating employees it also concentrates on
managing human resources to achieve strategic goals. Therefore, having the right
structure in place ensures issues are addressed in a timely and effective manner. Most
importantly it gets ‘buy in’ from employees as they feel involved in contributing to the
overall strategic plan of the organisation. This can result in higher levels of productivity
from a high performing workforce.

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❖ Multiculturalism:
Multiculturalism means that people from many cultures (and frequently many countries)
interact regularly. Global firms are repositories of multiculturalism. Not that domestic firms
have only mono Culture’s. Domestic firms too may have employees with different
nationalities. Infosys, for example, has foreigners representing nine per cent of the total
employee strength. Similarly, four per cent of WIPRO's employees are foreigners. Domestic
firms having multiculturalism may be by choice, but it is by design with multinational
enterprises.
A multinational corporation needs to maintain a unified culture that knits all the subsidiaries
together Each subsidiary tends to become a stand-alone unit if a unified culture does not exist.
Unsilver, for example, has decentralised its operations worldwide. To knit together the
decentralised orgamsation, Uniliver worked to build a common organisational culture among
its managers. For years the company hired people of different nationalities, but with similar
values and interests. The idea was to hire people who could easily jell with Uniliver's culture.
It is said that the company has been so Successful at this that Uniliver executives recognise
one another at airports even when they had met only once before Uniliver's senior
management believes that this corps of like-minded people is the reason why its employees
work so well, despite their national and cultural differences.
It is not just corporates which promote multiculturalism. Even nations are active in
promoting such a practice. Canada, for instance, has declared itself as a multicultural society
and to make this point explicit, the government enacted the Multi-culturalism Act of 1988.
Multiculturalism has since sunk deep into the roots of the government, which is reflected in
everything from broadcasting to education policy. It has itself become a basic Canadian value.

❖ NATURE OF CULTURE:
Culture is understood as the customs, beliefs, norms and values that guide the behaviour
of the people in a society and that are passed on from one eneration to the next. This
simple meaning connotes the following core elements of culture:
• Culture has normative value. It prescribes do's and dont's which are binding on
the members of a society.
• Culture is a group phenomenon. Culture applies to the members of a society.
Society's normative values are binding on each member and not vice versa.

• Cultural practices are passed on from generation to generation. Women in Indian

society wear Kumkum on their foreheads because their parents have told them to
do so. The parents did the same because their parents had done so.
There are dominant cultures, sub-cultures, organisational cultures and occupational cultures
(See Fig.

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 FIGURE (Levels of Culture)

Dominant culture is pervasive and extends to the whole of a country. For example,
certain things are auspicious and some others are not so and this belief is shared by all
Indians.
Subcultures exist within the dominant culture. The cultural practices of Punjabis are
different from those obtaining in Karnataka. Interestingly, subcultures subsume into
the dominant culture to present a unified culture, typifying "unity in diversity"
Within the dominant culture is the organisational culture. Every organisation will
have its own distinct culture. The culture Of Tatas, for example, is different from that
of Infosys while that of Infosys is not the same as that of WIPRO.
Each profession carries its own culture and it cuts across dominant cultures. An
accountant, for example, speaks the same language whether he or she is an Indian or
an American. So is the case with a medical practioner or an attorney.

CULTURAL DIMENSIONS
We propose to discuss three cultural models:

Globe Project Team, Hofstede's model and Trompenaar's 7d cultural model.

An understanding of these models equips international managers with the basic

tools necessary to analyse the cultures in which they do business. The three
approaches also provide useful theoretical concepts to help understand the nuances
of different cultures better.

Globe Project
The GLOBE (Global Leadership and Organisational Behaviour Effectiveness)
project team comprises 170 researchers who have collected data over seven
years on cultural values an practices and leadership attributes from 17,000
managers in 62 countries, covering as many as 825 organisations spread across

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the globe. The research team identified nine cultural dimensions that distinguish
one society from another and have important managerial implications:

assertiveness, future orientation, performance orientation, human orientation,

gender differentiation, uncertainty avoidance, power distance,
collectivism/societal, and ingroup collectivism.
Assertiveness
This aspect is defined as the degree to which in individuals in organisations or
societies are expected to be tough, confrontational and competitive versus modest
and tender.

Future Orientation
This dimension refers to the level of importance a society attaches to future-
oriented behaviours such as planning and investing in the future and delaying
immediate gratification.

Performance Orientation
Performance orientation measures the importance of performance and
excellence in society and refers to Whether people are encouraged to strive for
continued improvement and excellence.

Human orientation
Human orientation is understood as the degree to which individuals in
organisations or societies encourage and reward people for being altruistic,
generous, caring and kind to others.

Gender Differentiation
This is understood as the extent to which an organisation or society resorts to role
differentiation and gender discrimination.

Hofstede's Cultural Dimensions

In a discussion on multicultures, reference should be made to the pioneering

work done by the Dutch scientist, Geert Hofstede. he identified four cultural

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 dimensions around which countries have been clustered, with people in each
group exhibiting Identical behaviours. The four dimensions are:
power distance, uncertainty avoidance, Individualism and masculinity.
Hofstede's study preceded the Research Project. But we have. taken the GLOBE
study first because of its comprehensiveness and widespread research base. If
Hofstede focussed on the employees of only IBM, the GLOBE study covered as
many as 825 organisations, picked up from among financial, food processing and
telecommunication Industries. However, the usefulness of Hofstede's study cannot
be undermined.

Power Distance

Power distance is the extent to which less powerful members of institutions and
organisations accept that power is distributed unequally. Countries in which
people blindly obey the orders of superiors have high power distance.
High power distance countries have norms, values and beliefs such as—
• inequality is fundamentally good,
• everyone has a place;
• most people should be dependent on a leader,
• the powerful are entitled to privileges, and
• the powerful should not hide their power.

The dimension of power distance can be measured in a number of ways. For example,
the basic motivational assumption in high power distance countries is that people dislike
work and try to avoid it. Consequently, managers believe that they must adopt Theory
X leadership style, that is, they must be authoritarian, must force workers to perform
and must supervise their subordinates closely.

Uncertainty Avoidance

Uncertainty avoidance is the extent to which people feel threatened by ambiguous

situations, and have created beliefs and institutions that try to avoid these. There are
countries with high uncertainty avoidance and there are those characterised by low
uncertainty avoidance. Denmark and of low uncertainty avoidance cultures. Germany,
Japan, and Spain typify high uncertainty avoidance societies.
Countries with citizens who do not like uncertainty tend to have a high need for
security and a strong belief in experts and their knowledge. Countries with low
uncertainty avoidance have people who are more willing to accept that risks are
associated with the unknown, and that life must go on in spite of this. Specifically, high
uncertainty avoidance countries are characterised by norms, values, and beliefs which
accept that:

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 • Conflict should be avoided,
• Deviant people and ideas should not be tolerated,
• Laws are very important and should be followed,
• Experts and authorities are usually correct, and
• Consensus is important
Low uncertainty avoidance societies tend to represent the antonym of the above
characteristics.

Trompenaars' Framework
Trompenaars, an European researcher, conducted extensive research with 15,000
managers from 28 countries, representing 47 national cultures. He describes cultural
differences using seven dimensions (the theory is therefore called 7d cultural
dimensions model):
(i) universalism versus particularism, (ii) individualism versus collectivism, (iii)
specific versus diffuse, (iv) neutral versus affective, (v) achievement versus ascription,
(vi) past versus present, and (vii) internal versus external control (See Fig. 2.5). The
first five dimensions deal with how people relate to each other. The two final
dimensions deal with how a culture manages time and how it deals with nature. Each
dimension is a continuum or a range of cultural differences.

Universalism versus Particularism

In cultures with universalistic orientation, people believe in abstract principle; such as
the rules of law, religion or cultural principles. The basic premise is that these
principles can be applied everywhere without modification. UK, USA and Czech
represent universalistic cultures. Particularism, on the other hand is the belief that
circumstances dictate how ideas and practices should be applied. South Korea,
Mexico and Nigeria follow particularistic cultures. In universalistic cultures, the focus
is more on formal rules than on relationships; business contracts are adhered to very
closely and people believe that a 'deal is a deal'. In a particularistic culture, legal
contracts often are modified and the way, deals are executed also changes depending
on the situations. In particularistic cultures too, there exist rules, but people expect
exceptions to be made for friends, family relations and others. Managerial practices
under universalistic cultures include formalisation of business practices, treating all
cases similarly and announcing any change publicly. Particularism entails such
managerial practices as use of informal networks and introducing changes in a subtle
way.

Individualism versus Collectivism

This dimension is almost identical to Hofstede's value dimension. In individualistic

societies the focus is on "I" or "me" and the orientation is on one's own growth. In
collectivist societies, the focus is on groups, including family, organisation and
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community. Responsibility, achievements and rewards are group- based. In
individualistic societies, people are trained from childhood to be independent, and each
person assumes individual responsibility for his/her success or failure.

Neutral versus Affective

In this dimension, Trompenaars focusses on the appropriateness of expressing

emotions in different cultures. In neutral cultures, the tendency of the people is
to control their emotions so that it will not interfere with their Judgement. In
contrast, affective cultures encourage the expression of emotions. Expressions
of anger, laughter, gesturing and a range of emotional outbursts are considered
normal an acceptable. But in neutral societies, emotions are considered to be
messy interferences in achieving objectives. Achieving objectives is more
important than the emotional nature of the interaction.
Specific versus Diffuse

This cultural dimension focusses on how a culture emphasises on notions of privacy

and access to privacy. In specific cultures, individuals have large public spaces and
relatively small private spaces. While the public space is open, the private one is
guarded carefully and shared with only close friends and associates. A diffuse culture
does not allow any distinction between public and private spaces. In diffuse cultures,
an executive's office and home are not divided as clearly as they are in specific
cultures, and work relationships often extend into personal relationships.

Achievement versus Ascription

This dimension describes the methods used to acquire status. In an achievement
culture, an individual is accorded status based on how well he she performs his/her
functions. Status depends on achievement. An ascription culture is one in which status
is attributed based on who or what a person is, his age, gender or social connections.
Achievement is not the criterion to accord status.

MANAGING ACROSS CULTURES

Managing multiculturalism or cross-cultural management is of considerable
significance as it offers the following potential benefits:
• increasing creativity and innovation
• demonstrating more sensitivity in dealing with foreign customers
• hiring the best talent from anywhere
• demonstrating a global perspective

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 • creating a 'super organisational culture', using the best of all cultures
• greater flexibility within the organisation both to adapt to a wider range of
environments and to change within these environments

• to evolve universally acceptable HR policies and practices.

The international manager needs cross-cultural competence to manage
multiculturalism. Cross-cultural competence includes skills, awareness and knowledge.
In order to be culturally competent, an individual needs to:
l. possesses a strong personal identity;
2. have knowledge of and felicity with the beliefs and values of the culture;
3. display sensitivity to the effective processes of the culture;
4. communicate clearly in the language of the given cultural group;
5. perform specially sanctioned behaviour;
6. maintain active social relations within the cultural group;

7. negotiate the Institutional structures of that culture.

We propose to discuss six dimensions as part of cross-cultural management:

motivation, leadership, communication, teams, HR practices, and work values

❖ Managing across cultures strategies:

Managing across cultures can be a challenging task. Here are some strategies
that can help:

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 1. Develop cultural intelligence: Learn about the culture you will be working
with, their values, beliefs, and customs. This will help you understand their
perspectives and ways of doing things.
2. Communicate clearly: When working with people from different cultures,
it's important to communicate clearly and avoid using idioms or jargon that
may not be familiar to them. Be patient and take the time to listen carefully
to what others are saying.
3. Build relationships: Building relationships is important in any business
setting, but it's especially important when working across cultures. Take the
time to get to know your colleagues and build trust.
4. Be open-minded: Be open to new ideas and ways of doing things. Recognize
that there are different ways to approach problems and challenges.
5. Adapt your management style: Different cultures have different expectations
when it comes to management styles. Be flexible and willing to adapt your
style to better suit the needs of your team.
6. Seek feedback: Ask for feedback from your team members on how you can
improve your management style and communication. Be open to
constructive criticism and use it to make improvements.
7. Celebrate diversity: Embrace diversity and recognize the strengths that come
from having a team with different backgrounds and perspectives. Create
opportunities to celebrate cultural events and traditions.

By following these strategies, you can successfully manage across cultures and
build a strong and productive team.

❖ Cross cultural differences:

Cross-cultural differences refer to the variations in values, beliefs, attitudes, and customs
between people from different cultures. These differences can have a significant impact
on how people interact with each other, communicate, and work together. Here are some
examples of cross-cultural differences:

1. Communication styles: Different cultures have different communication styles. For

example, in some cultures, people may be more indirect in their communication,
while in others, they may be more direct and straightforward.
2. Social norms: Social norms vary between cultures. For example, in some cultures, it
may be considered impolite to interrupt someone while they are speaking, while in
others, interrupting may be seen as a sign of active engagement in the conversation.
3. Time orientation: Cultures differ in their attitudes towards time. For some, being
punctual is very important, while for others, being flexible with time is more
important.
4. Work values: Cultures also have different work values. For example, in some
cultures, a strong work ethic and dedication to one's job is highly valued, while in
others, a more relaxed attitude towards work is considered acceptable.
5. Individualism vs. collectivism: Different cultures have different levels of emphasis on
individualism vs. collectivism. In individualistic cultures, people tend to focus more
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 on their individual goals and achievements, while in collectivistic cultures, people
tend to prioritize the needs and goals of the group.

It's important to recognize these differences and adapt your communication and management
style to better suit the needs of your team members from different cultures. By doing so, you
can create a more inclusive and productive work environment.

❖ Cross cultural similarities:

While cross-cultural differences exist, there are also many similarities that can be found
across different cultures. Here are some examples:

1. Importance of family: The family unit is valued in many cultures around the world.
Family members are often relied upon for support and help in times of need.
2. Respect for elders: In many cultures, there is a strong emphasis on respecting and
honoring elders. Older people are often viewed as wise and are given a great deal of
respect.
3. Celebration of milestones: Birthdays, weddings, and other major life events are often
celebrated across cultures. These celebrations may vary in their specific customs and
traditions, but the overall importance of marking significant milestones is a common
theme.
4. Value of education: Education is often highly valued across different cultures. Many
cultures place a strong emphasis on the importance of learning and gaining
knowledge.
5. Appreciation for art and beauty: Many cultures appreciate art and beauty in various
forms, such as music, visual arts, and literature. The expression of creativity is often
valued and celebrated.
6. Importance of hospitality: Offering hospitality and showing kindness to others is often
highly valued across cultures. Guests are often treated with respect and generosity.

Recognizing these similarities can help to build understanding and appreciation for different
cultures. It can also facilitate cross-cultural communication and collaboration.

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 UNIT 2
International environment: political, legal and technological; Recruitment and
Selection - Staffing policies, approaches, Selection criteria, recent trends in
international staffing, Performance management of international employees,
issues in managing performance in the international context.

❖ Environment –

Environment is the aggregate of all conditions, events and influences that surround
and affect business.

❖ International Environment –
International business refers to the globalisation of trade and trading of goods and services
in international markets.
An Environment is described as an ecosystem in which an international company conducts
its daily operations.
The International Business Environment is a complex network of economic, political,
legal, and cultural forces that shape how organizations conduct international business. It
consists of external and internal factors that impact a company’s success or failure in different
markets.

❖ CHARACTERISTICS OF INTERNATIONAL ENVIRONMENT

• Large scale Operations:

To cope with the global competition in international environment, all the operations are
conducted on a very huge scale and generally using special purpose machinery and high skill
labour. Production and marketing activities are conducted on a large scale. After satisfying
the domestic market, the international market is tapped.

• Immobility of Factors:

The degree of immobility of factors like labour and capital is generally greater between
countries than within a country due to the immigration laws, citizenship, qualifications, etc.
These restrictions slows down the international mobility of labour. Similarly, the
international capital flows are prohibited or severely limited by different governments having
different fiscal policies.

• Heterogeneous Markets:

A cross-border business is very different from one that involves a single country. The
international markets lack homogeneity on account of differences in climate, language,
preferences, habit, customs, weights and measures, etc. The behaviour of international buyers

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in each case would, therefore, be different. International trade takes place between differently
cohered groups. The socio-economic environment differs greatly among different nations.

• Dominated by developed countries and MNCs:

International business environment is dominated by developed countries and their

multinational corporations (MNCs). Multinational Corporations (MNCs) encompass a
number of countries. Their sales, profits, and the flow of production is reliant on several
countries at once. Such companies from large economies like the USA, UK, Japan, China,
Germany, India, etc. dominate international trade. This is because they have large financial
and other resources. They also have the best technology and research and development
facilities. They have highly skilled employees and managers. These high skill people are
given very high salaries and other benefits. Therefore, they produce good quality goods and
services at low prices. This helps MNCs and developed countries to capture and dominate the
global market.

• Beneficial to Participating Countries:

International environment gives benefits to all participating countries. Developing countries

get foreign capital and technology from developed countries. They get rapid industrial
development. They get more employment opportunities. Developing countries get economic
development from the developing countries. Hence, developing countries open up their
economies through liberal economic policies.

• Special Role of Science and Technology:

International business gives a lot of importance to science and technology. Developed

countries use high technologies. International business helps them to transfer such top high-
end technologies to the developing countries. Such technology transfers help people from
developing countries to learn from dynamic industry experts in a diverse learning
environment. It helps them to receive groundbreaking training and unlock the door to
entrepreneurship.

• Sensitive Nature:

The international environment is very sensitive in nature. Any changes in the

economic policies, technology, political environment, etc. has a huge impact on it.
Similarly the culture and beliefs of that country also play very important role in
international business. Therefore, international business must conduct marketing
research to find out and study these changes and sensitivity of the society also. They
must adjust their business activities and adapt accordingly to survive changes.

❖ TYPES OF INTERNATIONAL ENVIRONMENT

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 An International Business Environment (IBE) involves different aspects like political
risks, cultural differences, exchange risks, and legal and taxation issues. Thus, it is
mandatory for the people at the managerial levels to work on factors comprising the
international business environment as it is crucial for a country’s economy.

The various types or aspects of the international business environment are provided below.

1. Political Environment in International Environment

The political environment means the political risk, the government’s relationship with
a business, and the type of government in the country. Conducting business
internationally implies dealing with different kinds of governments, levels of risk and
relationships.
There are different types of political systems, such as one-party states, multi-party
democracies, dictatorships (military and non-military) and constitutional monarchies.
Thus, an organisation needs to take into account the following aspects while planning
a business plan for the overseas location:

• Political system of the business

• Approach of the government towards business, i.e., facilitating or restrictive

• Incentives and facilities offered by the government

• Legal restrictions for licensing requirements and reservations to a specific sector like

the private, public or small-scale sector

• Restrictions on importing capital goods, technical know-how and raw materials

• Restrictions on exporting services and products

• Restrictions on distribution and pricing of goods

• Required procedural formalities in setting the business

2. Legal Environment in International Environment

The term ‘legal environment’ of a business refers to the strategies adopted by any
government to help, manage or constrain the business ecosystem of the country. Legal
environment of a business includes –

• various legislations enacted, amended or repealed by the government,

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 • administrative orders proclaimed by government authorities,
• decisions issued by various commissions and agencies of the central, state or local
government as well as judicial activities, and
• The legal environment in India includes various laws regulating business activities
like Companies Act 2013, Consumer Protection Act, 2019 and many other such
legislations, policies relating to licensing and approvals, foreign trade etc.
In every country, the government frames its legal systems according to its definite purposes
and priorities in order to regulate the business ecosystem of the country. The government
may also limit the business activities by regulations. These factors, in turn, create the legal
environment of a business.

3. Technological Environment in International Environment

The technological environment includes factors related to the machines and materials
used in manufacturing services and goods. As organizations do not have control over
the external environment, their success depends on how they will adapt to the external
environment. A significant aspect of the international business environment is the
level and acceptance of technological innovation in countries.

The last decade of the twentieth century saw significant advances in technology, and it is also

continuing in the twenty-first century. Technology often gives organizations a competitive

advantage. Hence, organizations compete to access the latest technology, and international

organizations transfer technology to be globally competitive.

Due to the internet, it is easier even for a small business plan to have a global presence, which

grows its exposure, market, and potential customer base. For political, economic and cultural

reasons, some countries are more accepting of technological innovations, while others are

less accepting. In analysing the technological environment, the organizations should consider

the following aspects:

• Level of technological developments in the country as a whole and specific business

sector

• Pace of technological changes and obsolescence

• Sources of technology

• Facilities and restrictions for technology transfer

• Time taken for the absorption of technology

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 ❖ Recruitment and selection: Recruitment and selection are two important HR
processes that involve identifying, attracting, and hiring the best candidates for a job
opening.
Recruitment is the process of identifying potential candidates for a job opening and
encouraging them to apply. This process can involve various activities, such as advertising
job openings, searching for candidates on social media or job boards, and reaching out to
candidates who may be a good fit for the job.

Selection, on the other hand, is the process of evaluating candidates and choosing the best
candidate for the job. This process typically involves screening resumes and applications,
conducting interviews and assessments, checking references and background, and making a
job offer.

Recruitment and selection in international human resource management

(IHRM):
Recruitment and selection are critical components of international human resource
management (IHRM). In the context of IHRM, recruitment and selection involve identifying,
attracting, and selecting candidates who have the necessary skills, knowledge, and cultural
competence to work in different countries and regions.

Here are some key considerations in recruitment and selection in the context of IHRM:

1. Cultural differences: Cultural differences can impact the recruitment and selection
process. For example, different cultures may have different expectations around the
hiring process or different ways of evaluating qualifications and experience. IHRM
professionals must be sensitive to these differences and adjust their recruitment and
selection approach accordingly.

2. Language barriers: Language barriers can make it challenging to evaluate

candidates effectively. IHRM professionals may need to rely on translators or
language proficiency tests to ensure that candidates have the necessary language skills
to succeed in the role.

3. Legal requirements: Different countries have different laws and regulations related
to recruitment and selection. IHRM professionals must be familiar with these
requirements to ensure that they comply with all relevant laws and regulations.

4. Global mobility: International assignments may require candidates to relocate to a

different country or region. IHRM professionals must consider candidates' willingness
and ability to relocate, as well as any necessary visas or work permits.

5. Talent shortages: Some regions or countries may have talent shortages in certain
industries or roles. IHRM professionals must develop effective recruitment strategies
to attract the best candidates and compete with other employers in the same market.

Overall, effective recruitment and selection in the context of IHRM requires a deep
understanding of cultural differences, legal requirements, and talent markets in different
countries and regions. It also requires the ability to evaluate candidates effectively and fairly,

19
taking into account factors such as language proficiency, global mobility, and cultural
competence.

❖ The recruitment and selection process in international human

resource management (IHRM)
The recruitment and selection process in international human resource management (IHRM)
is similar to that of domestic HRM, but with added complexities due to the global context. In
general, the recruitment and selection process in IHRM involves the following steps:

1. Identify the need for global talent: The first step in the recruitment and selection
process in IHRM is to identify the need for global talent. This may involve assessing
the organization's strategic goals and identifying the skills and knowledge required to
achieve those goals.

2. Develop a global recruitment strategy: Organizations need to develop a recruitment

strategy that aligns with their global business goals and objectives. This includes
identifying recruitment sources and methods that are effective in different regions and
countries.

3. Advertise the job: Advertise the job opening through various channels such as job
portals, social media, and other recruitment platforms.

4. Screen resumes: Screen the resumes of the applicants who have applied for the job
and shortlist them based on their qualifications, skills, and experience.

5. Conduct interviews: Conduct interviews with the shortlisted candidates to evaluate

their suitability for the role. This may involve phone or video interviews, as well as
in-person interviews for candidates who are located in the same country or region.

6. Check references: Check the references of the candidates to verify their

qualifications and experience.

7. Assess cultural fit: Assess the cultural fit of the candidates to ensure that they have
the necessary cultural competence to work in different countries and regions.

8. Make a job offer: Make a job offer to the candidate who is most suitable for the role.

9. Complete pre-employment formalities: Complete all pre-employment formalities

such as background checks, medical tests, and visa processing.

10. Onboard the employee: Onboard the employee and provide the necessary training
and support to ensure a smooth transition into the organization.

Overall, the recruitment and selection process in IHRM requires a strategic approach,
attention to cultural and legal considerations, and the use of technology and effective
communication to attract and select the best candidates. It also involves additional steps such
as assessing cultural fit and completing pre-employment formalities to ensure that candidates
are able to work effectively in different countries and regions.

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 ❖ Staffing policies in international human resource management
(IHRM):
Staffing policies in international human resource management (IHRM) refer to the strategies
and practices that organizations use to manage their human resources across different
countries and regions.
These policies include:

1. Ethnocentric staffing: In ethnocentric staffing, an organization's headquarters or

parent country is the primary source of talent for senior management positions. This
staffing policy assumes that the best candidates are those from the home country, and
is often used in the early stages of international expansion.

2. Polycentric staffing: In polycentric staffing, host country nationals are recruited and
employed to manage subsidiaries in different countries. This staffing policy is based
on the belief that local managers have a better understanding of local markets and
cultures, and is often used in mature international markets.

3. Geocentric staffing: In geocentric staffing, the organization seeks to employ the best
candidates from around the world for management positions, regardless of their
country of origin. This staffing policy is based on the belief that the best candidates
are those with the necessary skills, experience, and cultural competence, and is often
used in global organizations.

4. Regio centric staffing: In Regio centric staffing, the organization recruits and
employs candidates from specific regions for management positions. This staffing
policy is based on the belief that regional managers have a better understanding of
regional markets and cultures, and is often used in regional organizations.

Other staffing policies in IHRM include:

5. Transnational staffing: In transnational staffing, the organization seeks to create a

global mindset among its employees and managers, and to create a diverse workforce
that is capable of operating effectively in different cultures and markets.

6. Hybrid staffing: In hybrid staffing, the organization uses a combination of different

staffing policies, depending on the needs of the business and the availability of talent
in different countries and regions.

Overall, staffing policies in IHRM require a careful balance of cultural and strategic
considerations. Organizations need to consider factors such as the availability of talent,
cultural fit, and the organization's global business goals and objectives when developing their
staffing policies.

❖ Staffing approaches in international human resource management

(IHRM):
Staffing approaches in international human resource management (IHRM) refer to the
different ways in which organizations can manage their workforce across different countries
and regions.

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The most common staffing approaches in IHRM include:

1. Home country approach: In this approach, the organization relies on employees

from the home country to fill key positions in international subsidiaries. This
approach is often used by organizations in the early stages of international expansion
when local talent is not yet available or when the organization wants to maintain
control over its subsidiaries.

➢ Advantages:
1) Cultural Consistency: The home country approach ensures cultural consistency and
allows the organization to maintain its corporate culture in international subsidiaries.

2) Control: The approach provides greater control to the parent company over
international subsidiaries.

3) Transfer of Knowledge and Expertise: The approach allows for the transfer of
knowledge and expertise from the home country to international subsidiaries, which
can be critical in the early stages of international expansion.

4) Cost Savings: The approach can be cost-effective as employees from the home
country may be willing to work for lower salaries and benefits in international
locations.

➢ Disadvantages:
1) Cultural Differences: The approach may not be effective in adapting to local cultures
and customs, which can impact the success of international subsidiaries.

2) Lack of Local Knowledge: The approach may lead to a lack of local knowledge,
which can make it difficult to understand local markets and customers.

3) Resistance to Change: Local employees may resist the approach, which can lead to
employee turnover and low morale.

4) Legal Issues: The approach may result in legal issues, as local laws and regulations
may require the hiring of local employees.

2. Host country approach: In this approach, the organization relies on local

employees from the host country to fill key positions in international subsidiaries.
This approach is often used when the organization wants to adapt to local cultures and
customs, and when local talent is available and can contribute to the organization's
success.

➢ Advantages:
1) Cultural Adaptability: The host country approach allows organizations to adapt to
local cultures and customs, which can improve the success of international
subsidiaries.

2) Local Knowledge: The approach allows organizations to leverage local knowledge,

which can be critical in understanding local markets and customers.

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3) Legal Compliance: The approach complies with local laws and regulations, which
can reduce legal issues.

4) Improved Morale: The approach can lead to improved morale among local
employees, as they feel valued and recognized.

➢ Disadvantages:
1) Cultural Inconsistency: The approach may result in cultural inconsistency across
international subsidiaries, which can impact the corporate culture.

2) Limited Transfer of Knowledge: The approach may result in limited transfer of

knowledge and expertise from the home country to international subsidiaries.

3) Control: The approach provides less control to the parent company over international
subsidiaries.

4) Cost: The approach may be more expensive as local employees may require higher
salaries and benefits.

3. Third country approach: In this approach, the organization hires employees

from a third country to fill key positions in international subsidiaries. This approach is
often used when local talent is not available or when the organization wants to bring
in employees with specific skills and expertise.

➢ Advantages:
1) Cultural Diversity: The third country approach allows organizations to bring in
employees from different cultures, which can improve cultural diversity in
international subsidiaries.

2) Transfer of Knowledge and Expertise: The approach allows for the transfer of
knowledge and expertise from a different country, which can be critical in gaining
new insights and approaches.

3) Reduced Cost: The approach can be cost-effective as employees from third countries
may be willing to work for lower salaries and benefits in international locations.

4) Improved Morale: The approach can lead to improved morale among employees, as
they feel valued and recognized.

➢ Disadvantages:
1) Cultural Inconsistency: The approach may result in cultural inconsistency across
international subsidiaries, which can impact the corporate culture.

2) Language Barriers: The approach may result in language barriers between

employees, which can impact communication and collaboration.

3) Legal Issues: The approach may result in legal issues, as local laws and regulations
may require the hiring of local employees.

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4) Lack of Local Knowledge: The approach may lead to a lack of local knowledge,
which can make it difficult to understand local markets and customers.

4. Global approach: In this approach, the organization seeks to develop a global

talent pool by recruiting and training employees from different countries and regions.
This approach is often used by multinational organizations that want to develop a
diverse and globally-minded workforce.

➢ Advantages:
1) Consistency: The global approach ensures consistency in HR policies and practices
across international subsidiaries, which can help in maintaining a cohesive corporate
culture.

2) Transfer of Knowledge and Expertise: The approach allows for the transfer of
knowledge and expertise from the home country to international subsidiaries, which
can be critical in gaining new insights and approaches.

3) Economies of Scale: The approach allows for economies of scale, as the same HR
policies and practices can be implemented across different locations.

4) Control: The approach provides more control to the parent company over
international subsidiaries, which can help in maintaining quality standards.

➢ Disadvantages:
1) Cultural Insensitivity: The approach may result in cultural insensitivity, as HR
policies and practices may not be adapted to local cultures and customs.

2) Limited Adaptability: The approach may not allow for enough adaptability to local
market conditions, which can affect the success of international subsidiaries.

3) Recruitment Difficulties: The approach may face recruitment difficulties, as local

employees may prefer to work for organizations that have a strong local presence.

4) Communication Challenges: The approach may face communication challenges due

to language and cultural barriers between employees.

5. Transnational approach: In this approach, the organization seeks to create a

borderless workforce by recruiting and training employees from different countries
and regions and developing a culture that transcends national boundaries. This
approach is often used by global organizations that want to create a unified and
integrated workforce.

➢ Advantages:
1) Flexibility: The transnational approach allows for flexibility in HR policies and
practices, which can be adapted to local market conditions and cultural differences.

2) Cultural Sensitivity: The approach promotes cultural sensitivity, as HR policies and

practices are tailored to local cultures and customs.

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 3) Transfer of Knowledge and Expertise: The approach allows for the transfer of
knowledge and expertise across international subsidiaries, which can help in gaining
new insights and approaches.

4) Reduced Recruitment Difficulties: The approach may reduce recruitment

difficulties, as employees from different countries may be willing to work in
international locations.

➢ Disadvantages:
1) Complex and Difficult to Implement: The approach is complex and difficult to
implement, as it requires coordination and communication across different
subsidiaries.

2) Higher Costs: The approach may result in higher costs, as HR policies and practices
may need to be adapted to different locations.

3) Potential Conflict: The approach may result in potential conflict between the parent
company and international subsidiaries over HR policies and practices.

4) Limited Control: The approach provides less control to the parent company over
international subsidiaries, which can make it difficult to maintain quality standards.

❖ Selection criteria in international human resource management

(IHRM):
Selection criteria in international human resource management (IHRM) are the specific
factors or attributes that an organization considers when selecting candidates for international
assignments. These criteria may vary depending on the type of position, location, and
organizational needs.
Some common selection criteria in IHRM include:

1. Language proficiency: Proficiency in the local language is often an important

selection criterion for international assignments, as it can help in effective
communication and integration into the local culture.

2. Cross-cultural competence: Cross-cultural competence is the ability to work

effectively in different cultures and is a critical selection criterion for international
assignments.

3. Technical expertise: Technical expertise in a specific field is often a key selection

criterion for international assignments, particularly in industries such as engineering
or technology.

4. International experience: International experience, particularly in the relevant

region or country, can be a valuable selection criterion for international assignments,
as it demonstrates an individual's ability to work in a foreign environment.

25
 5. Adaptability and flexibility: Adaptability and flexibility are important selection
criteria for international assignments, as they demonstrate an individual's ability to
adjust to new situations and environments.

6. Family situation: An individual's family situation, such as their marital status or

number of dependents, can also be a selection criterion for international assignments,
as it can affect their willingness to relocate.

7. Health and wellness: An individual's health and wellness may also be a selection
criterion for international assignments, particularly if the location poses health risks or
requires a certain level of physical fitness.

Overall, selection criteria in IHRM are designed to identify individuals who have the
necessary skills, knowledge, and attributes to succeed in international assignments and
contribute to the organization's global success.

❖ Recent trends in international staffing:

International staffing refers to the process of recruiting, selecting, and deploying employees
for work in foreign countries. With the growing globalization of businesses and the increasing
mobility of labour, there are several recent trends in international staffing that are worth
noting:

1. Cross-border remote work: With the advancement of technology, it has become

easier for employees to work remotely from anywhere in the world. As a result, more
companies are opting for cross-border remote work arrangements, where employees
work from their home country but collaborate with colleagues located in other
countries.

2. Global mobility programs: Many multinational companies are investing in global

mobility programs to facilitate the movement of employees across different countries
for work. These programs help to develop the skills and experiences of employees,
which can be beneficial for both the employees and the company.

3. Emphasis on diversity and inclusion: International staffing is becoming more

diverse and inclusive, with companies focusing on hiring employees from different
cultural backgrounds, genders, and nationalities. This not only helps to create a more
diverse workforce but also improves cross-cultural communication and collaboration.

4. Increased use of local talent: Companies are increasingly recruiting and hiring local
talent in foreign countries rather than sending expatriates. This approach helps
companies to better understand local markets, cultures, and customs, which can be
beneficial for their business operations.

5. Growing importance of global leadership development: As companies expand

their operations globally, the demand for effective global leaders is increasing. As a
result, there is a growing emphasis on developing global leadership skills, including
cross-cultural communication, adaptability, and strategic thinking.

26
These trends are likely to continue in the coming years as businesses continue to expand their
global footprint and seek to remain competitive in the global marketplace.

❖ Performance management of international employees:

Managing the performance of international employees can present unique challenges due to
differences in cultural norms, language barriers, and varying work expectations. Here are
some strategies for effectively managing the performance of international employees:

1. Set clear expectations: Clearly communicate job expectations, performance

standards, and company policies to international employees. Make sure they
understand what is expected of them and how their performance will be evaluated.
2. Provide regular feedback: Regular feedback is important for all employees, but it
can be especially helpful for international employees who may not be as familiar with
cultural norms or the company's work environment. Provide feedback frequently and
be specific about what needs improvement.
3. Use cross-cultural communication skills: Be aware of potential cultural differences
that may impact communication with international employees. Use cross-cultural
communication skills, such as active listening and open-ended questions, to help
ensure clear communication.
4. Offer training and development: Offer training and development opportunities to
help international employees develop the skills needed to succeed in their roles. This
can include language training, cultural orientation, or specialized skills training.
5. Use technology to facilitate communication: Use technology, such as video
conferencing and chat platforms, to facilitate communication between international
employees and managers. This can help overcome language barriers and time zone
differences.
6. Be sensitive to cultural differences: Be sensitive to cultural differences that may
impact the performance of international employees. For example, some cultures may
place more emphasis on team performance, while others may prioritize individual
performance.
7. Recognize and reward good performance: Recognize and reward good
performance among international employees. This can include bonuses, promotions,
or other forms of recognition that are appropriate for the employee's culture.

By following these strategies, you can effectively manage the performance of international
employees and help them succeed in their roles.

❖ Issues in managing performance in the international context.:

Managing performance in the international context can present a number of
challenges and issues. Here are some of the most common ones:

1. Cultural differences: Different cultures have different expectations about work,

communication, and performance, which can create misunderstandings and conflicts.
For example, in some cultures, being direct and assertive is valued, while in others, it
may be seen as disrespectful.

27
 2. Language barriers: Language differences can make it difficult to communicate
effectively, especially when it comes to feedback and coaching. Misunderstandings
can occur, which can lead to performance problems and frustration.

3. Legal and regulatory differences: Different countries have different laws and
regulations around employment, which can impact performance management
practices. For example, some countries may have different laws around termination or
privacy, which can impact how performance is managed.
4. Time zone differences: International teams may be located in different time zones,
which can make it difficult to communicate in real-time and can impact collaboration
and teamwork.
5. Technology issues: International teams may use different technology platforms or
have different levels of access to technology, which can impact performance
management practices.
6. Performance measurement: Measuring performance can be challenging in the
international context, as performance goals and metrics may need to be adapted to
local contexts and cultures.
7. Resistance to change: International employees may be resistant to changes in
performance management practices, especially if they are used to different approaches
in their home country or culture.
8. Bias and stereotypes: Bias and stereotypes can impact performance management in
the international context, as managers may make assumptions about employees based
on their cultural background or nationality.

By being aware of these issues and taking steps to address them, managers can effectively
manage performance in the international context and help their employees succeed.

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 UNIT 3

HRM in cross border mergers and acquisitions. Training in international

management: training strategies, expatriate training, types of training
programmes and emerging trends in training for competitive advantage.
International Compensation: objectives, theories, components and
compensation package.

❖ HRM in cross border mergers and acquisitions.:

In today’s increasingly complicated and globalized economic climate, Mergers and Acquisitions
(M&A) have replaced organic development as the primary means of expansion for many
companies. The term “cross-border merger” refers to a partnership between an Indian and a
foreign firm. Only mergers with Indian companies were permitted in India. After the Companies
Act, 2013 was passed, outbound mergers were authorized with some limits. The Companies
Amendment Act, 2017, was pivotal for the legal basis for international mergers. For international
mergers, the Reserve Bank of India released proposed rules in 2017. In response, the Foreign
Exchange Management (Cross-Border Merger) Regulations, 2018, were drafted. New restrictions
have eased business in India, helping companies diversify, reform, and consolidate their
businesses. It opened new international markets for Indian businesses. While the reasons for most
mergers and acquisition failures are primarily financial, a large number of deals also fail due to
poor human resources management, including issues such as incompatible work cultures,
different management styles, lack of motivation, attrition, want of communication, trust issues
within teams and uncertainty of long-term goals.

❖ Importance of human resource management in mergers &

acquisitions:
The term human resource management (HRM) is used to describe an organization’s systematic
efforts to shape the actions of its employees. Managing human resources is a crucial strategic
challenge for all firms, but especially so for those engaged in cross-border Mergers and
Acquisitions, since employee behaviour has a significant impact on profitability, customer
satisfaction, and other essential metrics of organizational success. Human resource management
encompasses a wide range of actions any company takes, no matter how big or small. Both
strategic plans and routine procedures for supervising employees are part of human resource
management. All organizations need to have policies in place that lay out the ground rules for
managing employees.
Developing and implementing comprehensive compensation strategies helps to retain talented
managers. To ensure the success of the new synergy, it is essential that the leadership team first
identifies the most valuable personnel

and then designs a remuneration package that will not only keep them happy at work but also
substantially motivate them. The acquiring firm’s human resources policies and reward system
tend to have the most significant impact on winning over the target company’s workforce and
facilitating a smooth transition.

29
Effective communication is one of the most important ways for a combined firm to get the most
out of its people. To successfully implement an M&A, it is necessary to convince employees that
they would personally profit from the company’s continued growth. One of the safest and most
productive strategies is using numerous communication channels simultaneously.

❖ Role of human resource management in cross-border M&A:

The outcome of Mergers and Acquisitions can be affected by human resource management at any
time during the procedure. Human resource management’s primary concern in the lead-up to a
merger is usually to ensure that all applicable laws and regulations are being followed,
particularly those pertaining to equal employment opportunity and collective bargaining
agreements. Human resources managers can get to work on the merger preparations immediately
after a deal is announced by doing things like handling retention agreements and evaluating pay
scale disparities. Human resources managers have been shown to have the most significant
impact on Mergers and Acquisitions during the integration phase, which is when M&A processes
and policies are put into effect. Human resources managers are crucial after an acquisition,
especially if there are cultural differences. In many cases, the type of integration varies from
country to country, which will impact business practices and policies.

❖ Strategies of human resource management that fit mergers and

acquisition:

Geographic roll up:

Mergers and Acquisitions (M&A) occur when businesses look to grow into new geographic
markets while keeping their operations at the regional level. When larger corporations buy out
smaller ones, they often leave the local management team in place so that business can continue
as usual. These Mergers and Acquisitions (M&As) are like overcapacity M&As in that they both
entail the consolidation of enterprises; however, they differ considerably in that they often take
place early in an industry’s life cycle. Strategically, a roll-up relates to the creation of business
gains and aims to generate economies of scale and scope, while an overcapacity merger or
acquisition aims to minimize capacity and duplication. Even though people are less easily
replaceable in geographic roll-up M&As, the processes and values of the merging entities are
likely to be more different than in an overcapacity
M&A. But because the company buying the other company is usually bigger than the company
being bought, conflicts over status are less likely to happen than in an overcapacity M&A.

Industry convergence

Through Mergers and Acquisitions, new industries can be formed out of those which are already
in existence but are seeing their borders erode. This form of a merger is uncommon and poorly
understood at the present time, making it challenging to assess. When corporations join to save
money on research and development (R&D), the acquired company is sometimes given more

30
leeway than usual, and the focus is on creating value through integration rather than achieving
perfect symmetry.

Market extension
Cross-border Mergers and Acquisitions (M&A) allow companies to broaden their operations
beyond their home country. Such Mergers and Acquisitions take place when the acquiring and
acquired companies are functionally related in production and/or distribution but sell products
that do not compete directly with one another or when a corporation desires to diversify
geographically, like when two companies create the same product but sell it in different areas.
Businesses engage in this form of M&A to fulfill their long-term strategic objectives, and one
common motivation is to get the scale and efficiencies needed to compete on a global scale in less
developed markets. Success in a merger or acquisition aimed at expanding a company’s product
line or market presence is correlated with the size and M&A experience of the two companies
involved.

Due diligence
The due diligence stage begins once a target company has been selected, and company executives
begin communicating with one another to share financial and legal data that will help them weigh
the pros and cons of a proposed merger. The present moment is ideal for learning about the
culture of the prospective company and comparing it with that of the current business. Since the
two companies had similar views on corporate principles and ethics, merging them was a breeze.
Therefore, cultural due diligence should play a pivotal role in the M&A process during the due
diligence phase. It is critical to ensure that cultural assessment is not forgotten throughout an
M&A process by including experts in human resources or organizational development on the
M&A team. M&A teams should conduct interviews or use a cultural assessment tool to evaluate
the culture of firms they are contemplating acquiring proactively. Critical insights into potential
synergies and areas of conflict that can arise throughout the cultural integration endeavour can be
gained by understanding how the firms’ executives and employees set plans and goals, engage
with the marketplace, and reward behaviours. It is crucial currently to do proper homework on the
cross-border management skills of both companies. Cross-border acquisitions often change from
absorption to reverse acquisition in the acquired firm’s native country. Those in charge at
corporate headquarters may misunderstand the significance of on-the-ground operations in
establishing the company’s credibility and reputation in the new market because they are focused
on abstract concepts like ownership or the implementation of standard operating procedures
across all locations.

Substitute for research & development

When companies with cutting-edge R&D or technological know-how are purchased rather than
developed in-house, typically, larger, more seasoned companies are the ones doing the acquiring
in a reverse merger. In place of research and development (R&D), M&As must keep valuable
human resources and accumulated knowledge. Because entrepreneurial people often feel limited
by the bureaucratic structure of the acquiring organization, adjusting the newly formed entity’s
processes and values is a complex undertaking. The success of this type of international merger

31
or acquisition hinges on the degree of integration achieved by the acquired firm and the
adaptability of the acquiring company. Integration issues arise only in certain fields.

Potential target
The standard practice for a company contemplating many M&A targets is to collect a wide
variety of relevant data and information on each of them. The opportunity to rapidly expand
product lines or move into new geographies, or even eliminate a competitive threat, are all
examples of the kind of data that could be useful in determining whether or not an M&A target
will be helpful in achieving a given growth goal. As data is gathered on the Merger or
Acquisition’s prospective target, it’s also vital to think about how much effort will be required to
integrate the two organizations’ operations. The firm’s international business experience is
another element in cross-border M&As. M&A activity is more likely and more successful if the
target company has prior experience operating in a foreign environment through partnerships,
joint ventures, or acquisitions. Similarly, the acquired firm’s M&A and national cultural
experience are important considerations.

Challenges of human resource management in cross

border mergers & acquisition
In the past, human resource management has often been given a seat at the table quite late in the
M&A process. Many of the human resource management co-workers believe that human resource
management should be involved in planning and strategy at an earlier stage. Human resource
management engaged late in domestic M&A agreements might result in unrealized synergies and
deal value degradation. The consequences of ignoring human resource management in a cross-
border merger or acquisition are substantially more severe. The human resources management
team is ideally suited to overcome the logistical, cultural, and legal hurdles that prohibit
businesses from realizing their full potential and closing deals for maximum value.

Legal and regulatory issues

Human resource management needs to collaborate closely with the interdisciplinary team of legal
and accounting professionals to successfully handle the additional regulatory and legal difficulties
that arise during cross-border M&A negotiations.

Tax issues
Foreign subsidiaries of merging corporations may receive substantial tax benefits from
transactions structured as mergers. This benefit may be lost if HR and business teams engage in
informal integration initiatives also known as deemed integration, such as merging reporting lines
or moving operations to a single location.

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Labour and employment regulations
In some countries, when a merger or acquisition is about to be finalized, it is customary to first
meet with labour unions, works councils, or other employee representatives. These entities may
be able to obstruct a contract. To successfully address these labour relations issues, human
resource management managers must devote sufficient time and resources. Terminating an
employee in most countries requires substantial notice and severance, and simple function
duplication due to acquisition is typically not sufficient cause. A company’s human resources
department also must be aware of any restrictions on modifying employment terms.

Immigrations consideration
Work permits and visas may be required for some personnel at the acquired company; it is
essential to ensure a smooth transition of all relevant paperwork. Even in an asset sale, a change
in work authorization may be necessary before a seller’s employee can begin working for a
buyer. The purchaser is responsible for completing all paperwork for themselves and their
personnel, who will be working on-site at the overseas subsidiary. While doing their due
diligence, human resource management should discover these immigration concerns and see to it
that they are resolved.

Availability of information
The amount of information available to the public is substantially smaller, and the accuracy of
financial reports is much less certain. As a result, human resource management managers will not
only have significantly less data at their disposal during due diligence but will also have to
exercise heightened caution when handling sensitive employee information.

Effect of national and corporate culture

Differences in national culture can influence anything from work hours to leadership
expectations, which human resource management must take into account when negotiating
international deals.

Human resource management functions and duties may shift in different cultural contexts.
Human resource management staff members can be both order takers and strategic advisors.
Cross-border counterparts may not have as much involvement as you. When performing due
diligence and integrating new systems, you may face pushback from subordinates if you are the
leader of human resource management. Foreign labour markets are also typically more strictly
regulated, something that human resource management directors discover in addition to different
reaction times and attitudes toward vacation and work hours. When conducting due diligence,
these rules must be carefully considered. Even the questions you choose to ask during due
diligence can be affected by factors like the company’s employment policies, plans, and
programs. The human capital issue is further complicated by the fact that deal structures can vary
widely from one nation to the next. Employees working away from the headquarters may feel
powerless, which can have adverse effects on transaction value, productivity, and quality of work
33
delivered on time, as well as cooperation and a willingness to work to resolve employee
difficulties. Human resource management executives may face resistance to central supervision
from a foreign country despite the urgent need for international cooperation. It is essential to
separate genuinely controllable problems from the ones that can be dealt with on a national or
even international scale.

❖ Training in international management: International training and management

development are always closely associated in the management literature. Gregerson et al.
(1998) proposed four strategies for developing global managers: international travel; the
formation of diversified teams; international assignments and training.
These four strategies relate to expatriation management, particularly integrating international
training and management development. Training aims to improve current work skills and
behaviour, whereas development aims to increase abilities in relation to some future position
or job, usually a managerial one (Dowling et al., 1999, p. 155). A truly global manager needs
a set of context-specific abilities, such as industry-specific knowledge, and a core of certain
characteristics, such as cultural sensitivity, ability to handle responsibility, ability to
Develop subordinates and ability to exhibit and demonstrate (Baumgarten, 1992). These
characteristics and skills are considered as important international competencies and all can
be developed through effective international training and management development.
International training refers to training for international assignments.
According to Bartlett and Ghoshal (2000), global firms can enhance their inter-unit linkages
by creating a pool of global managers from anywhere in the world. Management
development in MNEs is the “glue” bonding together otherwise loose and separate entities.
Indirect costs may be considerable and un-quantified, such as damaging relations with the
host country government and other local organizations and customers, as well as loss of
market share, damage to corporate reputation and lost business opportunities. The literature
indicates that expatriate failure is a persistent and recurring problem and failure rates remain
high.
International management development can also be expected to play a central role in MNEs
because of its importance in developing a cross-national corporate culture and integrating
international operations.

❖ Training Strategies:
There is absolutely no substitute for on-the-job training. With that being said, though, it’s also
important to remember that not all on-the-job training works. To be effective, the process of training
employees while they’re actively performing their jobs must be part of your overall learning
management strategy. It’s not enough to just show an employee a new task and walk away. For
training on-the-job that really sticks, use these strategies:

• Mentoring

Organizations that value the collective knowledge base of their workforce have a
solid mentoring program. Mentors don’t necessarily need to be an employee’s direct

34
supervisor. Often, a more experienced employee who is on a strong career progression
track makes a great mentor. The strategy of mentoring focuses on growing an employee’s
overall skill set, fostering a positive attitude, and setting the employee up for success in
general, not with just a specific task.
• Coaching

While mentoring takes more of a big picture approach, coaching is much more specific.
The role of a coach is to ensure employees have the information, skills, and support they need
to complete a task or set of tasks. Effective coaches observe employees as they’re working
and give continual feedback to help them improve. Coaches keep their eyes on overall goals,
watching how individuals affect the success of the entire team and making adjustments as
they go.
• Job Shadowing

There are elements of both mentoring and coaching for employees who are put in the role of
having another employee shadow them. In addition to teaching valuable job skills, this
strategy can promote the culture of the company and foster teamwork. One word of caution,
though: pick the right employees to be shadowed. If you’re not sure, shadow a person
yourself before you have new employees follow along.
• Career Development

You may not think of promotions as a form of training, but they are. When you have a strong
career progression program, you’re encouraging your employees to pursue on-the-job
opportunities and excel as mentors and trainers themselves.
• Solid Follow-up

Training is never a set-it-and-forget-it proposition. Any effective training requires assessment

and follow-up. As a manager of learning, trainers have a responsibility to track on-the-job
training efforts and record them as part of an employee’s overall training plan. A good online
learning management system allows trainers to integrate on-the-job-training with their online
courses that include manager sign-offs and tracking.

❖ Expatriate Training:
Expatriate is a term used to describe an employee who is temporarily or permanently
assigned to work in a foreign country. Expatriates may be assigned to work in a foreign
country by their company, or they may be sent to work in a foreign country by their
government. Expatriates may be assigned to work in a foreign country for a variety of
reasons, including to gain experience working in a foreign country, to learn a new language,
or to gain knowledge about a foreign culture.
There are many benefits of expatriate assignments for both the employee and the employer.
For the employee, expatriate assignments can offer opportunities for growth and

35
development, as well as new and exciting experiences. They can also provide a chance to
learn about a new culture and to improve foreign language skills. Additionally, expatriate
assignments can offer a higher salary and a variety of benefits, such as tax breaks and
allowances.
1. Establish a clear purpose for the program. Before creating an expatriate program, it is
important to establish a clear purpose for it. What are the company's goals for the
program? What do they hope to achieve by sending employees abroad?

2. Define the target audience. Who will the program be aimed at? Is it for senior
executives only, or will it also include lower-level employees? Defining the target
audience will help to determine the specific criteria that employees must meet in order
to be eligible for the program.

3. Establish eligibility criteria. In order to be eligible for an expatriate program,

employees must meet certain criteria. Establishing clear eligibility criteria will help to
ensure that only the most qualified employees are chosen for the program.

4. Design a comprehensive selection process. The selection process for an expatriate

program should be comprehensive and rigorous. It should include a review of the
candidates' skills and experience, as well as their personal and professional goals.

5. Create a comprehensive training program. Once employees have been selected for an
expatriate program, they need to be properly trained for their new role. The training
program should include information on the company's culture and business practices,
as well as on the specific country where the employee will be working.

❖ Types of Training programmers in international management:

Everything you need to know about types of training in HRM. Training is the systematic
process of enhancing the job-related skills, attitude and knowledge of personnel.
Training enables employees to develop and rise within the organisation, increase their market
value. Basically, the top management is responsible for training of employees in the
organisation.
The commitment of top management is an essential qualification of training programmes
because it involves in framing training policy.
Training of the employees is possible if they believe that the resulting modification in the
behaviour is in their own interest and they can perform their job in a better way after
attending the particular training programme because learning is a self-activity and employee
development is self-development.

International management training programs are designed to prepare individuals to

manage and lead organizations across cultural, linguistic, and geographic

36
boundaries. There are various types of training programs available for international
management, some of which include:

1. Cross-Cultural Training: This type of training focuses on developing

cultural awareness and sensitivity to help managers understand the norms
and values of different cultures. It may include language training,
understanding cultural differences in communication, and developing skills
in negotiation and conflict resolution across cultures.
2. International Business and Management Programs: These programs provide
an in-depth understanding of the complexities of international business
operations and the skills needed to manage them effectively. They cover
topics such as global business strategies, cross-border finance, and legal
considerations in international management.
3. Leadership Development Programs: These programs focus on developing
leadership skills that are necessary for managing global teams and leading
international organizations. They may include training in team building,
coaching, mentoring, and effective communication across cultures.
4. Expatriate Training: This training is designed for employees who are
relocating to a foreign country for an extended period. It includes practical
information about living and working in a foreign country, such as cultural
norms, legal requirements, and healthcare systems.
5. Language Training: Learning the language of the host country can help
managers to better understand the culture and communicate effectively with
local employees, customers, and partners. Language training programs can
be customized to the specific needs of the organization and the individual.
6. Virtual Training: With the increasing use of technology, virtual training
programs have become popular for international management training.
These programs use video conferencing and other online tools to deliver
training and connect individuals from different parts of the world.

Overall, the type of training program selected for international management will
depend on the needs of the organization and the individuals involved. It is
important to select a training program that is relevant, effective, and tailored to the
specific needs of the organization and its employees.

❖ Emerging trends in training for competitive advantage:

Training is a crucial element for organizations to stay competitive in today's
dynamic business environment. Here are some emerging trends in training that can
help organizations gain a competitive advantage:

1. Technology-enabled Training: The use of technology in training has

increased significantly in recent years. E-learning platforms, virtual reality,

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 and augmented reality are becoming more prevalent in training programs,
making training more engaging and accessible for learners. Technology-
enabled training can be delivered at any time and from anywhere, which
saves time and cost for organizations.
2. Microlearning: Microlearning refers to delivering small, bite-sized pieces of
information to learners. This trend has emerged due to the shorter attention
spans of today's learners. Microlearning allows learners to access training
content quickly and conveniently, which can lead to better retention and
application of the learning.
3. Personalized Training: Personalized training programs are tailored to the
specific needs of individual learners. Personalization is achieved by
leveraging data and analytics to create customized learning paths for each
learner. Personalized training can increase engagement, motivation, and
retention of learning.
4. Gamification: Gamification involves applying game design principles to
non-game contexts such as training. This trend has gained popularity due to
its ability to engage learners and make training more fun. Gamification can
improve learner motivation, retention, and application of learning.
5. Diversity, Equity, and Inclusion (DEI) Training: DEI training is becoming
increasingly important for organizations to create inclusive work
environments. DEI training can help employees develop cultural
competency, recognize unconscious bias, and build skills to work effectively
with diverse colleagues and customers.
6. Agile Training: Agile training refers to a training methodology that is
aligned with agile project management principles. Agile training focuses on
delivering learning in short cycles, with a focus on continuous improvement.
This approach enables organizations to respond quickly to changing
business needs.

By embracing these emerging trends in training, organizations can gain a

competitive advantage by developing a highly skilled and engaged workforce. It is
essential for organizations to stay up-to-date with these trends to ensure their
training programs remain effective and relevant.

❖ International Compensation:
International compensation refers to the pay and benefits provided to employees
working in an international or global context. The compensation of employees
working overseas or in different countries can be more complex than that of
domestic employees due to differences in tax laws, currency exchange rates, and
cost of living. Here are some key elements of international compensation:

1. Base Salary: The base salary is the fixed amount paid to an employee for
their work. The base salary for international employees can vary

38
 significantly depending on factors such as the employee's level of
experience, qualifications, and the location of the job.
2. Foreign Service Premium: A foreign service premium is an additional
payment made to employees working overseas. The premium is designed to
compensate employees for the additional expenses associated with living
and working in a foreign country, such as the cost of housing, transportation,
and language training.
3. Cost of Living Allowance (COLA): A COLA is an additional payment made
to employees to compensate for the higher cost of living in certain locations.
COLA payments are typically based on the cost-of-living index for the host
country.
4. Benefits: Benefits such as health insurance, retirement plans, and paid time
off are an important part of international compensation. The type and level
of benefits can vary depending on the location of the employee and the
employer's policies.
5. Exchange Rate Fluctuations: Exchange rate fluctuations can have a
significant impact on international compensation. Employers may use
currency hedging strategies to mitigate the impact of currency fluctuations
on employee compensation.
6. Taxation: Tax laws can vary significantly between countries, which can
affect the amount of compensation employees receive. Employers may
provide tax equalization or tax protection to ensure that employees are not
disadvantaged by differences in tax laws.

International compensation is an important factor in attracting and retaining top

talent in global organizations. It requires careful consideration of various factors
such as the location of the employee, the level of experience, and the impact of tax
laws and currency exchange rates.

❖ objectives of international compensation:

The objectives of international compensation are to attract, retain, and motivate
employees working in an international or global context. Here are the main
objectives of international compensation:

1. Attracting Talent: International compensation aims to attract talented

employees to work in foreign locations where the company operates. This is
particularly important for companies with a global presence, as they need to
compete with other employers to attract top talent.
2. Retaining Talent: Retaining talented employees is also a key objective of
international compensation. Employees may be more likely to stay with a
company if they feel that they are being fairly compensated for their work
and that their compensation package reflects the challenges of working in an
international context.

39
 3. Motivating Employees: International compensation can be used as a tool to
motivate employees to perform at a high level. This can be achieved by
linking compensation to performance or by providing additional benefits
such as housing allowances or education allowances for employees'
dependents.
4. Managing Costs: International compensation can also be used to manage
costs associated with international assignments. Companies may provide
different compensation packages for employees working in different
locations, taking into account the cost of living, taxation, and other factors.
5. Ensuring Equity: International compensation aims to ensure that employees
working in different locations are being paid equitably for their work. This
requires companies to consider the cost of living, taxation, and other factors
when determining compensation packages.
6. Complying with Regulations: Finally, international compensation aims to
ensure that companies comply with local regulations and tax laws. This
requires careful consideration of local laws and regulations, as well as the
use of strategies such as tax equalization or tax protection to ensure that
employees are not disadvantaged by differences in tax laws.

By achieving these objectives, companies can effectively manage their global

workforce, attract and retain top talent, and ensure that employees are being fairly
compensated for their work.

❖ Theories of International compensation:

There are several theories of international compensation that help to explain how
and why companies compensate employees working in different countries. Here
are three key theories:

1. Balance Sheet Approach: The balance sheet approach to international

compensation is based on the idea that employees should be compensated in
a way that allows them to maintain the same standard of living in the host
country as they would have in their home country. This approach takes into
account differences in the cost of living, taxation, and other factors. The
balance sheet approach typically involves providing a base salary, a cost-of-
living adjustment, and other allowances such as housing and education
allowances.
2. Localization Approach: The localization approach to international
compensation is based on the idea that employees should be compensated in
the same way as local employees in the host country. This approach takes
into account local market conditions, including the cost of living, prevailing
wage rates, and other factors. The localization approach typically involves
providing a base salary and benefits that are comparable to those provided to
local employees.

40
 3. Global Value Chain Approach: The global value chain approach to
international compensation is based on the idea that employees should be
compensated based on the value they create for the company. This approach
takes into account the global value chain of the company, including the
location of production and the market for the company's products or
services. The global value chain approach typically involves providing a
base salary and benefits that are linked to the performance of the company
as a whole.

Each of these theories has its strengths and weaknesses, and the approach that a
company takes to international compensation will depend on a variety of factors,
including the location of the employee, the industry, and the company's overall
strategy. By understanding these theories, companies can develop effective
international compensation strategies that align with their business objectives and
help to attract and retain top talent.

❖ components of international compensation:

The components of international compensation can vary depending on the
company's specific needs and the location of the employee, but typically include
the following:

1. Base Salary: This is the fixed compensation that an employee receives,

typically paid on an annual or monthly basis. The base salary is usually
determined by the employee's job level, experience, and other factors, and
may be adjusted for cost-of-living differences.
2. Benefits: Benefits typically include health insurance, retirement plans, life
insurance, disability insurance, and other employee benefits. These benefits
are usually provided by the employer and can vary depending on the
location of the employee.
3. Allowances: Allowances are payments that are made to employees to cover
additional costs associated with living and working in a foreign country.
These can include housing allowances, cost of living allowances, and
education allowances for dependents.
4. Incentives: Incentives are payments that are made to employees based on
their performance or the performance of the company. These can include
bonuses, profit sharing, and stock options.
5. Taxes: Taxes can be a complex issue for international employees, as they
may be subject to different tax laws and regulations in different countries.
Companies may provide tax equalization or tax protection to ensure that
employees are not disadvantaged by differences in tax laws.
6. Relocation Expenses: Companies may also provide assistance with
relocation expenses, including the cost of shipping household goods,
temporary housing, and transportation costs.

41
By providing a comprehensive international compensation package that includes
these components, companies can effectively manage their global workforce and
attract and retain top talent. However, it's important to note that the components of
international compensation can vary widely depending on the location of the
employee, the industry, and the company's overall strategy.

❖ compensation package in international compensation:

An international compensation package typically includes a combination of base salary,
benefits, allowances, and incentives that are designed to attract, retain, and motivate
employees working in a foreign country. Here are the components of an international
compensation package in more detail:

1. Base Salary: The base salary is the fixed compensation that an employee receives,
usually paid on an annual or monthly basis. The base salary is typically determined by
the employee's job level, experience, and other factors, and may be adjusted for cost-
of-living differences.
2. Benefits: Benefits typically include health insurance, retirement plans, life insurance,
disability insurance, and other employee benefits. These benefits are usually provided
by the employer and can vary depending on the location of the employee.
3. Allowances: Allowances are payments that are made to employees to cover additional
costs associated with living and working in a foreign country. These can include
housing allowances, cost of living allowances, and education allowances for
dependents.
4. Incentives: Incentives are payments that are made to employees based on their
performance or the performance of the company. These can include bonuses, profit
sharing, and stock options.
5. Taxes: Taxes can be a complex issue for international employees, as they may be
subject to different tax laws and regulations in different countries. Companies may
provide tax equalization or tax protection to ensure that employees are not
disadvantaged by differences in tax laws.
6. Relocation Expenses: Companies may also provide assistance with relocation
expenses, including the cost of shipping household goods, temporary housing, and
transportation costs.
7. Repatriation Benefits: Repatriation benefits are provided to employees who are
returning to their home country after working abroad. These can include assistance
with finding a job, temporary housing, and other benefits to ease the transition.

By providing a comprehensive international compensation package that includes these

components, companies can effectively manage their global workforce and attract and retain
top talent. However, it's important to note that the components of an international
compensation package can vary depending on the location of the employee, the industry, and
the company's overall strategy.

42
 UNIT 4
International industrial relations - nature, approaches and strategic issues before
employers, employees and government. Cross cultural communication and
negotiation: communication process, barriers, effectiveness and managing cross
cultural negotiation. Repatriation: challenges, benefits, process and managing
repatriation.

❖ International industry relation

The concept of industrial relations means the relationship between the employees and management
in the day to day working of an industry. The Indian IR scenario has been rapidly changing with the
opening up of the liberalized economy and the subsequent inflow of Multinational Corporations
(MNCs).
This has brought a shift in the attitude towards the relationship. This entry of MNCs has shifted the
focus from a labour economy to a human economy. An extensive linkage between economy, politics
and history has always characterized Indian IR. The changes that are taking place are primarily due to
endogenous forces embedded within India’s political economy.
There has been a major effect on the macro-economic aspect on the structure of the labour market
(productivity, employment and wages), also on the structure of IR (number of unions, collective
bargaining, labour legislation, industrial conflict and state intervention). These transformations have
brought in changes on the growth pattern of the economy.

The concept of industrial relations means the relationship between the employees and management
in the day to day working of an industry. The Indian IR scenario has been rapidly changing with the
opening up of the liberalized economy and the subsequent inflow of Multinational Corporations
(MNCs).
This has brought a shift in the attitude towards the relationship. This entry of MNCs has shifted the
focus from a labour economy to a human economy. An extensive linkage between economy, politics
and history has always characterized Indian IR. The changes that are taking place are primarily due to
endogenous forces embedded within India’s political economy.
There has been a major effect on the macro-economic aspect on the structure of the labour market
(productivity, employment and wages), also on the structure of IR (number of unions, collective
bargaining, labour legislation, industrial conflict and state intervention). These transformations have
brought in changes on the growth pattern of the economy.

❖ Industrial Relations Definition

Industrial relations deal with either relationship between the state and employers’ and workers
organizations or the relations between the occupational organizations themselves.
“International labour organization
Industrial Relations refers to the relationship between management and employees, or employees and
their organization that arise out of employment. “Dale Yoder

❖ Nature of Industrial Relations

43
 • Industrial relations are concerned with the relationship between management and
workers.

• Industrial relations safeguard the interest of employees.

• Industrial relations are concerned with the system, rules, and procedures used by
unions and employees to determine the reward for effort and other conditions of
employment, safeguard the interests of the employees and their employer and regulate
how employers treat their employees.

• Industrial relations maintain a balance with employee expectations, employer

associations, trade unions, and other social and economic institutions of societies.

• Industrial relations help in resolving disputes, conflicts, and controversies between

labour and management.

❖ Approaches to Industrial Relations:

1. Systems Approach
2. Unitary Approach
3. Pluralist Approach
4. Marxist Approach
5. Sociological Approach
6. Gandhian Approach
7. Psychological Approach.
8. Human Relations Approach

• Systems Approach

John Dunlop gave the systems theory of industrial relations in the year 1958. He believed that every
human being belongs to a continuous but independent social system culture which is responsible for
framing his or her actions, behaviour and role.
Actors: By actors here we mean that the individuals or parties involved in the process of developing
sound industrial relations. This variable is denoted by ‘A’.
Contexts: The contexts refer to the setup in which the actors perform the given tasks. It includes the
industry markets (M), technologies (T) and the power distribution in the organization and labour
unions(P).
Ideology: The similar ideas, mentality or beliefs shared by the actors helps to blend the system. It can
be expressed by the initial (I)

• Unitary Approach

As the name suggests, the unitary approach can be seen as a method of bringing together the
teamwork, common objective, individual strategy and mutual efforts of the individuals. This theory
believes that the conflicts are non-permanent malformations, which are a result of improper
management in the organization.
To create a productive, effective and harmonious work environment;

44
to develops a trustworthy, open, fair and transparent work culture;
to create a cordial work environment;

• Pluralist Approach

The pluralist theory also called the ‘Oxford Approach’, was proposed by Flanders in the year 1970.
This approach explained that the management and the trade unions are the different and robust
sub-groups which unanimously form an organization.
The organization should appoint personnel experts and industrial relations specialists to act
as mediators between the management and trade unions. They need to look into the matters of
staffing, provide consultation to the managers and the unions, and negotiate with both the parties in
case of conflicts.
The organization should ensure that the trade unions get recognized and the union leaders or
representatives can perform their duties freely.
In the case of industrial disputes, the organization can avail the services of the external agent for
settlement of such issues.

• Marxist Approach

Lenin came up with the concept of a Marxist approach in the year 1978, where he emphasized the
social perspective of the organization. This theory perceived that the industrial relations depend upon
the relationship between the workers (i.e., employees or labour) and the owners (i.e., employer or
capital). There exists a class conflict between both the groups to exercise a higher control or
influence over each other. Industrial relations are a significant and never-ending source of conflicts
under capitalism which cannot be avoided. However, cases of open disputes are quite unusual.
Understanding the conceptions of capitalized society, capital accumulation process and the pertaining
social relations, give a better overview of the industrial relations. The Marxist theory assumed that the
survival of the employees without any work is more crucial than the survival of the employer without
the labours.

• Sociological Approach

The industries comprise of different human beings who need to communicate with the individuals of
other organizations.

Due to the difference in their attitude, skills, perception, personality, interests, likes and dislikes,
needs, they are usually involved in one or the other conflict. Even the social mobility and other
aspects including transfer, default, group dynamics, stress, norms, regulations and status of the
workers influence their output and the industrial relations.

• Gandhian Approach

The Gandhian approach to industrial relations was proposed by the father of our nation, Mahatma
Gandhi or Mohandas Karamchand Gandhi, who was also a well-known labour leader. Gandhi Ji
perceived that every organization is a joint venture, and the labour should be treated as associates or
co-partners with the shareholders. Moreover, the workers should have proper knowledge of all the
business transactions as it is their right. He focussed on increasing the production and believed that
the gains should be shared with the employees because of whom it has been possible. He also

45
emphasized that the industrial disputes and conflicts between the parties should be resolved healthily
through interactions, arbitration and bilateral negotiations.

• Psychological Approach

The psychologists perceived the problem of the industrial relations as a result of the varying
perception and mindset of the key participants, i.e., the employees and the management.

The ‘thematic application test’ was conducted by Mason Harie to understand the behaviour,
mindset and perception of the two significant workgroups, i.e., executive and the union leaders, in a
particular situation.
The general belief of a management representative is entirely different from that of a labour
representative.
Both the management and labour do not consider each other to be trustworthy.
Even each of these groups considers that the other one lacks emotional and interpersonal attributes.

• Human Relations Approach

The person behind the concept of the human relations approach is Keith Davis. The organization and
the society comprise of human beings who vary in various aspects as their behaviour, emotions,
attitude, mindset and personality. But they have come together to achieve common organizational
goals and objectives.
The concept of human relations approach underlines the need for making the individuals familiar with
the work situations of the organization and uniting the efforts of the workers. The purpose is to meet
the social, psychological and economic objectives, by enhancing the overall productivity.

• to ensure cooperation by promoting the mutual interest of the organization;

• to enhance the productivity of the individuals;
• to satisfy the psychological, social and economic needs of the employees.

❖ strategic issues before employers In International industrial

relations:
International industrial relations involve the management of the relationship
between employers and employees across different countries. There are several
strategic issues that employers need to consider when managing international
industrial relations, including:

1. Cultural differences: Employers need to be aware of the cultural differences

that may exist between countries and the impact these differences may have
on the employment relationship. Different cultures may have different
expectations regarding work hours, communication styles, and decision-
making processes, among other things.
2. Legal requirements: Employers need to be familiar with the different legal
requirements that apply in each country where they have employees. This
may include employment laws, tax laws, and immigration laws.

46
 3. Labor market conditions: Employers need to understand the labor market
conditions in each country where they operate. This includes factors such as
the availability of skilled labor, wage rates, and labor laws.
4. Collective bargaining: Employers need to be familiar with the collective
bargaining practices in each country where they operate. This includes
understanding the role of trade unions, the process of negotiating collective
agreements, and the legal requirements that apply.
5. Employee communication: Employers need to establish effective
communication channels with their employees across different countries.
This includes providing information about company policies, employment
conditions, and other relevant matters.
6. Social responsibility: Employers have a responsibility to operate in a
socially responsible manner and to respect the human rights of their
employees. This includes promoting diversity and inclusion, ensuring safe
and healthy working conditions, and protecting employees from
discrimination and harassment.

By addressing these strategic issues, employers can effectively manage

international industrial relations and maintain positive relationships with their
employees across different countries.

❖ strategic issues before employees In International industrial relations:

International industrial relations involve the relationship between employers and
employees across different countries. Employees also face several strategic issues
when it comes to international industrial relations. Here are some of the key issues:

1. Employment Conditions: Employees need to understand the employment

conditions that apply to their job in the country where they are working.
This includes their rights and responsibilities, work hours, wages, benefits,
and other terms of employment.
2. Cultural differences: Employees need to be aware of the cultural differences
that may exist between countries and how these differences may impact
their work environment. This includes understanding communication styles,
decision-making processes, and work ethics in different cultures.
3. Language barriers: Employees may encounter language barriers when
working in a foreign country. This can affect their ability to communicate
with colleagues, understand job responsibilities, and access information and
resources.
4. Employment laws: Employees need to be familiar with the employment
laws in the country where they are working. This includes knowing their
legal rights, understanding the process for making complaints or seeking
redress, and being aware of their obligations as an employee.

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 5. Health and Safety: Employees need to be aware of health and safety
regulations in the country where they are working. They must understand
their responsibilities and those of their employer in maintaining a safe
working environment.
6. Social responsibility: Employees may face ethical and social responsibility
issues when working in a foreign country. They must ensure that they
comply with local laws and customs, and that their actions do not negatively
impact the local community or environment.

By addressing these strategic issues, employees can effectively manage their

international industrial relations and ensure they have a positive work experience
across different countries. They can also contribute to building positive
relationships between themselves and their employer, as well as with the local
community.

❖ strategic issues before government In International industrial

relations:
International industrial relations involve the relationship between employers and
employees across different countries, and governments play a crucial role in
regulating these relationships. Here are some of the strategic issues that
governments need to consider when it comes to international industrial relations:

1. Employment laws and regulations: Governments need to ensure that there

are appropriate employment laws and regulations in place to protect
workers' rights and interests. These laws may include minimum wage laws,
anti-discrimination laws, health and safety regulations, and labor standards.
2. International trade agreements: Governments need to negotiate and enforce
international trade agreements that promote fair and equitable treatment of
workers across different countries. These agreements may include
provisions on labor standards, worker rights, and environmental protection.
3. Immigration policies: Governments need to establish appropriate
immigration policies that allow for the free movement of workers across
borders while also protecting national interests. This includes policies on
work visas, permanent residency, and citizenship.
4. Social policies: Governments need to implement social policies that support
workers and their families. This includes policies on healthcare, education,
and social security.
5. International organizations: Governments need to work with international
organizations such as the International Labor Organization (ILO) to promote
international labor standards, fair working conditions, and social justice.
6. Cross-border labor disputes: Governments need to develop mechanisms for
addressing cross-border labor disputes between employers and employees.
This includes establishing procedures for resolving disputes through
mediation or arbitration and enforcing judgments across borders.
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By addressing these strategic issues, governments can effectively manage
international industrial relations and promote fair and equitable treatment of
workers across different countries. They can also contribute to building positive
relationships between employers and employees and support the development of a
stable and productive global workforce.

❖ Cross culture communication and negotiation:

Cross-cultural communication theory explores how people of different countries, ethnicities, and
cultures can work together to communicate most effectively. This means overcoming language
differences, understanding multicultural nonverbal cues, and working together to understand how to
best convey ideas across cultural divides. Given the prevalence of remote work and the continued
globalization of the economy, cross-cultural communication is likely to become more important than
ever in the years ahead.
Cross-cultural communication allows people to avoid miscommunication and misinterpretation,
instead opening up the possibility of fruitful relationships across previously daunting cultural barriers.
This form of multicultural communication enables the free exchange of information among people of
vastly different backgrounds, empowering everyone to profit from the flow of valuable data.
In cross-cultural negotiations, above and beyond the issues of personal negotiation styles and
techniques, one must consider the impact of cultural difference. This impact will often be tied to
communication issues, increasing the possibilities of misunderstanding. Things that are said, left
unsaid, or unclearly said can all create an extra layer of difficulty on top of the substantive issues to be
discussed.
In cross-cultural negotiations, we also often bring a certain amount of baggage to the table based on
our personal and group history, with all of the stereotypes and assumptions that may go along with
that history. What makes it particularly challenging is that cultural difference is a two-way street,
potentially making both sides of the table feel awkward. In a potentially adversarial negotiation, that
awkwardness could easily become distrust and fear.

❖ Communication Process in Cross-Cultural Communication and

negotiation:
Effective communication is a critical component of cross-cultural communication
and negotiation. Cross-cultural communication refers to the exchange of
information and ideas between individuals from different cultural backgrounds.
Here are the key components of the communication process in cross-cultural
communication and negotiation:

1. Sender: The sender is the person who initiates the communication process.
In cross-cultural communication, the sender needs to be aware of the
cultural differences that may exist and tailor their message accordingly.
2. Message: The message is the information or ideas that the sender is trying to
convey. In cross-cultural communication, it is essential to use clear, concise
language that is easily understood by the receiver.
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 3. Channel: The channel is the medium through which the message is
transmitted. In cross-cultural communication, the choice of channel may
vary depending on cultural preferences and may include face-to-face
meetings, telephone calls, email, or video conferencing.
4. Receiver: The receiver is the person who receives the message. In cross-
cultural communication, the receiver needs to be aware of the cultural
differences that may exist and interpret the message accordingly.
5. Feedback: Feedback is the response to the message that the receiver
provides to the sender. In cross-cultural communication, feedback may be
different due to cultural differences in communication styles.
6. Context: The context refers to the situational factors that may influence the
communication process. In cross-cultural communication, the context may
include cultural norms, values, beliefs, and social customs.

Effective cross-cultural communication and negotiation require an understanding

of these components and how they interact in different cultural contexts. It is
essential to take the time to learn about cultural differences and develop strategies
to overcome any communication barriers that may arise. This may include using
interpreters, providing training on cultural differences, and adapting
communication styles to meet the needs of different cultures.

❖ Barriers in Cross-Cultural Communication:

In business, cross-cultural communication is crucial to successfully conduct business with
teams and stakeholders from around the world. Everyone benefits from greater bandwidth,
institutional knowledge, and competitive advantage when communication is effective.
Ineffective communication, on the other hand, can offend, confuse, or deliver the wrong
message, resulting in strained relationships with customers, partners, vendors, and staff. The
following are some of the most common cross-cultural barriers:
1. Language
Those from different cultural and linguistic backgrounds confront communication obstacles
because miscommunication is widespread among people who speak the same language.
Misunderstandings can result from anything from a mispronunciation of a word to a lack of
specificity. Despite the fact that English is the most widely used international business
language, not every company in the world utilizes it on a regular basis. Employees may
struggle to communicate in English, which can lead to misconceptions when it comes to
receiving directions, determining the level of urgency, and addressing difficulties or concerns.
2. Stereotypes
These are generalizations about a group of people that are ascribed to individuals regardless
of their personal traits due to their membership in that group. Positive, negative, or neutral
stereotypes exist. Many stereotypes are negative or even hostile, and they create a severe

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communication barrier in the workplace. The stereotype is a concept that is utilized in a
variety of situations. The uniqueness of Chinese cultural characteristics, for example, has
been recognized in various ways. Chinese people are frequently described as emotionally
reserved, introspective, serene, exceedingly courteous, socially cautious, self-restrained, and
so on.
3. Body Language
Body language is a term that refers to all non-verbal communication. This includes how we
welcome people, sit or stand, our facial expressions, clothes, hairstyles, tone of voice, eye
movements, how we listen, how we breathe, how near we stand to others, and how we touch
others. Body language exerts a strong influence in emotional situations, where body language
frequently takes precedence over words. Kinesics is the scientific study of body language.
Around the world, eye contact, posture, and facial expressions have distinct connotations.
4. Emotional Display
From culture to culture, what constitutes an appropriate display of emotion varies. In certain
nations, expressing wrath, fear, or irritation at work is deemed improper in the workplace.
People from these cultures keep their feelings to themselves and simply talk about the facts of
the problem. Participants in various cultures are expected to disclose their feelings during a
talk. You can imagine the misconceptions that can occur when a businessperson expresses
significant emotion in the presence of co-workers who believe that such behaviour is
inappropriate.
5. Ethnocentrism
It is a tendency to criticize other groups based on one's own standards and ideals.
Ethnocentric values not only operate as a barrier to communication, but they can also affect a
student's mood and productivity. Ethnocentrism is the belief that one's own group's culture is
good, right, and rational, whereas other civilizations are inferior.
6. Prejudice
Prejudice emerges when someone's characteristics are 'prejudged' simply because they are
classified as belonging to a certain group. It's frequently linked to negative attitudes about
that particular group. This mental barrier can be disastrous for organizational communication
since it can prevent entire groups of employees from receiving critical information.

❖ Effectiveness in Cross-Cultural Communication:

In today’s diverse workplace, communication issues can take on an added dimension of
complexity. Every culture has its own set of tacit assumptions and tendencies when it comes
to face-to-face interactions, and trying to get your point across effectively can sometimes be
difficult. Even when a language barrier doesn’t exist, cross-cultural communication can be
challenging. Here are our top ten tips for effective cross-cultural communication:
1. Maintain etiquette

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Many cultures have specific etiquette around the way they communicate. Before you meet,
research the target culture, or if time allows, do some cross-cultural training. For example,
many cultures expect a degree of formality at the beginning of communication between
individuals. Every culture has its own specific way of indicating this formality: ‘Herr’ and
‘Frau’ in Germany, reversing family and given names in China and the use of ‘San’ in Japan
for men and women etc. Be aware of these familiarity tokens and don’t jump straight to first
name terms until you receive a cue from the other person to do so.
2. Avoid slang
Not even the most educated non-native English speaker will have a comprehensive
understanding of English slang, idioms and sayings. They may understand the individual
words you have said, but not the context or the meaning. As a result, you could end up
confusing them or at worst, offending them.
3. Speak slowly
Even if English is the common language in a cross-cultural situation, it’s not a good idea to
speak at your normal conversational speed. Modulating your pace will help, as will speaking
clearly and pronouncing your words properly. Break your sentences into short, definable
sections and give your listener time to translate and digest your words as you go. But don’t
slow down too much as it might seem patronising. If the person you’re speaking to is talking
too quickly or their accent is making it difficult for you to understand them, don’t be afraid to
politely ask them to slow down too.
4. Keep it simple
In a cross cultural conversation, there’s no need to make it harder for both of you by using big
words. Just keep it simple. Two syllable words are much easier to understand than three
syllable words, and one syllable words are better than two syllable words. Say “Please do this
quickly” rather than “Please do this in an efficacious manner.”
5. Practice active listening
Active listening is a very effective strategy for improving cross cultural communication.
Restate or summarise what the other person has said, to ensure that you have understood
them correctly, and ask frequent questions. This helps build rapport and ensures that
important information doesn’t get missed or misunderstood.
6. Take turns to talk
Make the conversation flow more freely by taking it in turns to speak. Make a point and then
listen to the other person respond. Particularly when people are speaking English as their
second language it’s better to talk to them in short exchanges rather than delivering a long
monologue that might be difficult for them to follow.
7. Write things down
If you’re not sure whether the other person has understood you properly, write it down to
make sure. This can be particularly helpful when discussing large figures. For example, in the
UK we write a billion as 1,000,000,000 but, in the USA, it’s written as 1,000,000,000,000.

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8. Avoid closed questions
Don’t phrase a question that needs a ‘yes’ or ‘no’ answer. In many cultures it is difficult or
embarrassing to answer in the negative, so you will always get a ‘yes’ even if the real answer
is ‘no’. Ask open-ended questions that require information as a response instead.
9. Be careful with humour
Many cultures take business very seriously and believe in behaving professionally and
following protocol at all times. Consequently, they don’t appreciate the use of humour and
jokes in a business context. If you do decide to use humour, make sure it will be understood
and appreciated in the other culture and not cause offence. Be aware that British sarcasm
usually has a negative effect abroad.
10. Be supportive
Effective cross-cultural communication is about all parties feeling comfortable. In any
conversation with a non-native English speaker, treat them with respect, do your best to
communicate clearly and give them encouragement when they respond. This will help build
their confidence and trust in you.

❖ MANAGING CROSS CROSS-CULTURAL NEGOTIATIONS:

MANAGING CROSS CROSS-CULTURAL NEGOTIATIONS have always wondered what
it is that makes cultures different. As a Venezuelan-Greek, with strong British education, I
consider myself blessed with the ability to adapt to others. However, in pressured times like
the present, cross-cultural negotiations are fraught with difficulty. The pressure to sign the
deal or act in a way to impress urgency, can really throw a negotiation off the rails.
1.Build rapport
Take time to build the relationship and understand the other parties; not only what they are
looking for in interacting with you, but also their relative cultural drivers (the leading
indicator is Hofstede’s index on cultural variations.
2.Communication – be respectful of symbols or associations
Be aware of etiquette in terms of actions as well as symbolisms, which can both inadvertently
impact your discussions negatively. For example, binding documents in a purple folder, may
not go down too well in Italy where it is associated with bad luck…
3.Learn from what we call Cultural Ambassadors
If you work in a multinational corporation track people from the country that you are likely to
be engaging with, and discuss how things are done in their countries, the real dos and don’ts
in their business culture.
4.How are decisions made?
Be aware of the relative importance (or not) of hierarchy and power distances. Autocratic
behaviour is acceptable in high power-distance countries, such as the Middle East or Africa
but clashes with the more equitable Anglo-Saxon cultures.

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5.Negotiation lengths
Timeframes for agreements and negotiations vary; generally, the further east from Europe, the
longer the negotiation timeframes. Do not push for quick responses or exert pressure for
agreements in China or the Middle East.
6.Demonstrate sensitivity to gender issues
This is particularly relevant for women in male-dominated culture. A lead female negotiator
may face resistance in what are more “masculine” cultures. Whilst in a lot of countries the
traditional role of women is changing, best to err on the side of caution and split the chairing
of the negotiation with by both a man and a woman.

❖ Repatriation:
Repatriation is a process of returning back from a international assignment to a home country
after completing the assignment or some other issues. Repatriation is the last step in the
expatriation cycle and it involves readjustment and re-entry of international managers and
their families back to their home country. Expatriation and repatriation are not two separated
processes, rather the former is a beginning and the latter the closure. The term may also refer
to the process of converting a foreign currency into the currency of one’s own country.
• There are a many successful international assignments which are very important to the
employee career as well as for the company’s growth. So many companies send
expatriate to other countries for doing business internationally.

• The employees who are send to abroad for international assignment are expatriates
those employees who learned many things that would be useful to those who will be
sent to that same country if some means could be identified as to how they might be
mentors to future expatriate employees.

• Expatriates can bring new and unusual approaches to cultural environment,

information gathering, analysis of data, and problem-solving as a result of having
work cross-culturally in an effective manner.

• Expatriates may have been more flexible, or less rigid, in changing circumstances. In
that different approaches have been tried in other contexts, they may be able to bring
insights and innovation to the planning process that may not have been considered
previously.

• The repatriate who has performed at a high level in a HCN may bring a dimension of
confidence and competence that will enhance his or her value to the company as it
competes in a changing world market.

❖ Repatriation challenges:
Repatriation refers to the process of returning an employee who has been working
in a foreign country back to their home country. While repatriation is often seen as

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a positive and exciting experience, it can also be challenging for employees. Here
are some of the challenges that employees may face during repatriation:

1. Reverse culture shock: Reverse culture shock is the psychological and

emotional adjustment that occurs when an individual returns to their home
country after an extended period abroad. This can lead to feelings of
disorientation, frustration, and even depression as the individual adjusts to
life in their home country.
2. Career challenges: Employees who have been working abroad may face
challenges when trying to reintegrate into their home organization. This may
include difficulty finding a suitable position within the company or
difficulty adapting to changes that have occurred in the organization during
their absence.
3. Loss of status: Employees who have been working abroad may have
enjoyed a certain level of status and recognition within the organization.
Upon returning home, they may find that their status has diminished, and
they are no longer considered as valuable as they once were.
4. Financial issues: Repatriation can be expensive, and employees may face
financial challenges when returning home. They may need to find a new
home, purchase a new vehicle, or pay for children's education. Additionally,
they may need to adjust to a lower salary than what they were earning
abroad.
5. Difficulty maintaining relationships: Employees who have been working
abroad may have established close relationships with colleagues, clients, and
others in the host country. Upon returning home, they may find it difficult to
maintain these relationships, which can be emotionally challenging.
6. Lack of support: Employees who have been working abroad may feel that
they do not receive adequate support from their organization or colleagues
upon returning home. This can lead to feelings of isolation and frustration.

To address these challenges, organizations can take several steps to support

employees during the repatriation process. This may include providing financial
support, offering career counseling, and facilitating re-entry training and cultural
adjustment programs. By providing support to employees during the repatriation
process, organizations can help ensure a smooth transition and reduce the negative
impact of repatriation challenges.

❖ Repatriation Benefits:
Repatriation is when an expatriate employee returns to their country of origin after working
in a different country. It is common for repatriation benefits to be overlooked when putting
together relocation packages.

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When your employee needs to move back to their home country, it can be costly. To help
offset these costs and help your employee navigate this transition, you should consider
including repatriation benefits in your company’s relocation packages.
• Departure Services

Many companies will assist their employees with lease termination, utility termination, de-
registration from the local government and schools, dilapidation negotiations, and final
billing when dealing with global mobility.
• Move Management

Your company could help to coordinate the shipment of household goods from the departure
location to your employee’s returning location with the help of a relocation specialist.
• Cross-Cultural Training

Cross-cultural training is also a great way to help your employee get used to the culture back
in their home country. Cross-cultural training programs typically get started around six weeks
after the employee has settled into their new location. This training will help identify any
issues your employee may be experiencing due to changing countries.
• Career Development

When your employee has been living in a different country for an extended period, it is
essential for them to feel that their time in the other country was worth it.
Your employee will want to use the experience they gained overseas and use that experience
in their career when they return home. Career development will help your returning employee
learn how to utilize their experience from overseas in their new job role when they return
home and begin their new job position.
• Emotional Counselling

Many companies offer emotional counselling for both the returning employee and the
employee’s family. Emotional counselling can help your employee feel confident about
returning to a new career path in their home country and help them feel more comfortable
with their new role.

❖ Repatriation Process:
Repatriation refers to the process of sending an item, commodity, asset, or individual from a
foreign nation to a homeland. The process process applies to anyone returning from a foreign
country to their origin. It also includes the conversion of foreign currency into domestic
currency.

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Under the repatriation process, an individual residing in a foreign country can go back
voluntarily or even be forced out of a nation. The homeland is responsible for the transport of
its citizens. This process applies to refugees, deportees, and foreign nationals as well. In the
U.S., citizens must pay a repatriation tax – the transition cost of converting money earned
overseas into US dollars.

The repatriation process refers to the process of returning an employee who has
been working in a foreign country back to their home country. The process can be
complex and challenging, and it is essential for organizations to develop a
comprehensive plan to support employees during the transition. Here are the key
steps in the repatriation process:

1. Pre-departure preparation: Before the employee leaves the host country, the
organization should begin preparing for their return. This may include
reviewing the employee's job description and responsibilities, identifying
potential challenges that may arise during the repatriation process, and
developing a plan to address these challenges.
2. Communication and coordination: Communication and coordination are
critical during the repatriation process. The organization should
communicate regularly with the employee to keep them informed of any
changes that may affect their return, and coordinate with relevant
departments (such as HR, finance, and IT) to ensure a smooth transition.
3. Cultural adjustment: Cultural adjustment is an important part of the
repatriation process. The employee may have become accustomed to the
culture and way of life in the host country, and it may take some time for
them to readjust to life in their home country. Organizations should provide
support and resources to help employees navigate this transition, such as
language training and cultural adjustment programs.
4. Career development: Organizations should work with employees to identify
potential career opportunities upon their return. This may include discussing
potential job opportunities within the organization, providing career
counselling and training, and identifying opportunities for professional
development.
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 5. Re-entry support: Re-entry support is essential to help employees reintegrate
into the organization and their home country. This may include providing
support for finding housing, transportation, and other practical matters, as
well as social support to help the employee reconnect with colleagues and
friends.
6. Evaluation and feedback: Organizations should evaluate the effectiveness of
their repatriation process and seek feedback from employees to identify
areas for improvement. This can help ensure that the process is effective and
that employees feel supported during the transition.

Overall, the repatriation process can be complex and challenging, but with the right
planning and support, organizations can help employees make a smooth transition
back to their home country and successfully reintegrate into the organization.

❖ Managing Repatriation:
• Make sure you’re sending the right people abroad. Carefully assess who will be
successful. Don’t just look at their technical skills; consider the employee and his family’s
ability to adapt to a new culture.
• Clearly define the expat’s career goals before the overseas assignment begins and
make sure the goals reflect your company’s overall objectives. If the purpose of overseas
assignments, for example, is to give your company global reach, then view the trip as a
stepping-stone toward that goal. Have a strong sense of where the assignment will lead next
for the employee.
• Discuss the challenges of repatriation before the employee leaves. Let the expatriate
know that coming home can be difficult, and stress the importance of staying connected to
the home office.
• Create a mentor program. Assign mentors before employees go abroad so they’re
involved from the start. The mentor should continue to help throughout the stay and for six
months after employees return home. If possible, mentors should be previous expats who
worked in the same region as the employees they are mentoring.
• Encourage expats to make regular visits to the home office through a home-leave
policy. They can reconnect with colleagues and new employees, and help prevent feeling
“out of sight, out of mind.” Help expats stay in the loop by including them in companywide
e-mails and newsletters. Managers at home can serve as advocates by looking for job
openings and mentioning their names in discussions.
• Understand and educate management on the challenges of repatriation. Recognize that
when returning home, repats can experience reverse culture shock. Look for symptoms,
which include boredom, withdrawal, feelings of frustration, and distancing from co-workers.
Help repats by letting them know they’re not alone and their feelings are normal.

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• Find positions and activities that use repats’ new skills. Allow them to act as mentors,
put them on assignments in which they can interact with overseas colleagues, and encourage
them to continue to learn a foreign language or join a community organization related to the
country where they lived.
• Provide support to the entire family. Help the repat’s spouse find a new job, and offer
counselling to the parents and children on readjusting to life after living abroad.
• Encourage repats to approach repatriation similarly to relocating overseas. Many
people are well prepared for their move abroad and expect that life will be different. Repats
should have a similar mind-set when they return home. They should approach it as another
new adventure. Make sure that repats set realistic goals, are aware of changes in their home
offices, and reflect on personal changes and new priorities.
• Once repats have returned home, offer a counselling program. Review their
international experience and discuss the challenges of repatriation both personally and
professionally. Discuss with the repats how their business has changed and how to capitalize
on their global experience.

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