IHRM PRACTICES

1
 TABLE OF CONTENTS

Introduction......................................................................................................................................3
Understanding International Human Resource Management..........................................................3
Understanding the EPRG Model....................................................................................................3
Adoption of the EPRG Model by Multinational Corporations........................................................5
Application of Human Resource Practices by Multinational Corporations……………………….6
International Staffing……………………………………………………………………………6
Training and Development………………………………………………………………………7
Performance Appraisal…………………………………………………………………………..8
Conclusion:......................................................................................................................................9
References......................................................................................................................................10

2
Introduction
Globalization has transformed business processes and boosted global economic growth.
Expanding into overseas markets to suit global demand may affect HR rules and procedures.
Collings reports that as globalization grows, more people are placed on foreign employment
assignments (2010). Businesses participate in worldwide events to improve profits, brand
visibility, and sales (Napier and Shim, 2019). However, enterprises' presence in the global
market produces tough circumstances for multinational human resources management, which
must be carefully addressed to generate competitive advantages. Neil (2018) suggests
multinational firms employ global human resource management methods to deal with HR rules
and practices arising from global expansion. This is the study's main objective.

Understanding International Human Resource Management

The term "international human resource management" refers to a set of procedures designed to
improve HR operations on a global scale. Organization's ultimate goal is to succeed domestically
and internationally, where it faces stiff competition. Human resource management on a global
scale encompasses a wide range of activities, such as training and evaluation of staff, as well as
sourcing, screening, and hiring of candidates from all over the world (Altarawneh, 2016). Human
resource managers here are also responsible for overseeing the organization's worldwide talent
pool and relocating upper management. Human resource management on a global scale identifies
three distinct sorts of workers. To begin, domestic workers are individuals who are citizens or
permanent residents of the same nation as the company's headquarters. Second, workers in the
country where a parent company has a presence are considered "host country workers" (Brauns,
2013). Employees from a third country are defined as those who do not fall into the first two
groups.

Understanding the EPRG Model

When it comes to putting into action a company's worldwide business plan, the choices and
policies made in the realm of human resources are among the most crucial components. Any
company with global expansion ambitions needs to think through the details of setting up a
foreign subsidiary, from choosing the right location to appointing locals to crucial positions,
before taking the plunge. Multinational corporations can address HRM issues using a variety of
strategies, including the ethnocentric, polycentric, regiocentric, and geocentric approaches
(Perlmutter, 1969; Heenan and Perlmutter, 1979).
The ethnocentric approach, as described by Ahlstrom and Bruton (2010), prioritizes the home
country's organizational culture over local customs. Ethnocentric organizations believe that their
goals can be met only by adopting practices common in their home country. Human resources
departments that have an ethnocentric view of their workforce typically promote from within
when staffing a new overseas office. Organizations often choose to implement an ethnocentric
strategy due to differences in managerial style and process in the foreign country where the

3
subsidiary is based, as well as variances in the skill sets of the subsidiary's personnel. In addition,
sending workers to a foreign company can help them advance in their home country's workplace
(Tung, 2018). The organization benefits from the ethnocentric strategy in a number of ways,
including 1) the elimination of personnel problems caused by a dearth of suitably qualified
candidates to fill positions at the new subsidiary. 2) It's a highly functional strategy for
maintaining business culture in the new outpost and for helping corporate keep tabs on its
overseas outposts (Tung, 2018). However, the cultural aspect may pose certain problems in areas
such as the management level decision making process and the marketing strategy. In addition,
there are issues with the time and money required to acclimate workers from the parent company
to the new overseas location (Perlmutter and Heenan, 1974).
When compared to an ethnocentric strategy, which views the subsidiary as an extension of the
parent company, a polycentric strategy views the subsidiary as a separate entity, which opens up
opportunities for citizens of the host country to assume leadership roles within the subsidiary
(Perlmutter and Heenan, 1974). This strategy takes into account the host country staff's
familiarity with the subsidiary's environment and culture, as well as the staff's familiarity with
the necessary skills and talents to properly perform the essential positions (Adler and Ghadar,
2019). Having fewer linguistic or other cultural barriers in the way of managerial decision-
making is a major advantage of polycentric personnel. Since cross-cultural training is not
relevant to the orientation program, this method is also noticeably cheaper than the ethnocentric
approach. Finally, it allows the subsidiary's management some leeway in adapting to local
conditions, as they are not tightly constrained by the parent company's policies.
In addition, the geocentric perspective incorporates a more holistic understanding of the global
market, which has implications for HR policies and procedures. Companies that adopt
geocentrism typically pursue global strategies that are adaptable to local conditions.
Accordingly, when implementing the staffing policy, firms will consider individuals of any
nationality and location who demonstrate the necessary skills and competencies for the important
job in the subsidiary (Heenan and Perlmutter, 1979). The geocentric model has evolved into the
most complex organizational structure as multinational firms have come to recognize the talents
and abilities of their employees as more important than their nationalities (Dowling, Welch and
Schuler, 2019). Multinational firms can now hire citizens of other countries as part of their
strategy for meeting the challenges posed by global competition, challenges that can be met only
via the application of a truly global and multi-cultural perspective. Therefore, it will improve
both the companies' international reputation and their access to top-tier personnel (Tung and
Miller, 2019).
The regiocentric method is a second option related to the polycentric one. The borders of
regiocentric MNCs appear to extend beyond the host country to include other areas with similar
natural characteristics that can be leveraged in the organization's business strategy and human
resources practices (such as the ASEAN region, the South-East Asia region, the European
Economic Community region, and so on) (Lucio, 2013). Using a regiocentric approach in HR
procedures can help ensure that new hires at key roles in the subsidiary have a smoother
transition into the company's culture.

4
Adoption of the EPRG Model by Multinational Corporations as Marketing Strategies

Ethnocentric Orientation- Nissan, Walt Disney

The management team adopts this perspective when they assume that their domestic marketing
strategies will translate well to other countries. Beginning operations in a new country doesn't
necessitate any changes to your company's model. Initially, Nissan only exported Japanese-made
vehicles that were suitable for the country's relatively warm winters. Vehicles have trouble
starting when shipped to the USA, a country with harsh winters. Northern Japan experiences
cooler winters than other parts of the country, but that doesn't stop locals from wrapping their
cars in blankets. Nissan's upper management imagined that consumers in the United States would
do so. For a long time, Nissan attempted to manufacture vehicles in Japan and then export them
to the United States (Pandey, 2021). Yet it was all for naught. When Walt Disney first intended
to expand his business to France, he used the same advertising methods he had used in the
United States. The French cultural minister called for a boycott of the park as a symbol of
American clichés and consumer society. Simultaneously, the French farmer movement and the
US government were at odds. It became out that there were flaws in the system's functioning.
For instance, in an effort to conform to American practices, several amusement parks have been
proclaimed alcohol-free. However, in a country where drinking wine with lunch is the norm, this
was not well received (Hafsa and Shahzad, 2015).
Polycentric Orientation- McDonald’s and Google
One well-known company that employs a polycentric approach is McDonald's. Due to its
American roots, the menu there is focused on the local delicacy of cattle and meat. When it
arrived in India, it discovered that Indians do not typically consume beef. It not only removed its
meat offers but also developed vegetarian options for the Indian subcontinent. In Europe,
McDonald's frequently offers wine along with soft drinks (Pandey, 2021). In Netherlands, there
is a peculiar Dutch biscuit called a McFlurry. Google is another company using a polycentric
approach. Do you care to see how the doodles change every day? Instead of attempting a single
drawing everywhere, it customizes itself for each nation. In India, a different person can be
honored at the same time as another holiday is being observed in the United States.
Regioncentric Orientation- Coca Cola and Goodyear International
Coca-Cola has been taking a regional focus when developing marketing campaigns in nations
like India, Pakistan, and Bangladesh. Tire giant Goodyear International has formed alliances
with countries that share cultural and economic values. One part of the world is Asia-Pacific,
another is Europe, and the remaining parts are Latin America, North America, the Middle East,
and Africa (UKEssays, 2018).
Geocentric Orientation- KFC

5
A worldview with a geocentric perspective encompasses the entire planet. With this outlook,
management considers every country in the world a potential customer base. In order to
accommodate vegetarians in India, KFC offers both a "vegetarian thali" and a "Chana snacker."
The MTV channels owned and operated by Viacom are branded with the names of the countries
in which they are broadcast. It recruits more persons of these origins and makes an effort to
accommodate their musical tastes (Ford, 2019).
At various points in their global lifecycles, organizations progress through the EPRG
framework's distinct phases. From ethnocentrism, they may progress through polycentrism and
on to geocentrism. Companies' involvement in the market selection process varies as a result of
the EPRG orientations. It's understandable that businesses would adopt a less stringent approach
to market selection if they held an ethnocentric view and assumed that all countries had
equivalent markets (Pandey, 2021). On the other hand, businesses with a polycentric focus would
engage in a thorough procedure to choose their target markets.

Application of Human Resource Practices by Multinational Corporations for the

Management of Their Organizations and Subsidiaries
Human resources play a crucial part in every company since they are essential to achieving
success. As a result, businesses have spent heavily on their human resources because of the
impact they have on productivity. According to research by Alamdar et al. (2012), an
organization's performance is directly related to its ability to achieve its objectives. Training and
development, pay and benefits, and enough personnel are just a few of the human resource
strategies that can boost an organization's productivity.
International Staffing
Managers of a global business need to think about how to expand the reach of every department
(finances, marketing, human resources management, etc.) abroad. They should choose when,
where, and how to do their work. Shouldn't these be done in the motherland? Should the hiring
procedure take place in the home country or the host country? Should HR be handled outside of
the company? Or, domestic staff should be responsible for overseas missions. Should we be
using people from the area? International human resource management (IHRM) includes actions
including figuring out how to recruit and hire foreign workers to fill open positions. The field of
international human resource management (IHRM) has traditionally focused on the phenomenon
of "expatriation" - the sending of workers abroad for extended periods of time (Harris &
Brewster, 2019). Many companies today have a sizable portion of their workforce permanently
or temporarily stationed in a different country, and it is no longer uncommon for upper-level
managers to be expected to move offices at some point in their careers. These workers are some
of the most expensive assets of companies with global reach. They face concerns and issues that
are unique among workers.
In order to back up its global hiring strategy, The Coca-Cola Company has established an
efficient and successful personnel philosophy. With that in mind, the company's strategy for

6
employing its subsidiaries is to hire locals from those countries. The idea behind this notion is
that workers within a country know the market and legal framework better than those from
elsewhere. Nonetheless, there are significant considerations that make it impossible to rule out
the idea of employing expatriates in the subsidiaries (Acuff, 2018). The need to fill job openings
in countries with a shortage of specific skillsets is the primary driver of this phenomenon. When
it first began doing business in emerging markets, for instance, it needed to fill a number of
highly specialized roles with people from outside the country. The other reason the parent firm
employs foreign nationals at its branches is to give those workers a chance to advance personally
(Aswathappa 2010). The company does this by sending workers to other countries in order to
help them go ahead there. These workers can receive exposure to new cultures and perspectives
by working in a variety of settings. The Coca-Cola Company takes a geocentric, ethnocentric,
and polycentric approach to its workforce needs as it expands its operations around the world.
The firm takes a geocentric stance on hiring since it is convinced that locals have a better grasp
on the local business climate than those from elsewhere. This tactic is also used by the
corporation when developing its worldwide service program by the HRM department. As a
result, the organization is able to cultivate its human resources and form a group of executive
managers thanks to the plan (Hooper and Newlands, 2012). There are a number of benefits to
adopting a geocentric approach. For example, it helps the Coca-Cola Company promote its
global team of executive managers. These high-level executives and managers are sensitive to
the varying cultural, political, and social climates in which the organization works
internationally. This will guarantee that the business has a well-rounded worldview. The
geocentric approach to staffing also provides a foundation for training global managers who can
be sent to any of the company's overseas branches (Hooper and Newlands 2012).
Coca-polycentric Cola's approach allows its subsidiaries to operate autonomously in response to
the specifics of their respective product markets. It employs this method to provide native
enterprises with a chance to refine their HR procedures (Downes, 2016). The Coca-Cola
Company can save money in the hiring process by using this method. Employee morale is
boosted by polycentrism since it gives natives an opportunity to rise through the ranks
(Colakoglu and Caligiuri, 2019). In nations where the national language is distinct from the
parent company's language, the Coca-Cola Company adopts an ethnocentric strategy (English).
In this way, all of the upper-level managers are speaking the same language, which will facilitate
better communication and quicker resolution of issues. The Coca-Cola Company, in particular,
employs an ethnocentric policy to restrict the independence of its affiliates.
Training and Development
For a company operating internationally, this is one of the most crucial and important tasks for
the HR department. In this area of HRM, multinational corporations with diverse origins adopt
various strategies. Having skilled and eager people available in the organization is one of the
objectives and goals of training and development. To build a more intelligent working
environment, training and growth are crucial (Tung, 2018). A worldwide company called British
American Tobacco (BAT) is active in numerous nations throughout the world, including
Pakistan, South Africa, the UK, Japan, Saudi Arabia, and many others. This company is based in

7
the United States, and since Americans place a strong emphasis on training and development in
their HR practices, they adopt the same strategy for training and development abroad. This
includes providing opportunities for on-the-job and off-the-job training at both theoretical and
practical levels, as well as training and development opportunities through a variety of local,
regional, and global training programs that include training and development programs. As a
result, BAT's HRM practices mirror those of their home nation, and the company's subsidiaries,
such as the United Kingdom branch, utilize the same HR policies and procedures as their home
office. The ethnocentric perspective best fits this tactic.
Performance Appraisal
The evaluation is used for a variety of reasons, including professional growth, the assessment of
the employee's contribution, and justification for managerial actions like pay raises and
promotion opportunities. Management of individual performance is a formal procedure that
includes objective-setting, performance evaluation, and feedback. It is important to consider the
organization's goals, the staffing viewpoint, internationalization strategies, and local context
specifics while developing a performance rating system (Schuler et al, 2019). Global and
subsidiary objectives may be at odds, data may not be comparable across subsidiaries, the
worldwide market may be very volatile, and varying levels of market maturity all contribute to
the unique challenges and characteristics of performance appraisal in an international
environment. Recognizing that it may take longer time to see results in markets with less support
infrastructure from the parent firm, as well as resolving the conflict between universal appraisal
criteria and unique objectives in local units, is also crucial (Schuler et al., 2019).
Five Swiss multinationals were the focus of Marchon's (2014) investigation into evaluation
procedures. The direct supervisor in the host country evaluates the expatriate's performance in all
five of the investigated corporations (Tetra Pak, Holcim, Novartis, Credit Suiss, and Nestlé). It is
the assignee's direct supervisor at Tetra Pak, Credit Suisse, and Novartis who is responsible for
setting goals and evaluating performance, just as is the case with any other employee. This
exemplifies a polycentric strategy, in which the parent company treats its branches as separate
organizations and gives them extensive discretionary authority. The direct local supervisor at
Holcim also evaluates the expatriates, but they do so using a standardized form that was created
by the head office for the evaluation of overseas assignees. Surprisingly, just one business,
Nestlé, has implemented a procedure that allows the home company to review the expat
employee's work (Marchon, 2014). The group-wide assessment procedure is the same for both
the expatriate and the local staff, but the former receives an annual performance review to share
with the latter at the end of the year. Nestlé’s approach to HR and performance evaluation
reveals an ethnocentric perspective, with key decisions being decided in Switzerland and then
communicated to local businesses.

8
Conclusion
Human resource management is expert- and location-dependent. Companies, especially those
operating internationally, must focus on the mother company's requirements and guiding
principles while creating their management plan. Transferring know-how from the parent
company to the branches and building capacity in the host country are key to success. There are a
number of approaches used to achieve this goal, ranging from ethnocentric to polycentric to local
(region-centric) to geocentric. Each has its own advantages and disadvantages, and the
conditions under which it is most likely to be implemented—for example, the target region, the
profession, and the technology at play—all play a role in whether or not the projection is
successful. This research recommends a polycentric strategy so the indigenous can advance.
Locals know their markets better than foreigners. Geocentric strategies should be used when
polycentric ones aren't. If the other two tactics fail, the report suggests utilizing an ethnocentric
strategy.

9
References
Acuff, F. (2018). International and Domestic Human Resource Functions: Innovations in
International Compensation. New York: Organization Resources Counsellors, pp. 3-5.
Adler, N.J. and Ghadar, F. (2019). Strategic human resource management: a global perspective.
Human resource management: an international comparison. Berlin:Waiter de Gruter.
Al Ariss, A., & Sidani, Y. (2016). Comparative international human resource management:
Future research directions. Human Resource Management Review, 26(4), 352–358.
doi:10.1016/j.hrmr.2016.04.007.
Alamdar, H. K., Muhammad, M. N., Muhammad, A. & Wasim, H. (2012). Impact of job
satisfaction on employee performance: An empirical study of autonomous Medical Institutions
of Pakistan. African Journal of Business Management, 6(7), pp. 2697-2705.
Altarawneh, I.I. (2016). Strategic human resources management and its impact on performance:
the case from Saudi Arabia. International Journal of Business Management and Economic
Research, 7 (1), pp.14-15.
Armstrong, M., & Taylor, S. (2014). Armstrong’s Handbook of human resource management
practice. London: Ediction. Kogan Page Limited.
Aswathappa, K. (2010). Managing across cultures. In: 4th, ed. International Business. New
Delhi: Tata McGraw Hill Education, pp.210-211.
Bonache, J., & Stirpe, L. (2012). Compensating global employees. In Handbook of Research in
International Human Resource Management (2nd ed.; pp. 162–182). Cheltenham, UK: Edward
Elgar Publishing Limited.
Brauns, M. (2013). Aligning strategic human resource management to human resources,
performance and reward. The international business and economics research journal, 12 (11), 4-
5.
Bruton, G.D. (2010). Rapid Institutional Shifts and the Co–evolution of Entrepreneurial Firms in
Transition Economies. Entrepreneurship Theory and Practice, 34(3), pp.531-554.
Colakoglu, S. and Caligiuri, P.M. (2019). Cultural Distance, Expatriate Staffing and Subsidiary
Performance: The Case of US Subsidiaries of Multinational Corporations. International Journal
of Human Resource Management, 19:223-239.
Collings, D., & Scullion, H. (2012). Global Staffing. In Handbook of Research in International
Human Resource Management (2nd edition). Edward Elgar Publishing Limited.

10
Collings, D.G. (2010). Swimming against the tide: Outward staffing flows from multinational
subsidiaries. Human Resource Management, 49 (4), pp. 575-598.
Dowling, P.J., Welch, D.E. and Schuler, R.S. (2019). International human resource management:
Managing people in an international context. South Western College Publishing, ITP, Cincinnati,
OH.
Downes, M. (2016). Overseas Staffing Considerations at the Environmental Level. Journal of
International Management, 1:255-286.
Ford, J. (2019). What is an example of a geocentric company? Retrieved from https://answer-to-
all.com/popular/what-is-an-example-of-a-geocentric-company[Accessed August 7th, 2022].
Hafsa, S., Namrah, A. & Shahzad, G. (2015). Impact of Human Resource Management Practices
on Employees Performance. Middle-East Journal of Scientific Research, 23(2), pp. 329-338.
Harris, H. and Brewster, C. (2019). The coffee-machine system: how international selection
really works. The International Journal of Human Resource Management, 10 (3), 488-500.
Hopper, M.J. and Newlands, D. (2012). The Eight Dimensions of International Management.
London; Routledge. Human Resource Management (2nd ed.). Cheltenham, UK: Edward Elgar
Publishing Limited.
Lucio, M.M. (ed.). (2013). International Human Resource Management: An Employment
Relations Perspective. [ebook] SAGE Publications. Available
at:https://www.perlego.com/book/862179/international-human-resource-management.
Marchon J. (ed.) (2014). Expatriation management: Theoretical principles and practices in suiss-
based multinational companies, Master’s thesis, Economics and Social Sciences Faculty,
University of Fribourg, Switzerland, 2004.
Napier, N. and Shim, W.S. (2019). Expatriate management: The differential role of national
multinational corporation ownership. The International Executive (1986-1998), 38(4), p.543.
Neil, J. (2018). The Expatriate Venture: What Role Does Cross-Cultural Training Play and What
Theories Guide Research in the Fields?
Pandey, K. (2021).EPRG Framework-International Business and Market Development.
Retrieved fromhttps://www.superheuristics.com/eprg-framework-international-business-and-
market development [Accessed August 8th 2022].
Perlmutter, H. (1969). The tortuous evolution of the multinational corporation. Columbia
Journal of World Business, 4, 9-18.
Perlmutter, H.V. and Heenan, D.A., 1974. How multinational should your top managers be?
Harvard business review, 52 (6), pp.121-132.
Schuler, R.S., Fulkerson, J.R and Dowling, P.J. (2019)."Strategic Performance Measurement and
Management in Multinational Corporations". Human Resource Management, 30 (3), pp. 365–
392.
11
Tayab, H.M. (2015). International Human Resource Management: A Multinational Company
Perspective. New York, Oxford University Press Inc.
Tung, R.L. (2018). 'Selecting and training of personnel for overseas assignments'. Columbia
Journal of World Business, 16 (1), pp.68 - 78.
Tung, R.L. (2018). Selection and training procedures of US, European, and Japanese
multinationals. California management review, 25 (1), pp.57-71.
Tung, R.L. and Miller, E.L. (2019). Managing in the twenty-first century: The need for global
orientation. MIR: Management International Review, pp.5-18.
UKEssays. (2018). How Coca Cola Selects and Compensates Expatriates. Retrieved from
https://www.ukessays.com/essays/business/how-coca-cola-select-and-compensate-expatriates-
business-essay.php?vref=1>[Accesed August 8th 2022].

12