INTRODUCTION – HRM TO IHRM

• The success of organizations increasingly depends on people-embodied know-

how- the knowledge, skill, and abilities imbedded in an organization's members.

• This knowledge base is the foundation of an organization' core competencies

(integrated knowledge sets within an organization that distinguish it from its
competitors and deliver value to customers).

• HRM plays important role in creating organizations and helping them survive.
Our world is an organizational world. We are surrounded by organizations and
we participate in them as members, employees, customers, and clients.

• Most of our life is spent in organization, and they supply the goods and services
on which we depend to live. Organizations on the other hand depend on people,
and without people, they would disappear.

Core elements of HRM

• People: Organizations mean people. It is the people who staff and manage
organizations.

• Management: HRM involves application of management functions and

principles for acquisitioning, developing, maintaining and remunerating
employees in organizations.

• Integration & Consistency: Decisions regarding people must be integrated

and consistent.

• Influence: Decisions must influence the effectiveness of organization resulting

into betterment of services to customers in the form of high-quality products
supplied at reasonable cost.

• Applicability: HRM principles are applicable to business as well as non-business

organizations too, such as education, health, recreation and the like.
Nature of HRM

• HRM Involves the Application of Management Functions and Principles.

The functions and principles are applied to acquiring, developing, maintaining
and providing remuneration to employees in organization.

• Decision Relating to Employees must be Integrated. Decisions on

different aspects of employees must be consistent with other human resource
(HR) decisions.

• Decisions Made Influence the Effectiveness of an Organization.

Effectiveness of an organization will result in betterment of services to customers
in the form of high-quality products supplied at reasonable costs.

• HRM Functions are not Confined to Business Establishments Only but applicable
to nonbusiness organizations such as education, health care, recreation and like.

• It is People Centered

• Pervasive Function: Human Resource Management is a pervasive function of

management. It is performed by all managers at various levels in the
organization

• Continuous Process: Human Resource Management is not a one shot

function. It must be performed continuously if the organizational objectives are
to be achieved smoothly.

• Based on Human Relations: Human Resource Management is concerned with the

motivation of human resources in the organization. The human beings can‗t be
dealt with like physical factors of production. Every person has different needs,
perceptions and expectations.
 Objectives of HRM

• Societal Objectives: To be ethically and socially responsible to the needs and

challenges of the society while minimizing the negative impact of such demands
upon the organization.

• Organizational Objectives: To recognize the role of HRM in bringing about

organizational effectiveness. HRM is only means to achieve to assist the
organization with its primary objectives.

• Functional Objectives: To maintain department‘s contribution and level of

services at a level appropriate to the organization‘s needs.

• Personal Objectives: To assist employees in achieving their personal goals, at

least in so far as these goals enhance the individual‘s contribution to the
organization. This is necessary to maintain employee performance and
satisfaction for the purpose of maintaining, retaining and motivating the
employees in the organization.

• Helping to establish and maintain a harmonious employer/employee relationship

• Helping to create and maintain a safe and healthy work environment

• Developing programs to meet the economic, psychological, and social needs of

the employees and helping the organization to retain the productive employees

• Ensuring that the organization is in compliance with provincial/territorial and

federal laws affecting the workplace (such as human rights, employment equity,
occupational health and safety, employment standards, and labour relations
legislation). To help the organization to reach its goals

• To provide organization with well-trained and well-motivated employees

• Helps you get results - through others: Different managerial techniques help
mangers to direct the performance of employees in desirable direction in order to
achieve the organizational objectives. Through the efforts of others working in an
organization, managers get things done that require effective human resource
management.

• Helps you avoid common personnel mistakes: Qualified HR mangers utilize

organization resources in such a way that helps to avoid common personnel
mistakes like the following…

• Hiring the wrong person for the job

• Experiencing high turnover

• Finding employees not doing their best

• Having your company taken to court because of your discriminatory

actions

• Committing any unfair labor practices

• Helps you to gain Competitive Advantage: Among all the resources possessed by
the organizations it is only Manpower or the Human resources that create the
real difference. Because all organizations can have the same technology, they
can possess same type of financial resources, same sort of raw material can be
used to produce the goods and services but the organizational source that can
really create the difference is work force of the organization.

• To Attract People: People will be interested to join any organization if it is

providing them quality working environment, attractive benefit and opportunities
to excel in future. Keeping in view the opportunities in the market, the first
issues will be to attract good people for your organization.

• To Develop People: Development is related to provide the opportunities for

training and development to match the skills to job in particular areas. It requires
 careful need assessment for training and selecting effective training methods and
tool

• To Motivate: Motivation means to influence performance of others and to

redirect the efforts in desirable direction by using different motivational tools that
can help in fulfilling the mission of organization. Third important issues/concern
will be to keep your workforce motivated so that they should keep on delivering
effectively.

• To Keep Talented People: This is related to retention of workforce in organization

and to take steps that can prevent undesirable detachments of talented and
motivated workers from the organization.

FUNCTIONS/ ROLES/ ACTIVITIES OF HRM

HRM functions have been grouped to Four major categories

1. Managerial Functions of HRM

• Planning: Plan and research about wage trends, labor market conditions, union
demands and other personnel benefits. Forecasting manpower needs etc.

• Organizing: Organizing manpower and material resources by creating authorities

and responsibilities for the achievement of organizational goals and objectives.

• Staffing: Recruitment & Selection

• Directing: Issuance of orders and instructions, providing guidance and motivation

of employees to follow the path laid-down.

• Controlling: Regulating personnel activities and policies according to plans.

Observations and comparisons of deviations

Operational Functions of HRM

• Procurement: Planning, Recruitment and Selection, Induction and Placement

• Development: Training, Developme nt, Career planning and counseling.

• Compensation: Wage and Salary determination and administration

• Integration: Integration of human resources with organization.

• Maintenance: Sustaining and improving working conditions, retentions, employee

communication

• Record Keeping

• Separations: Managing separations caused by resignations, terminations, layoffs,

death, medical sickness etc.

• Personnel Planning and Evaluation: HR Audit

Strategic HR FUNCTIONS

Role of HR Managers (Today) OR Immediate Future

• Humanitarian Role: Reminding moral and ethical obligations to employees

• Counselor: Consultations to employees about marital, health, mental, physical

and career problems.

• Mediator: Playing the role of a peacemaker during disputes, conflicts between

individuals and groups and management.

• Spokesman: To represent of the company because he has better overall picture

of his company‘s operations.

• Problem Solver: Solving problems of overall human resource management and

long-term organizational planning.

• Change Agent: Introducing and implementing institutional changes and installing

organizational development programs

• Education customizer: HR is no longer a trainer for the sake, but for developing
and retaining productive workers
• Technology experts: Champion the development of technology which ensures
efficiency and effectiveness in the delivery of services.

• Strategic business partner: HR must factor in policies on employee welfare and

new or changing competency requirements when corporate strategies are being
developed.

• Employee champion: HR must create a productive work environment, ensure

effective communication, and manage workforce relations.

• Employee Advocate Role for HR: HR managers manage most HR activities in line
with the strategies and operations that have been identified by management and
serves as employee ―champion‖ for employee issues and concerns.

• Quality of life expert: Human resource achieves this through taking interest in
family and social obligations of the employees, workers time requirements, team
responsibilities, and development needs of the workers

• Job Match makers: HR matches the Knowledge, skills and attitudes of the
individual with the job requirements

• Company Communicator: Is in-charge of communicating difficult organizational

policies, decisions and work plans with sensitivity, honesty and timing.

Role of HR Managers (Future)

• Protection and enhancement of human and non-human resources

• Finding the best way of using people to accomplish organizational goals

• Improve organizational performance

• Integration of techniques of information technology with the human resources

• Utilizing behavioral scientists in the best way for his people

• Meeting challenges of increasing organizational effectiveness

• Managing diverse workforce

CHALLENGES OF MODERN MANAGEMENT

• Globalization: - Growing internationalization of business has its impact on HRM in

terms of problems of unfamiliar laws, languages, practices, competitions,
attitudes, management styles, work ethics and more.

• Corporate Re-organizations: It is a challenge to manage employees‘ anxiety,

uncertainties, insecurities and fears during these dynamic trends.

• New Organizational forms: The challenge for HRM is to cope with the
implications of these newly networked relations more and more, in place of more
comfortable hierarchical relationships that existed within the organizations for
ages in the past

• Changing Demographics of Workforce: These dynamic workforces have their

own implications for HR managers and from HRM point of view is a true
challenge to handle.

• Changed employee expectations: is a challenge for HRM to redesign the profile

of workers, and discover new methods of hiring, training, remunerating and
motivating employees.

• New Industrial Relations Approach: The challenge before HRM is to adopt a

proactive industrial relations approach which should enable HR specialist to look
into challenges unfolding in the future and to be prepared to convert them into
opportunities.

• Managing the Managers: - Managers are unique tribe in any society, they
believe they are class apart. They demand decision-making, bossism, and
operational freedom.

• Contribution to the success of organizations: - The biggest challenge to an HR

manager is to make all employees contribute to the success of the organization
in an ethical and socially responsible way. Because society‘s well-being to a large
extent depends on its organizations.
• Increasing Size of Workforce: The size of organisations is increasing. A large
number of multinational organisations have grown over the years.

• Increase in Education Level: The governments of various countries are taking

steps to eradicate illiteracy and increase the education level of their citizens.
Educated consumers and workers will create very tough task for the future
managers.

• Technological Advances: With the changes coming in the wake of advanced

technology, new jobs are created and many old jobs become redundant. There is
a general apprehension of immediate unemployment.

• Changes in Political Environment: There may be greater Government ‗s

interference in business to safeguard the interests of workers, consumers and
the public at large.

• Mobility of Professional Personnel: Organizations will expand the use of

―boundary agents‖ whose primary function will be achieving coordination with
the environment. One interesting fact will be an increase in the mobility of
various managerial and professional personnel between organizations.

Factors Contributing to the Growing Importance of HRM

• Accommodation to workers' needs: Workers are demanding that organizations

accommodate their personal needs by instituting such programs as flexible work
schedules, parental leave, child-care and elder-care assistance, and job sharing.

• Increased complexity of the Manager‘s job: Management has become an

increasingly complex and demanding job for many reasons, including foreign
competition, new technology, expanding scientific information, and rapid change.
Therefore, organizations frequently ask human resource managers for assistance
in making strategic business decisions and in matching the distinctive
competencies of the firm's human resources to the mission of the organization.
 • Expertise: Now a days there exist sophisticated personnel activities that require
special expertise.

• Legislation and litigation: The enactment of laws has contributed enormously to

the proliferation and importance of human resource functions. Four areas that
have been influenced most by legislation include equal employment,
Compensation, safety, and labor relations. An organization's failure to comply
with laws regulating these areas can result in extremely costly back-pay awards,
class action suits, and penalties.

• Consistency: Human resource policies help to maintain consistency and equity

within an organization. Consistency is particularly important in compensation and
promotion decisions.

• Cost of Human Resource: Human resource activities have become increasingly

important because of the high cost of personal problem. The largest single
expense in most organizations is labor cost, which is often considerably higher
than the necessary because of such problems as absenteeism tardiness and
discrimination.

SUMMARY

• It is critical that today‘s organizations align their human resources to better meet
strategic objectives. A failure to do so results in wasted time, energy, and
resources. Organizations are more likely to achieve this alignment with their
corporate objectives when they review their recruitment and selection processes
for fit, communicate the mission and vision statements, use joint goal setting,
design an appropriate reward system, empower the workforce, promote and
develop from within, and use teams to achieve synergy.

• Human Resource functions are strategic, operational and managerial to what

extend do you agree?

CONCEPT OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT

International Human Resource Management:

WHAT IS IHRM
Introduction
An organization gains competitive edge when it has an efficient pool of employees.
In addition, we know that a large number of organizations conduct their businesses
across national boundaries. Therefore, there is an increasing need of managing
global employees. The effective management of global employees is a major
determinant for the success or failure in international ventures. It has become a
challenge to procure, train, and retain employees for global organizations. IHRM
plays a very crucial role in terms of managing employees belonging to different
geographical locations and countries. Therefore, International HRM deals with the
typical HRM functions like recruitment, selection, training and development,
performance appraisal, etc., at the international level.

Definitions

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‖.
According to 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.‖

Another definition of IHRM is that ―it is the systematic planning and co-ordination of
the fundamental organizational processes of job and work design, staffing, training
and development, appraising, rewarding, and protecting and -representing the
human resources in the foreign operations of an organization‖.

Pulapa Subba Rao defines international human resource management as, performing
HRM and its related activities and arranging for related and necessary immigration
facilities for prospective and current expatriate employees, by organizations operating in
domestic and/or foreign countries.

International HRM deals with the typical HRM functions like recruitment, selection,
training and development, performance appraisal, etc., at the international level.

According to Hugh Scullion, International HRM (IHRM) involves the HRM issues and
problems arising from the internationalisation of business, and the HRM strategies,
policies and practices which firms pursue in response to the internationalisation of
business.

International human resource management bears both functional and strategic

resemblance to human resource management. Functionally it performs almost the same
set of activities as human resource management – recruitment, selection, performance
management, compensation, training, industrial relations, career management etc.
Strategically international HRM is closely linked to the business strategy of the
organization.

Hence international human resource management can be defined as the set of activities
involved in hiring, managing performance, compensation, training and relations with
employees hired to manage internal operations of a company, with a view to ensure the
success of their international business and strategies.

TYPES OF EMPLOYEES IN IHRM

International human resource management deals with at least three types of employees
based on their country of origin:

1. Parent-Country Nationals (PCNs) – Employees belonging to the country where a

company‘s headquarters are located are called as parent-country nationals or home
country nationals.

2. Host-Country Nationals (HCNs) – Employees belonging to country where the

company has set up a subsidiary or a manufacturing facility are called host- country
nationals.

3. Third-Country Nationals (TCNs) – Employees who work in the home or host country
facility of the company but are not nationals of either are called third- country nationals.

International HRM also means dealing with issues related to different countries,
expatriation, repatriation, cross-cultural issues etc.

FACTORS THAT DIFFERENTIATE IHRM FROM HRM

Dowling (1999) attributed to six factors that differentiate international from domestic
HRM:

1. Wide range of HR activities.

2. Need for a broader perspective.

3. More Involvement in personal life of the employee.

4. Responsiveness to changes in staffing requirements as international strategy
changes.

5. Higher risk exposure.

6. More external influences.

IHRM CONCEPT

International HRM is the process of acquiring, allocating, and utilizing human resources
in a global business to achieve the stated objectives. Because of global context,
international HRM is the interplay of three dimensions- HR activities, type of employees,
and countries of operations.

The three dimensions of international HRM are described here briefly:

1. There are three broad activities in international HRM — procuring, allocating, and
utilizing employees for international operations. These three broad activities cover all
HR functions which are relevant for domestic operations and discussed in different parts
of the text.

2. There are three types of employees in a multinational firm based on their place of
origin — parent country nationals, host country nationals, and third country nationals.
Parent country nationals (PCNs) are those whose origin is the country where the firm‘s
headquarters are located.

Host country nationals (HCNs) are those whose origin is the country where the firm‘s
operations are located. Third country nationals (TCNs) are those whose origin is a
country which is neither the home country nor the host country.

3. There are three types of countries involved in international HRM activities — home
country, host country, and third country. Home country is the country of origin of the
firm. Host country is the country in which operations of the firm are carried on. For a
single firm, there may be many host countries. Third country is a country from where
resources — human and other resources — are procured. There may be many third
countries.

FACTORS AFFECTING IHRM

HRM activities are performed in a particular context. It implies that either different HRM
activities may be required in a global firm as compared to the domestic firm or even if
the HRM activities remain the same, there may be difference in the way of performing
these activities.

I. Cultural Diversity:

Culture of a country is one of the key factors which affect people-oriented processes,
and HRM is a people-oriented process. Therefore, culture of a country has very
significant impact on HRM practices. When we consider global perspective of HRM, we
find cultural diversity along the globe, that is, cultures of two countries are not alike.

Cultural diversity exists on five dimensions- individualism versus collectivism, power

orientation, uncertainty avoidance, masculinity versus femininity, and time orientation.
Let us see how these dimensions affect human behaviour and, consequently, work
practices.

Individualism versus Collectivism:

People differ in terms of individualism and collectivism. Individualism is the extent to

which people place value on themselves; they define themselves by referring
themselves as singular persons rather than as part of a group or organization. For
them, individual tasks are more important than relationships. Collectivism is the extent
to which people emphasize the good of the group or society.

They tend to base their identity on the group or organization to which they belong.
Countries that value individualism are USA, Great Britain, Australia, Canada,
Netherlands, and New Zealand. Countries that value collectivism are Japan, Columbia,
Pakistan, Singapore, Venezuela, and Philippines.‘ India may be placed near to
collectivism.

Power Orientation:

Power orientation, also known as orientation to authority, is the extent to which less
powerful people accept the unequal distribution of power; people prefer to be in a
situation where the authority is clearly understood and lines of authority are never
bypassed. On the other hand, in a culture with less orientation to power, authority is
not as highly respected and employees are quite comfortable circumventing lines of
authority to accomplish jobs.

Uncertainty Avoidance:

Uncertainty avoidance, also known as preference for stability, is the extent to which
people feel threatened by unknown situations and prefer to be in clear and
unambiguous situations. In many countries, people prefer unambiguity while in many
other countries, people can tolerate ambiguity.

Masculinity versus Femininity:

Masculinity or femininity, also known as degree of assertiveness or materialism, is the

extent to which the dominant values in a society emphasize aggressiveness and the
acquisition of money and material goods, rather than concern for people and overall
quality of life.
In societies having masculinity characteristics, more emphasis is placed on ego goals
such as career, money, etc., while in societies having femininity characteristics, more
emphasis is placed on social goals such as relationships, helping others, etc.

Time Orientation:

Time orientation dimension divides people into two categories- long- term orientation
and short-term orientation. People having long-term orientation focus on future, prefer
to work on projects having a distant payoff, and have persistence and thrift. People
having short-term orientation are more oriented towards past and present and have
respect for traditions and social obligations.

The basic implication of cultural diversity is that same set of HRM practices is not
suitable for all cultures; consideration has to be given about matching HRM practices
with cultural characteristics of the countries concerned.

Workforce Diversity:

Workforce diversity is increasingly becoming common for large organizations even for
domestic ones. However, in a global firm, additional workforce diversity emerges
because of hiring personnel from different countries.

A typical global firm may draw its employees from three types of countries — home
country (PCNs), host country (HCNs), and third country (TCNs). In a global firm,
workforce diversity can also be seen in the context of employee mobility from one
country to another country for performing jobs.

On this basis, an employee can be put in one of the following categories:

1. Expatriate — a parent country national sent on a long-term assignment to the host

country operations.
2. Inpatriate — a host country national or third country national assigned to the home
country of the company where it is headquartered.

3. Repatriate — an expatriate coming back to the home country at the end of a foreign
assignment.

Workforce diversity implies that various categories of employees not only bring their
skills and expertise but also their attitudes, motivation to work or not to work, feelings,
and other personal characteristics. Managing such employees with pre-determined HRM
practices may not be effective but contingency approach has to be adopted so that
HRM practices become tailor-made.

Language Diversity:

Language is a medium of expression but employees coming from different countries

have different languages. Though English is a very common language, it does not serve
the purpose adequately as it does not cover the entire world. While employees coming
from different countries may be encouraged to learn the language of the host country
for better dissemination of the information, it does not become feasible in many cases.

An alternative to this is to send multilingual communications. It implies that anything

transmitted to employees should appear in more than one language to help the
message get through. While there are no hard- and-fast rules in sending such
messages, it appears safe to say that such a message should be transmitted in the
languages the employees understand to ensure adequate coverage.

Economic Diversity:

Economic diversity is expressed in terms of per capita income of different countries

where a global company operates. Economic diversity is directly related to
compensation management, that is, paying wages/salaries and other financial
compensation to employees located in different countries.
One of the basic principles of paying to employees is that ―there should be equity in
paying to employees.‖ However, putting this principle in practice is difficult for a global
company because its operations are located in different countries having different
economic status. In such a situation, some kind of parity should be established based
on the cost of living of host countries.

Diversity of various types in a global firm suggests that HRM practices have to be tailor-
made to suit the local conditions.

ROLES OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT

The HR strategy and the degree of internalization determine the role or roles that HR
assumes upon itself.

Various international human resource management roles suggested by various

researchers are:

1. Champions of Processes:

This role encompasses:

a. Building commitment of the senior leadership.

b. Training managers.

c. Monitoring HR processes.

2. Guardian of Culture:

This includes:

a. Supervision and management of implementation of global values and systems.

b. Ensuring future leaders are sensitive and equipped to deal with global challenges.
3. Effective Political Influencer:

It means:

a. Understanding internal labour market where a subsidiary is located.

b. Managing the internal labour market for the global managers.

4. Network Leadership:

It includes:

a. Building strong internal and external networks.

b. Keeping abreast with latest trends and developments.

c. Mobilizing resources to staff project teams effectively.

5. Builder:

This includes:

a. Articulating various International HR management basics.

b. Developing basic internal HR management practices at the beginning of

internalization.

6. Change Partner:

This means:

a. Continuously calibrating human resource management practices as the external

environment changes.
b. To enable the MNC to be agile in terms of its HR practices to meet the challenges of
the environment and cash-on the business opportunities.

7. Navigator:

It encompasses:

a. Competency development of the people and developing a competent organization.

b. Balancing between long-term and short-term plans and goals.

c. Balancing between global integration and local responsiveness.

d. Balancing between change and status quo in an global environment

IHRM ACTIVITIES

Although the major activities of human resource management as practiced in

international organizations, their scope, responsibilities, and authority may vary
according to the size of the subsidiary. The policy making section may study the local
situation and generate a report which will then submitted to the top management for
approval. They themselves may not have the authority to formulate such policies.

Let us look at the major areas generally looked after by the human resource
department:

1. Establishing or Reviewing Employment Policies:

Check their relevancy and applicability to International operations. For instance, Equal
Employment Opportunity Policies relevant to the United States may not be applicable to
the subsidiaries in overseas operations. Some countries allow only certain percentage of
expatriates to be appointed in their subsidiaries.

2. Recruitment:
Recruitment and selection policies must be established taking local regulations and
rules. Human resource plans must be drawn for the local operations annually and such
information must be passed on to the headquarters for compilation of a cumulative plan
for the whole corporation. Checks and verifications must be made for the accuracy and
relevancy for scheduled production and service operations of the subsidiary.

3. Selection Process:

The steps involved in the selection process must be examined to see their relevancy
and applicability to the subsidiaries. For instance, the content and the information
secured through application forms must be relevant and applicable to the local
situation. Care must be exercised in importing such forms from parent company and
using them in the subsidiary without incorporating the local content.

4. Performance Assessment:

Performance assessment is an essential part of the Human resource Management in

many of the international companies. They may range from simple to complex
assessment systems, such as Competency based systems. The employee‘s performance
is evaluated periodically with a formalized assessment system.

Whatever approaches are chosen, the following seem to be the common objectives of a
performance appraisal used in international companies:

1. To help the employees improve their current job performance.

2. To stimulate their interest in self-development

3. To provide an adequate supply of well-prepared employees for promotional exercises

4. To provide a tool for comparing employee s performance with salary for sound salary
administration.
5. To provide opportunity to express his feelings about job related matters.

6. To foster good personal relations.

7. To encourage high standards of performance

8. To let each employee know where he or she stands.

In recent years, quite a number of international companies have imported Management

by Objectives approach to the assessment system in their subsidiaries. With proper
training, the system has become routine and accepted by the employees.

Such a system includes the following steps:

1. Agreement on duties and responsibilities of the subordinate‘s job between the boss
and the subordinate.

2. Setting objectives in all areas of major responsibility

3. After setting the objectives, the subordinate submits them to his or her boss.

4. Reporting of progress to the boss.

5. At the end of the given period, the subordinate prepares an accomplishment report
comparing performance to the set objectives.

6. The next important step is the appraisal interview where reasons for not
accomplishing objectives are explored and corrective actions are suggested.

5. Training and Development:

Through Training and Development, international companies have contributed a great

deal of education to the employees of their subsidiaries. In many organizations, a
separate department is set up to look after this responsibility. Training improves the
ability and knowledge of operative employees and development, improves the ability
and knowledge of managerial personnel.

Some of the commonly used training programs in the subsidiaries of international

companies are:

a. Job instruction using models or prototypes

b. Apprenticeship training or understudy

c. Job rotation

d. Lectures to provide theoretical aspects of job

e. Coaching, especially low performers

Some of the commonly used developmental programs for executive level in subsidiaries
are:

a. Interviewing Skills

b. Negotiation Skills

c. Motivational methods

d. Leadership styles

e. Grievance handling skills

f. Middle management development programs

g. Executive development programs

h. MBA level courses on a part-time basis.

i. Use of local educational institutions

6. Employee Compensation:

Compensation is a complex subject when it comes to international area of

management. Conditions, systems, and legal aspects vary from country to country. If
two or more countries are involved in determining salaries and benefits to their
employees in world-wide locations, the complexity is further increased.

MORGANS MODEL OF IHRM

Morgan (1986) had developed a unique model to depict how IHRM works. He asserted
that IHRM basically is comprised of three components, namely-

1. The wide spectrum of HR activities particularly with reference to the added

responsibilities of the international HR managers in terms of managing cultural diversity
and developing international executives.

2. The National/Country specific people and cultural categories involved in IHR activities
and lastly

3. Types of international employees deployed in various international organizations.

DIFFERENCES BETWEEN HRM AND IHRM

a. The people associated with International Human Resource Management have to
manage employees of three nation-tiers, namely the parent country nationals,
host country nationals, and third-country nationals whereas the people
associated with Domestic Human Resource Management have to manage the
employees of only one country, where the HRM is based.

b. In IHRM, the staff is spread across various nations whereas in DHRM, the team
must work within the boundaries of a single nation.
c. The risks in managing international affairs are higher for IHRM whereas The risks
in managing domestic affairs are less for DHRM.

d. The IHRM is concerned with external factors like foreign countries' international
policies and regulations whereas The external factors in DHRM are lesser
compared to IHRM.

e. IHRM addresses a wide range of activities as compared to domestic HRM. For

example, IHRM deals with activities related to international taxation, foreign
currencies, exchange rates coordination, and international orientation of
employees, whereas such activities are irrelevant from the perspective of HRM.

f. IHRM needs greater involvement of HR manager in the personal lives of

employees staying abroad. The HR manager of a Multinational Corporation
(MNC) must ensure that an employee posted abroad has understood all the
major aspects of working environment in foreign country, compensation
package, and other relevant details regarding taxation and transportation.

g. IHRM aims to provide more exposure to employees as an international

assignment offers varied learning opportunities as compared to a local
assignment that is the area of concern for domestic HRM. However, IHRM also
involves high risk and cost.

h. IHRM has to deal with more external factors as compared to domestic HRM. For
example, in IHRM, the HR managers may have to deal with ministers, political
figures, and government regulations of the foreign countries. However, in
domestic HRM, the HR managers normally do not face such types of issues and
problems.

VARIABLES THAT MODERATE THE DIFFERENCE BETWEEN HRM AND IHRM

 1.CULTURAL ENVIRONMENT
a. Culture encompasses the values, behavioral norms, and patterns of behavior of
country
b. Culture shock: moving to a new environment requires many adjustments in short
period of time. This can challenge the frame of reference of the expatriate and their
national identity. People can get psychologically disoriented because they miss or
misunderstand cues which leads to resentment of the host country leading to lower
performance and higher rates of failure
2.INDUSTRY TYPE
a. Global industry- performance/competitiveness in 1 country is influenced by the
firm‘s position in others (eg. Bombardier and Apple produce different parts for their
products all around the world, hence have a very globally integrated strategy)
b. Multidomestic industry- competitiveness is independent of the firm‘s position in
other countries (retail, insurance, banking etc.) so IHRM is a series of domestic
strategies
3. RELIANCE ON DOMESTIC MARKET
a. Countries that have large domestic markets that account for majority of the
business will have more emphasis on domestic operations

4.MANAGEMENT’S ATTITUDE
a. When management is more open to global expansion HRM strategies become
more suited for the local market-management understands that there is no one best
way because they have a global mindset

FACTORS AFFECTING INTERNATIONAL HUMAN RESOURCE MANAGEMENT

1.The nature of IHRM may be restricted by government policies and legal regulations in
the host country. This is especially felt in developing countries, where management and
technical training within the host country‘s educational system is rudimentary and the
local government views the presence of MNCs as a means of developing local expertise.
2. Culture, particularly national culture at the headquarters, plays a role in determining
IHRM practices. Culture may affect HQ decisions in two ways:

(a) Some cultures are simply more comfortable than others in taking an ethnocentric
approach to management.

(b) The mix of cultures in the subsidiaries of an MNC and the level of cultural difference
among the subsidiaries of an MNC will restrict the IHRM approach taken.

3. MNCs with extensive international experience have had the opportunity to develop
more diverse methods of maintaining coordination and control over their foreign
operations.

4. The method used to establish operations in foreign locations may also affect HR
policies. For example, HR practices in the acquired/ merged operation will reduce the
wholesale exportation of home-country HR systems into the subsidiary.

5. An MNC opening subsidiaries in developed countries face a much different IHRM

challenge than one opening subsidiaries in developing countries. Developed countries
have well educated staff having technical and management experience.

What Are the Major Challenges of IHRM?

IHRM is subject to some of the most critical challenges. Here‘re a few:

 Managing diversity in the workplace is one of the biggest challenges of IHRM.

IHRM professionals‘ responsibility is to build and maintain a diverse workforce
where each employee can stay en gaged and there are no cultural differences.

 In an international scenario, HRM professionals need to bridge the gap between

employees and executives in order to create an open communication channel.
This can be a great challenge, especially in the international context.
 In IHRM, it is also a critical challenge to manage a global payroll while staying
compliant throughout. This is also something that IHRM professionals should
take into consideration.

 Removing gender-based differentiation and execute equal pay across different

subsidiaries of an MNC is another major challenge of global human resource
management.