International Human Resource Management

INTERNATIONAL HUMAN RESOURCE MANAGEMENT

CONTENTS……… • Introduction to IHRM • Challenges to IHRM • Equal employee opportunity • Network organizations

Human Resource Management • Human Resource Management (HRM) involves all management decisions and practices that directly affect the people who work for the organization. • Human Resources the people who work for the organization.

What is IHRM? • International HRM (IHRM) is the process of: – – – – –

procuring, allocating, and effectively utilizing human resources in a multinational corporation, while balancing the integration and differentiation of HR activities in foreign locations.

OBJECTIVES of IHRM • To reduce the risk of international human resource • To aviod cultural risks • To aviod regional disparities • To manage diversifies human capital

P.Morgans Model of IHRM

Human resource activities – Procurement – Allocation – Utilization of human resources

Nation/country categories where firms expand and operate

– Host country – Parent country – Third country

Categories of employees in an MNE • Parent-country nationals (PCNs)  – Employees who were born and live in a parent country. • A parent (or home) country: the country in which a company’s corporate headquarters is located.

Categories of employees in an MNE • Host-country nationals (HCNs) 

– Employees born and raised in a host country. • Host country: a country in which the MNE seeks to locate or has already located a facility.

• Third-country nationals (TCNs) 

– Employees born in a country other than a parent or host country.

What is an expatriate?  An employee who is working and temporarily residing in a foreign country • Some firms prefer to use the term “international assignees” • Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

 Global flow of HR: more complexity in activities and more involvement in employees' lives

International Assignments Create Expatriates

Reasons for Expatriate Failure 1. 2. 3. 4.

Inability of spouse to adjust Manager’s inability to adjust Other family problems Manager’s personal or emotional maturity 5. Inability to cope with larger overseas responsibility 6. Lack of technical competence 7. Difficulties with new environment

Why IHRM

?

Factors that Influence the Global Work Environment

Forces for Change • Global competition: • Growth in mergers, acquisitions and alliances: • Organization restructuring: • Advances in technology and telecommunication

Impacts on Multinational Management

•Need for flexibility: •Local responsiveness: •Knowledge sharing: •Transfer of competence:

Managerial Responses • Developing a global “mindset” • More weighting on informal control mechanisms • Fostering horizontal communication • Using cross-border and virtual teams • Using international assignments

Differences between Domestic HRM and IHRM  More HR activities: taxation, culture orientation, administrative services  The need for a broader perspective: cater to multiple needs  More involvement in employees’ personal lives: adjustment, spouses, children  Changes in emphasis as the workforce mix of expatriates and locals varies: fairness  Risk exposure: expatriate failure, terrorism  Broader external influences: government regulations, ways of conduct

Differences between Domestic HRM and IHRM: variables • Complexity involved in operating in different countries, varied nationalities of employees • The different Cultural Environment • The industry or industries with which the MNC is involved • Attitudes of Senior Management • Extent of reliance of MNC on home country domestic market

Variables that Moderate Differences between Domestic HR and IHRM

Qualities of Global Managers • • • • • • • •

Understand the worldwide business Learn about many cultures Work with many types of people Create cultural synergy Adapt to living in many cultures Use cross-cultural skills daily Treat foreign colleagues as equals Use foreign assignments as career development

Main challenges in IHRM • High failure rates of expatriation and repatriation • Deployment – getting the right mix of skills in the organization regardless of geographical location • Knowledge and innovation dissemination – managing critical knowledge and speed of information flow • Talent identification and development – identify capable people who are able to function effectively • Barriers to women in IHRM • International ethics • Language (e.g. spoken, written, body)

Main challenges in IHRM • Different labor laws • Different political climate • Different stage(s) of technological advancement • Different values and attitudes e.g. time, achievement, risk taking • Roles of religion e.g. sacred objects, prayer, taboos, holidays, etc • Educational level attained • Social organizations e.g. social institutions, authority structures, interest groups, status systems

EQUAL EMPLOYEE OPPORTUNITY • Equal Employment Opportunities (EEO) means eliminating barriers to ensure that all employees are considered for the employment of their choice and have the chance to perform to their maximum potential.

EQUAL EMPLOYEE OPPORTUNITY • EEO practices include: • fairness at work, • hiring based on merit and • promotion based on talent. It concerns all aspects of employment including recruitment, pay and other rewards, career development and work conditions

OBJECTIVES • To promote recognition and acceptance of everyone's right to equality of opportunity • TO eliminate, as far as possible, discrimination against people by prohibiting discrimination on the basis of various attributes • TO eliminate, as far as possible, sexual harassment • TO provide redress for people who have been discriminated against or sexually harassed.

EQUAL EMPLOYEE OPPORTUNITY Discrimination on the basis of:• Disability • Race • Age • Minority • Marital status Equal employment opportunity act is implemented by many countries to stop these discriminations.

Diversity in workforce Differences among people in age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, capabilities/disabilities and in the thought process.

management system which incorporates the differences found in a multicultural workforce in a manner which results in the highest level of productivity for both the organization and the individual.

Diversity Wheel Diversity is the mixture of people in business, with their variety of backgrounds, experiences, styles, cultures, skills and competencies.

Learning’s from the Wheel • As individuals, we are all diverse • As organizations and work groups, some are more diverse than others • Important to understand your mix (customer’s, employees & stakeholders) now both current state and desired state • People are both similar and different among a variety of dimensions • Need to understand the impact of culture

NETWORK ORGANISATIONS • International Division Structure • Global Product Division • Global Area Division • Global Functional Division Structure • Multinational Matrix Structure

International Division Structure Structural arrangement that handles all international operations out of a division created for this purpose • Assures international focus receives top management attention • Unified approach to international operations • Often adopted by firms still in developmental states of international business operations • Separates domestic from international managers (not good) • May find it difficult to think and act strategically, or to allocate resources on a global basis

International Division Structure

Global Product Division Structural arrangement in which domestic divisions are given worldwide responsibility for product groups

• Global product divisions operate as profit centers • Helps manage product, technology, customer diversity • Ability to cater to local needs • Marketing, production and finance coordinated on product-by-product global basis • Duplication of facilities and staff personnel within divisions • Division manager may pursue currently attractive geographic prospects and neglect others with longterm potential • Division managers may spend too much time tapping local rather than international markets

Global Product Division

Global Area Division • Structure under which global operations organized on geographic basis

– International operations put on same level as domestic – Global division mangers responsible for all business operations in designated geographic area – Often used by firms in mature businesses with narrow product lines – Firm is able to reduce cost per unit and price competitively by manufacturing in a region – Difficult to reconcile a product emphasis with geographic orientation – New R&D efforts often ignored because divisions are selling in mature market

Global Area Division

Global Functional Division Structure Structure that organizes worldwide operations primarily based on function and secondarily on product

– Approach not used except by extractive companies such as oil and mining – Favored only by firms needing tight, centralized coordination and control of integrated production processes and firms involved in transporting products and raw materials between geographic areas – Emphasizes functional expertise, centralized control, relatively lean managerial staff – Coordination of manufacturing and marketing often difficult – Managing multiple product lines can be very challenging because of separation of production and marketing into different deparments.

Global Functional Division Structure

Multinational Matrix Structure Structure is a combination of global product, area, or functional arrangements – Allows organization to create specific type of design that best meets its needs – As matrix design’s complexity increases, coordinating personnel and getting everyone to work toward common goals often become difficult – Too many groups to their own way

Multinational Matrix Structure

Transnational Network Structures Multinational structural arrangement combining elements of function, product, geographic design, while relying on network arrangement to link worldwide subsidiaries

– At center of transnational network structures are nodes, units charged with coordinating product, functional, and geographic information – Different product line units and geographic area units have different structures depending on what is best for their particular operation

Transnational Network Structures

Control Mechanisms