What is International Human Resource Management?

– 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.

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.”

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”.

Concept of International Human Resource Management

The concept of HRM as we are familiar with today began to evolve from the early 19th century. But
the concept of International HRM is of a recent origin. Increased international trade and widespread
globalization over the past few decades have given rise to a contemporary branch of HRM, i.e.,
international HRM, also known as global HRM.

It 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.

IHRM is concerned with the management of all the human resource activities in global organizations
without regard to geographic boundaries. It is the process of procurement, allocation and effective
utilization of human resources in international business. It is the interplay among the three
dimensions human resource activities, types of employees and countries of operation.

In other words, the basic human resource processes such as HR planning, procurement, training and
development, induction, compensation, performance management and industrial relations are
influenced by two other groups of variables. First group of variables consists of types of employees;
these may be host country nationals, parent country nationals and third country nationals.

Second group of variables consists of countries involved the host country where a subsidiary may be
located, the home country where the company has its headquarters and the other countries that
may be the source of finance or labour.

Objectives of International Human Resource Management

Within present business scenario, there are larger number of organisations conduct business beyond
national boundaries. The differences in organisational environment across nations have encouraged
to determine and develop international HR staffing and practices. At global scenario, it is needful to
study about HR hiring, staffing developing, compensating and appraising HR for better utilisation of
people.

International Human Resource Management is the process of managing people in international

ventures and involves activities in at least two nations.

It is fact that the success of business and trades are depends on the skills and quality of human
resources and how effectively these resources are managed and utilised at international level.

1. It enhances to develop managerial skills, organisational 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 organise cross cultural counselling and language training programme;

5. To develop more feasible understanding of work practices at global levels;

6. To raise and develop better and new performance management of human resources;

7. To get more and more opportunities within global HR scenario;

8. To develop better and competitive HR strategies in global competitive scenario;

9. To reduce the cultural differences as amicable for cultural environment.

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.

Modern hr practices are formulated so that they could focus on

improving the complete processes that are undertaken within an
organisation. In the globalized world, some organizations were ready
and to some these new practices came as a shock. They had to shake
things up and broaden their scope to get used to modern day human
resources methods. These new practices call for a more balanced
approach and request the employees to share and manage their
everyday tasks, which in turn would simplify the whole process.

These modern HR practices throw up several challenges before their

managers who try to implement them in a real time organizational
scenario. Some of these are mentioned below. Lets go through each of
them in detail to understand and evaluate the complete procedures.

 Understanding the new world order. Economies have become

interdependent and with globalization things have changed a lot.
Companies and their profits are now not just dependant on the
circumstances that prevail in their home country but also on the
situations abroad. Managers implementing modern HR practices
have to understand that their companies cannot survive in
isolation and will have to accept competition from other markets
as well.

 Outsourcing. It is the buzz word and makes the task of attaining

strategic advantage over the competition much easier. These
days the complete HR functions are being outsourced to reduce
the burden over the in-house managers so that they can
concentrate on much important human resource functions.

 Worker Expectations. The need for empowerment and equality

has forced the modern HR practices to evolve. Employees look for
involvement and care about their contribution towards the
 organisation. Managing and looking after the employee
expectation aspect forms the major part of any HR practice.

 The work-life balance. The old adage, "all work and no play make
jack a dull boy" holds true even in a workplace. It is important to
maintain the professional and personal balance or it could lead to
several problems that could affect an employee's life.
Formulating a balanced policy isn't easy and it is a challenge for
an HR manager to come up with one. These days most modern
HR practices include the option of working from home.

 Communication. Improper communication is the root cause of

several misunderstanding in an organisation. It is very important
that both the top management and the general employees can
communicate freely and smoothly.

 Managing Diversity. We live in a global village which has shrunk

to an extent that people have started moving and are now
working in different cultural, racial, religious conditions. Managing
such diversity is not easy and hence more modern hr practices
and broader policy initiatives are required.

HR Trends

Discovering The Right Talent

With the rise in business competitions at a fast speed and many

other investments being at stake, it will be a daunting task to find
the most fitted talents for them. This is one aspect that will be the
reason for a headache for most companies in 2021.

This means the responsibility of finding the right people to take care
of their business process will always be a complex process for all
the emerging sectors and organizations. Making it one of the top
challenges that the HR management people will face in the year
2021.

Upskilling & Grooming The WorkForce

Upskilling to develop the skill of your existing worker is one trend
that needs to give proper emphasis. Grooming them with the right
knowledge and skill will prove to be fruitful for every company in the
future. So in 2021, companies expect to encourage their employees
to upskill their level of skills offering a proper training to bring the
best out of them.

Keeping yourself updated with the modern world of knowledge &

skill is highly essential. In today’s time being just expertise in one
field is never enough for any companies. So
constantly upgrading the skill of the current employees will
certainly be a key trend in 2021.

Artificial Intelligence(AI) In HR & Recruiting

Most HR and Recruiting work are already automated. And in 2021 it

will only take this process of automation further forward. Using the
combination of AI-powered tools and human elements, engaging and
retaining more of the employees has become a norm now.

Even the outfitted HR software along with Artificial

intelligence has begun managing the applications, filtering &
selecting process. Not just that, it is even processing the recruiting
& interviewing of applicants. So, therefore, the more vast number of
merging of AI with HR & Recruiting process is going to be next big
trend of 2021.

Flexible Working Adjustments

In order to retain more number of talented employees, providing

them with an adjusted flexible working environment is
highly essential. Many young talented employees want flexible
working hours to have a social life outside of work. Also, many
talented women decide to come back to work after long breaks. So
realizing this fact many companies have already started
to readjust their policy of working arrangements.

There is a great requirement for an introduced new employee to

have a flexible working facility. Something that provides them
mental peace as this has been a game-changer from a retention
perspective in most companies. They tend to lose a lot of talented
individuals if they stay adamant about following the traditional
mode working arrangement policy.

Focusing More On Collaborative Work

If any company is looking to bring the best out of its team,

then collaborative teamwork is really important. So in 2021
organizations are focusing on encouraging their employees to do
their job as much collaboratively as possible. It is seen as a force of
strength of getting their work done efficiently & productively in
almost every organization these days.

Organizations those who are emphasizing collaborative work found

that employees who work together online but never came face to
face are way less effective than employees working collaboratively
from one place. This is why companies with HR solutions are always
encouraging more and more teamwork to
maximize productive results building a better relationships with
each other in 2021.

Giving Importance To Employee Experience

In this age of digitalization, employers expect to enjoy a much better

working experience everywhere. It is mainly because of the growing
impact of millennials and transparency. As a result of that,
company leaders are looking to focus on making every possible
experience of employees better. As this also plays an important role
in the retention of talented employees.

Nowadays employees are the most powerful strength of any

company’s competitors. And they are not someone whose data and
transactional info is limited to be managed by the HR. Therefore the
role of HR is always being revised and revamped to ensure a better
working experience for the employees. So in 2021, the
main objective of company owners would be to present their
employees with the best of working experience.