INTERCULTURAL HUMAN RESOURCE

MANAGEMENT IN GLOBAL CONTEXT

INTERNATIONAL HRM
IHRM is performing HRM & its related activities &
arranging for related & necessary immigration
facilities for prospective & current expatriate
employees , by organizations operating in domestic
and/or foreign countries.
Multiculturalism , geographical dispersion , relocation
of expatriates , diverse regulatory environment for
taxation & labour laws.
Globalization & HRM
Managing HR globally gaining significance
Trans national experience for top management
Off-shoring to low cost locations increasing
complexities of staffing , performance monitoring &
differential compensations
Research on most HR practices in west may not be
relevant in other countries
MODEL OF IHRM
Utilize
Allocate
Procure O
t
H h
Host country nationals o e
H r
o m
Parent country nationals s e
t

Third country nationals

Domestic vs International HRM
Increased functional activities
Functional Heterogeneity
Increased involvement in employees personal lives
Enhanced risks
Increased influence of external environment
Strategic Orientations and practices for
IHRM
• Follows parent country • Different HR
practices strategies for
• Key people PCN different countries
• HCN often
• Locals low level employed
• Japanese companies • HCNs have higher
career opportunities

Orientation
Ethnocentric IHRM
IHRM Polycentric
Orientation

Orientation Geocentric
IHRM IHRM
Regiocentric
• Region specific HR strategies Orientation
• Employees transferred within • Hr policies &
a region practices
• Creates strong globally
communication integrated
• Best talent
posted
irrespective of
nationalities
MANAGING INTERNATIONAL HUMEN
RESOURCE ACTIVITIES
STAFFING: process of determining current & future
HR requirements to meet organizational goals &
taking appropriate steps to fulfil those requirements
Select appropriate approach for international staffing
Forms of international assignments:
Filling up job positions
Management development
Types of international assignments
• Short term ( upto 3 months)
Based on duration of • Extended term (upto 1 yr)
stay • Long term (1 to 5 yrs)

Within above • Commuter assignments

categories there may • Rotational assignments
be non standard • Contractual assignments
assignments as well • Virtual assignments
Sources of Human resources for
International Staffing
Local • Middle & lower level
• Familiar with culture & language, business
environment
citizens or • Less expensive
• Longer duration of stay

HCNs • Increases morale

Local • Lack of control over subsidiaries

• Difficulty in communications with headquarters
• Limited career opportunities outside subsidiary
citizens or • Federation of national units rather than truly
global organization

HCNs
Sources of Human resources for
International Staffing

Expatriates (employees who work

outside their home country)

Parent country Third country

nationals nationals
Sources of Human resources for
International Staffing
• Familiarity with parent company's objectives
,strategies , policies & practices

PCNs
• Higher level of control
• Availability of talented managers
• Expensive
• Difficulty in adapting
• Impose headquarters style
• Compensation discrimination

• Easy to find
• Cost lower compared to PCNs

TCNs
• Opportunities for career advancement
• Global work force
• Host country government reluctance
• TCNs reluctant t return home after assignment
Sources of Human resources for
International Staffing
• Employees assigned to work in the MNEs
home country who are citizens of either host
country of firm’s operations or a third country
Inpatriates • Microsoft employs Indian citizens(HCNs) for
its Indian operations , sends US citizens to
Japanese operations(PCNs) & sends British
citizens to Middle East Operations (TCNs)

• Transferring jobs to foreign

countries which were previously
Off-shoring carried out domestically
Characteristics of Global Managers

Global
mindset

Strategic vision
Willingness to
& long term
relocate
perspective

Ability to work Ability to

in diverse manage change
cultures & transition
Selection criteria for international
assignments

Ability to perform Family attitude

Technical &
under cross towards
Managerial
cultural international
Competence
environments assignments

Regulatory
Language framework in host
countries
Managing Expatriates: Expatriate failure
Inability to High cost of
Health Medical
adjust in alien living &
concerns
cultures income gaps

Career Lifestyle
apprehensions adjustment

Relocation Family
anxieties problems
Expatriate adjustment process

Mastery/
Adjustment Re-entry

Cultural
shock

Initial
Euphoria
Repatriation: process of returning home by an
expatriate after completion of foreign assignment

Re-
adjustment
Transition

Physical
relocation

Preparation
Training & Development

Process by which employees acquire skills, knowledge &

abilities to perform both their current & future
assignments in the organization

Preliminary
Cultural visit Practical
sensitization
training
programmes Language
training
Performance Management
Process that enables firm to evaluate the performance
against pre determined parameters
International context it becomes more complex
International HR managers need to reconcile the
differences between need for universal appraisal
standards & specific objectives of subsidiaries.
Praise given in groups in Japan whereas individually in
US
 Compensation
Refers to financial remuneration that employees
receive in exchange of their services rendered to the
organization.
It includes wages , salaries , pay rise & other monetary
issues.
Designed within the regulatory framework of country
of operation of an MNE
Culture plays significant role in determining
compensation
• Hardship allowance
• Cost of living allowance
• Housing allowance Allowances
• Home leave allowance
• Relocation allowance
• Assistance for tax equalization
premium
• To accept a foreign assignment , an extra pay is
often offered to expatriates as an inducement Foreign service
• Same range for a similar position in the home country but in
international context it often serves as a benchmark for other Base salary
compensation elements
• May be paid either in home country currency or local currency
compensation systems
Key components of International
• Combines features of both home & host country based system
compensation approaches to create global workforce. compensation
• Based on the principle that all expatriates regardless of Hybrid
their country of origin belong to one nationality
• Expatriates base salary is linked to salary structure of host system
country
• However other allowances & benefits are linked to home country
compensation
salary structure Host country based
• Going rate Approach
• Expatriates base salary is linked to salary structure of home system
country
• Balance sheet approach
compensation
• Designed to equalize purchasing power of expatriates at Home country based
comparable position levels at host & home country
Compensation
Strategic Approaches to International
Regulatory Framework & Industrial
Relations
Regulatory framework to manage human resources
varies substantially across countries
Labour laws, compensation & benefit laws ;individual
right laws , immigration ,discrimination
Industry conflicts handled differently
Strikes lock outs in Japan rare
Prohibited in US & Germany when in contract
In managing labour relations polycentric approach is
often adopted