INTERNATIONAL HUMAN RESOURCE

MANAGEMENT
Presented By

1. Harshitha. D
2. Divya
3. Geetha Shree
4. Impana
5. Dinesh P.K
Contents

• Introduction to IHRM
• Nature and Scope of IHRM
• Expatriate Selection
• Training And Remuneration
• Expat Failures
 Important terms

• Home country
Home country refers to the country where the headquarters is located.
• Host country
host country is the country where the MNC’s established its subsidiaries to grow
its business.
• Expatriate/Parent country Nationals
Someone living in a different countries for the purpose of undertaking a short or
long term overseas work assignment.
Introduction to IHRM

International human resource management can be defined as a set of activities

targeting human resource management at the international level. It helps to meet
Organizational objectives and achieve competitive advantage over competitors at
national level and international level.
IHRM comprises of typical HRM functions such as recruitment, selection,
training and development, performance appraisal and dismissal done at the
international level and additional exercises such as global skills management ,
expatriate management and so on.
IN simple form IHRM is concerned with handling the Human resource at MNC’s
and it includes managing three types of employees
• Home country employees
Employees residing in the home country of the company where the
corporate head quarter is situated ,
For example:- An Indian working in India for some company whose
headquarters is located in India itself.
• Host country employees
Employees residing in the nation in which the subsidiary is located .
For example :- An Indian working as an NRI in some foreign country.
• Third country employees
These are the employees who are not from home country or host country
but are employed at the additional or corporate headquarters.
For example :- An Indian MNC’s which has its corporate office in America ,may
employ a French person as the CEO to the subsidiary .The Frenchman
employed is a third country employee.
 Nature of IHRM

1. IHRM involves employment of right people at right job at right time ,irrespective of
geographic locations.
2. It requires the development of a diversified range of skills for employee especially,
For those who need to work beyond national boundaries.
Scope of IHRM
 Human resources activities
 Countries of operation
Origin of employees
 Human resources activities
HR activities in an IHRM context involve procurement,allocation,and utilization
of workforce. These functions in turn cover all the six activities of HRM ,that is HR
planning, hiring ,training, and development ,remuneration, performance
management, and employee relations.
 Countries of operation
The countries of operation in an IHRM perspective involves the host country in
which the overseas operations is located ,the home country that houses the
headquarters of the company ,and other countries that supply labour and finance.
 Origin of employees
The origin of the workforce of an international businesses can be classified
into three types such as Parent country nationals ,Host country nationals and
Third country nationals.
 Expatriate selection

Process of Selecting Expatriates

IT is a challenge for those responsible for selecting staff for international
assignments to determine selection criteria.
It involved in the expatriate selection, both in terms of the individual and the specifics
of the context concerned. These factors are interrelated,
• Technical Ability
• Cross cultural Suitability
• Family Requirements
• Cross Cultural
• MNC’s Requirements
• Language
 Technical Ability

A person’s ability to perform the required tasks is an important consideration and so

technical and managerial skills are therefore an essential criterion in selecting
expatriates .Indeed, research findings consistently indicates that multinationals place
heavy reliance on relevant technical skills during the expatriates selection process

Cross cultural Suitability

The cultural environment in which expatriates operate is an important factor in
determining successful performance .Not only required technical ability and managerial
skills, but also expatriates requires cross cultural abilities that enable to operate in a
new environment. It includes cultural empathy ,adaptability ,diplomacy ,language
ability, positive attitude ,emotional stability and maturity the managerial and technical
competences is regarded as primary for an expatriates success.
 Family Requirements

The contribution that the family ,particularly the spouse ,makes to the success of the
overseas assignment is now well documented. Family commitment can cause a
potential expatriate to decline the international assignment due to children's
education is an important consideration ,and the selected candidate may reject the
offered assignment on the grounds that a move at particular stage in his or her child’s
life is inappropriate.

MNC’S Requirements
Apart from expatriate related factors ,there are contextual factors ,such as
management philosophy and approach of the MNC whether it is ethnocentric
polycentric, region centric or geocentric. The status of the MNC whether it is an
international ,multi-domestic ,transnational or global company also influence this
decision to a great extent.
 Language

Language skills are be considered as of critical importance for expatriates positions but
lesser in others ,through some would argue that knowledge of the host country’s
language is an important aspect of expatriate performance ,regardless of the level of
position.
Difference in language are recognized as a major barrier to effective cross
cultural communication. Yet ,in terms of the other selection criteria we have examined
above, from the multinational’s perspective ,language is placed lower down the list of
desirable attributes.
Expatriate Training in IHRM

Many companies are relocating their employees and sending them on assignment to
work in their overseas operations as expatriates. International assignments are often
more complex then domestic assignments since they involve going to another country
and work in a different culture. This is where training is helpful to best ensure of such
assignments.
Training can also improves the overall management style .Research
shows that many host country nationals would like to see changes in some of the
styles of expatriates including their leadership styles , decision making communication
and group working.
Here are few components of a training regiment that highlights the basic needed
modifications for international success.

1. Develop Relationship skills

2. Learn the Language
3. Understand the simple and the Market
4. Be prepared for the Marketplace
5. Find a mentor or Trusted Partner
6. Have a Patience
• Develop Relationship Skills

Employees must be master these soft skills to be excellent team players ,communication
and problem solvers .

• Learn the Language

Language Proficiency can play a role in refining relationship skills .One should
seek opportunities to learn the language through specialised training programmes or
coursework that will help to adjust effectively in the host country.

• Understand the Culture and the Market

From a cultural perspective ,expatriates should learn what is held sacred and what is
viewed negatively. Blending into the market as opposed to creating embarrassment is
necessary to help global partnership's.
• Find a Mentor or Trusted Partner

Utilizing the knowledge of someone with experience in the chosen market can be
instrumental in helping one adjust and succeed.

• Have a Patience
The global market can offer unique obstacles one may not have been expecting,
but the opportunity to shine on a larger to work through challenges to appreciate the
role one is in.
Remuneration \International Compensation

International compensation can be defined as the provisions of monetary and non –

monetary rewards, including base salary ,benefits,perquisites,long and short term
incentives ,valued by employees in accordance with their relative contributes to MNC
performance.
Compensation is a key economic issues, which continues to assume an
increasingly large share of its operating expenses.HR executives in global firms spend
a great deal of time and make a lot of effort in designing and managing compensation
programs ,because of their high cost and impact on corporate
performance ,employees commitment and also their retention.
 Elements of International Compensation
There are many complexities in the international compensation programme as all the
objectives are difficult to meet and require a high degree of expertise .The elements
are discussed as follows :

• Base pay
• Incentives
• Retention and referral Bonuses
• Allowances
• Benefits
• Taxes
• Long term Benefits
Base Pay
Base pay is the primary component of a package of allowances and may be paid in home
or local country currency. The base salary is the foundation block for international
compensation whether the employee is a parent country or from any other country.

Incentives
Incentives are used to motivate employees for higher performance and to undertake
foreign assignments. Latest trends in total compensation package has seen a rise in
monetary benefits .
Retention and Referral Bonuses

Almost every organizations faces the issues of turnover of employees at some point or
the other .Referral bonus is paid to employees who bring qualified new employees
who meet the selection criteria.
This is helps to reduce the recruitment cost and time of the organization and
hence referral bonus is paid .There are many factors leading to retention of employees
apart from money such as quality of work –life, flexibility at work timing's ,challenging
assignments, transport and other benefits and rise in career graph.

Allowances
• Foreign service premiums
most common for employees, on long term assignments .More often paid to
parent country nationals than to third country nationals.
• Relocation
Compensation for costs such as transport ,temporary accommodation ,purchases of
appliances and vehicles, associated with moving to the host country.

• Education
For assignees children. This may involve in compensation for language classes
books, and school fees .

• Benefits
These are also known as indirect compensations and their purpose is to minimize
the payments and enhance quality of life .Benefits could to family ,upkeep of house
servant's etc.
 • Taxes

These take a substantial part of the salary to governments of both host and home
countries .Hence. MNC’s follow tax equalization policy ,according to be paid in the
home country and what is required to be paid in the home country and what is
required to be paid in host country .Expatriated are required to obtain tax
clearance certificate from the host country before they allowed to leave the
country.
 Expat failures
Expatriate failures occurs when an expatriate is forced to return to his or her home
organization before the expected duration of the foreign assignment is completed
Selecting suitable managers is the logical first steps but that alone does not ensures
success.

The major causes of expatriate failures .

 Selection based on headquarters criteria rather than assignments needs.
Inadequate preparation ,training and orientation prior to assignment.
Alienation or lack of support from headquarters.
Inability to adapt to local culture and working environment.
Problems with spouse and children –family unhappiness.
Insufficient compensation and financial support.
Poor programmes for career support and repatriation.
 Conclusion

IHRM is helps to enhancement of job opportunities Improves the working relationship

between home country and international countries in terms of trade and it helps to
directly or indirectly to the economic growth .