Unit 1: International Human Resource Management

International Human Resource Management (IHRM)

International Human Resource Management (IHRM) refers to the process of managing human resources in multinational organizations across different countries and cultures. It deals with global HR functions like recruitment, selection, training, compensation, and performance management, while considering international labor laws, cross-cultural differences, and global business strategies.

Key Features

• Operates across national boundaries.
• Involves managing a diverse workforce.
• Deals with expatriates, host-country nationals (HCNs), and third-country nationals (TCNs).
• Considers international regulations, taxation, and labor practices.
• Focuses on cross-cultural communication and global leadership.

Developments Leading to the Emergence of IHRM

1. Globalization

• Expansion of companies into international markets.
• Need for standardized yet locally adaptable HR policies.

2. Growth of Multinational Corporations (MNCs)

• Managing employees across multiple countries.
• Increasing demand for expatriate management.

3. Technological Advancements

• Easy communication and coordination across countries.
• Virtual teams and remote global workforces.

4. Liberalization of Trade Policies

• Opening up of international trade and foreign investments.
• Rise in cross-border mergers, acquisitions, and joint ventures.

5. Changing Demographics and Labor Mobility

• Increased international mobility of skilled labor.
• Cross-cultural integration in the workforce.

6. Strategic Role of HR in Global Business

• HR is now a strategic partner in achieving global business objectives.
• Focus on talent management and leadership development worldwide.

Perspectives of International HRM

1. Ethnocentric Perspective

• Headquarters-centric approach.
• Key positions held by parent-country nationals (PCNs).
• Limited local responsiveness.

2. Polycentric Perspective

• Host-country nationals (HCNs) manage subsidiaries.
• Local control and responsiveness are emphasized.
• Reduced cultural friction.

3. Geocentric Perspective

• Best talent is chosen regardless of nationality.
• Promotes global mindset and integration.
• Encourages collaboration across borders.

4. Regiocentric Perspective

• Focus on regional workforce and policies.
• Managers are transferred within specific regions (e.g., EU, ASEAN).
• Balances global and local strategies.

Summary Table

International Human Resource Management (IHRM)

📌 Role of IHRM

1. Recruitment and Selection at the Global Level

• Hiring the right talent from different countries.
• Managing expatriates, host-country, and third-country nationals.

2. Training and Development

• Providing cross-cultural, language, and international business training.
• Developing global leadership and talent pipelines.

3. Performance Management

• Designing fair and effective evaluation systems across borders.
• Managing diverse expectations and performance standards.

4. Compensation and Benefits

• Creating competitive and equitable international compensation packages.
• Managing tax laws, exchange rates, and cost of living differences.

5. Employee Relations

• Managing industrial relations and labor laws across countries.
• Respecting cultural norms and legal frameworks in each location.

6. Expatriate Management

• Selection, training, support, and repatriation of employees working abroad.
• Handling cultural adjustment and family-related concerns.

7. Compliance and Risk Management

• Ensuring compliance with international labor laws and global HR standards.
• Managing risks related to political, economic, and legal environments.

Distinguishing Activities of IHRM vs Domestic HRM

• IHRM plays a strategic role in managing talent globally and aligning HR practices with international business goals.
• It differs significantly from domestic HRM in scope, complexity, employee diversity, and international challenges.

Organizational Structure and HRM

Organizational structure refers to the way activities such as task allocation, coordination, and supervision are directed toward achieving organizational goals. It outlines how roles, power, and responsibilities are assigned and coordinated.

Types of Organizational Structure

Relationship Between Organizational Structure and HRM

How HRM Adapts to Different Structures

Functional Structure

• HR emphasizes specialization and clearly defined roles.
• Promotions often based on hierarchy and expertise.

Matrix Structure

• HR manages dual reporting relationships.
• Requires training in conflict resolution and coordination.

Team-Based Structure

• HR focuses on collaboration, team-building, and group rewards.
• Flexible job descriptions and shared responsibilities.

Network Structure

• HR ensures coordination between in-house teams and outsourced partners.
• Strong emphasis on contracts, compliance, and communication.

✨ Summary

• Organizational structure directly impacts HR planning, strategy, and execution.
• HRM must be aligned with the structure to ensure effective recruitment, performance, training, and motivation.
• The more complex or flexible the structure, the more adaptive HRM policies need to be.

International Human Resource Planning (IHRP)

International Human Resource Planning is the process of forecasting and planning for the right number and type of human resources at the right place and time for multinational operations. It ensures that an international organization has the right talent to achieve global business goals.

🎯 Objectives of International HR Planning

• Right person, right job, right time – globally.
• Effective use of global talent (including expatriates, locals, and third-country nationals).
• Ensure smooth functioning of international operations.
• Address cultural, legal, and language differences.
• Plan for expatriation and repatriation processes.

Process of International HR Planning

Key Factors Influencing IHRP

Types of Employees in IHRP

Summary

• International HR Planning is critical for aligning the global workforce with the company’s strategic objectives.
• It involves forecasting, analyzing, and strategizing to handle workforce needs across multiple countries.
• Must consider legal, cultural, economic, and political aspects in each location.