international HRM

1. Chapter 1 Introduction:The Enduring Context of IHRM

2. Chapter Objectives • In this introductory chapter, we establish the scope of the textbook: • Define key terms in IHRM • Outline the differences between domestic HRM and IHRM • Identify the variables that moderate these differences • And discuss trends and challenges in the global work environment and the enduring context in which IHRM functions and activities are conducted, including the way in which forces for change affect the operations of the internationalizing firm and have consequences for the management of people in the multinational context. IBUS 618 Dr. Yang

3. The General Field of HR • Major Functions and Activities • Human resource planning • Staffing • Recruitment • Selection • Placement • Performance management • Training and development • Compensation (remuneration) and benefits • Industrial relations

4. History of HRM

5. History of HRM • Personnel Management • Human Resource Management

6. GLOBALIZATION

7. Stages of Globalization • Domestic • International • Multinational

8. Reasons for Globalization?

9. Reasons for Globalization of Businesses • Expand Market Share • Cheap labour, Raw material is easily available • Extensive Global Communication • New technology • To Sustain in Foreign Competition • Trade Agreement like NAFTA

10. What is an Expatriate?

11. What is an Expatriate? An employee who is working and temporarily residing in a foreign country They are also called ‘international assignees’ by some firms. All three categories of employees, i.e. PCNs, TCNs, and HCNs are expatriates Nationality of the employee is major factor in determining the person’s ‘category

12. What is an Repatriation? Transfer of subsidiary staff back to the parent country (headquarters) operations.

13. International Human Resource Management • In international HRM, the preceding activities are broadened to include aspects pertaining to the national or country categories • (Host, Home, Other) countries, • and firm employees • Host‐Country Nationals (HCNs) • Parent‐Country Nationals (PCNs) • Third Country Nationals (TCNs)

14. WHY TO STUDY IHRM??

15. Why to Study IHRM? • Recent years have seen a rapid increase in global activity and global competition. • As the MNCs increase in number and influence, so the role of international HRM in those companies grows in significance. • The effective management of human resources internationally is increasingly being recognized as a major determinant of success or failure in international business

16. Differences between Domestic HRM and IHRM • More HR activities • The need for a broader perspective • More involvement in employees’ personal lives • Changes in emphasis as the workforce mix of expatriates and locals varies • Risk exposure • Broader external influences

17. More HR Activities • International taxation • International relocation and Orientation • Administrative services for expatriates (AIDS Test Services) • Host-government relations (work permits..) • Language translation services

18. The Need for a Broader Perspective • Designing and administering programs for more than one national group of employees (e.g. PCN, HCN, and TCN). • Complex equity issues arise when employees of various nationalities work together (expatriate premium to PCN only) • and the resolution of these issues remains one of the major challenges in IHRM field.

19. Changes in Emphasis as the Workforce Mix of PCNs and HCNs varies • As the need for PCNs and TCNs declines and more trained locals become available, resources previously allocated to areas such as expatriate taxation, relocation and orientation are transferred to activities such as local staff selection, training and management development. • These assignments may require the establishment of a program to bring high-potential local staff to corporate headquarters for development assignments. • The need to change emphasis in HR operations as a foreign subsidiary matures is clearly a factor that would broaden the responsibilities of local HR activities such as human resource planning, staffing, training and development and compensation.

20. More Involvement in employees Personal Lives • A greater degree of involvement in employees’ personal lives is necessary for the selection and effective management of both PCN and TCN employees. • The HR department or professional needs to ensure that the expatriate employee understands housing arrangements, health care and all aspects of the compensation package provided for the assignment (cost-of-living allowances, taxes and so on) • Many multinationals have an ‘International HR Services’ section that coordinates administration of the above programs and provides services for PCNs and TCNs such as handling their banking and home rentals while on assignment and coordinating home visits and final repatriation.

21. Risk exposure • Expatriate failure (the premature return of an expatriate from an international assignment) and underperformance while on international assignment are potentially high-cost problems for international companies. • Direct Costs (salary, training costs and travel and relocation expenses) per failure to the parent firm may be as high as three times the domestic salary plus relocation expenses, depending on currency exchange rates and location of assignments. • Indirect Costs such as loss of foreign markets share and damage to key host-country relationships may be considerable.

22. Broader External Influence 3 Major External Factors That Influence IHRM • Type of Government (Host Country dictation in hiring) • State of Economy • Generally accepted practices of doing business in each of the various host countries in which the multinational operates

23. Defining IHRM • International HR Management is the strategic integration and alignment of HR practices with business objectives to enhance firm and employee performance around the globe.