International Human Resource ManagementManaging people in a multinational context

IHRM

IHRM

• Define key IHRM terms• Review expatriate management evolution• Outline differences between domestic and

international HRM• Discover the increasing complexity and

potential challenges of current IHRM

Module Objectives

• Multinational are economically dominant• 70,000 transnational companies dominate

world trade, accounting 2/3 of it• The top 100 corporation account for 14% of

worldwide trade, 12% of assets & 13% of employment

• The 10 biggest have annual sales larger than the Australian government’s tax revenue

Key Trends

IHRM

• Average cost of moving an Australian abroad is $40,000, most spent on removalist, storage, airfare & accommodation

• 60% of the relocated were middle managers• 57% of companies reported a rise in domestic &

international relocations• Most focus on Asia but biggest rise (20%) in 1997-

2000 to the USA

Recent Survey …

IHRM

• Increase travel• Global technology & telecommunications• Rapid development of new technology• Free trade• Education• Migration of large number of people

Factors Creating the Global Marketplace

IHRM

• Search for new markets• Convergence of global lifestyles & values,

accelerated by global languages• E-commerce• Lowering of the costs of doing business

globally

Factors Creating the Global Marketplace

IHRM

• Do we have a strategy for becoming an international firm?• What type of managers will we need and how do we find and

develop them?• How can I find out about the way HRM is conducted in other

countries?• What will be the impact of local culture & norms?• Do we send expatriates or use locals?• Do we manage international moves if we send people out?• How do we manage knowledge across geographical and

cultural distance?

HR needs to address the following in Internationalisation

IHRM

Terms

IHRM

MNEculture shockemi-etic distinction

HCNPCNTCN

expatriateinpatriate

HRMIHRM

IHRM

Inter-relationships between approaches to a field

Figure1-1

Defining HRM

IHRM

An organization’s HRM activities include:1. Human resource planning2. Staffing (recruitment, selection, placement)3. Performance management4. Training and development5. Compensation (remuneration) and benefits6. Industrial relations

IHRM

Inter-relationships between approaches to the field

Figure1-2

IHRM

International assignments create expatriates

Figure1-3

Differences between Domestic and International HRM

IHRM

•More HR Activities •The need for broader perspective•Move involvement in employees’ personal lives•Changes in emphasis as the workforce mix of

PCNs and HCNs varies•Broader external influences•Risk exposure

IHRM

Variables that moderate differences between domestic and international HRM

Figure1-4

Laurent’s steps to truly international HRM

IHRM

1. Recognize that one’s own HRM reflects home cultureassumptions and values.

2. Recognize that one’s own peculiar ways are neither universally better nor worse than others - just different and likely to exhibit strengths and weaknesses, particularly abroad.

3. Recognize that organization’s foreign subsidiaries may prefer other ways to manage people – ways that are neither intrinsically better nor worse, but possibly more effective locally.

4. Headquarters willingness to acknowledge cultural differences and steps to make them discussable and therefore usable.

5. Build shared genuine belief that cross-cultural learning will result in more creative and effective ways of managing people.

IHRM

Strategic HRM in multinational enterprises

Figure1-5

Discussion Questions

IHRM

1. What are the main similarities and differences between domestic and international HRM?

2. Define these terms: IHRM, PCN, HCN, and TCN.3. Discuss two HR activities in which a MNE must engage

that would not be required in a domestic environment.4. Why is a greater degree of involvement in employees’

personal lives inevitable in many IHRM activities?5. Discuss at least two of the variables that moderate

differences between domestic and international HR practices.