Download Definitions IHRM File

Chapter 1
The
Challenges of
International
Human
Resource
Management
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
What is HRM
is set of organizational activities aimed at
effectively managing and directing human
resources/labour towards achieving
organizational goals.
Typical functions performed by HRM staff would
be recruitment, selection, training and
development, performance appraisal, dismissal,
managing promotions and so on.
1-2
What is International HRM
IHRM can be defined as set of activities aimed
managing organizational human resources at
international level to achieve organizational
objectives and achieve competitive advantage
over competitors at national and international level.
IHRM includes typical HRM functions such as
recruitment, selection, training and development,
performance appraisal and dismissal done at
international level and additional activities such
as global skills management, expatriate
management and so on.
1-3
Types of employees
Home country employees- Employees belonging to home
country of the firm where the corporate head quarter
is situated.
Host country employees- Employees belonging to the nation
in which the subsidiary is situated.
Third country employees- These are the employees who are
not from home country/host country but are employed at
subsidiary or corporate head quarters. As an example a
American MNC which has a subsidiary at India may employ a
French person as the CEO to the subsidiary.
The Frenchman employed is a third country employee.
1-4
Differences between domestic HRM
1.
Domestic HRM is done at national level and IHRM is done at
international level.
2. Domestic HRM is concerned with managing
employees belonging to one nation and IHRM is concerned
with managing employees belonging to many nations (Home
country, host country and third country employees)
3. Domestic HRM is concerned with managing limited number of
HRM activities at national level and IHRM has concerned with
managing additional activities such as expatriate
management.
4. Domestic HRM is less complicated due to less influence from
the external environment. IHRM is very complicated as it is
affected heavily by external factors such as cultural distance
and institutional factors.
1-5
Strategic IHRM
Strategic international human resource
management (SIHRM) is the process of planning
how best to develop and implement policies and
practices for managing people across international
boundaries by multinational companies.
As defned by Schuler et al (1999: 321) it consists
of: ‘Human resource management issues, functions
and policies and practices that result from the
strategic activities of multinational enterprises and
the impact on the international concerns and goals
of those enterprises’.
1-6
The aims of SIHRM are to ensure that HR strategies,
policies and practices are developed and implemented
that will help the enterprise to operate profitably in a
number of different countries and ensure that each unit
can operate effectively within its context – its culture
and the legal, political and economic factors that affect
it.
In doing this, the organization has to bear in mind the
point made by Pucik (2007: 203) that ‘The global firm
must manage the contradictions of
global integration,
local responsiveness and
worldwide coordination.
1-7
The specifc issues that affect international as
distinct from domestic HRM are the impact of ;
* globalization,
* the influence of environmental and cultural
differences, the
* extent to which operations should be
centralized or decentralized, and the
extent to which HRM policy and practice should
vary in different countries (convergence or
divergence).
The last two issues are of particular concern when framing
international HR strategies.
1-8
Globalization
Globalization is the process of international economic
integration in world-wide markets. It involves the
development of single international markets for goods
or services accompanied by an accelerated growth in
world trade.
Any company that has economic interests or activities
extending across a number of international
boundaries is a global company. This involves a
number of issues not present when the activities of the
firm are confined to one country
1-9
Environmental differences
Environmental differences between countries have to be
taken into account in managing globally. These
include ‘differences in the centrality of markets, institutions,
regulation, collective bargaining and labour-force
characteristics’. For example, in Western Europe collective
bargaining coverage is much higher than in countries like
the United States, Canada and Japan. Works councils are
mandated by law in Western European countries like
Germany, but not in Japan or the United States. In China,
Eastern Europe and Mexico, labour costs are signifcantly
lower than in Western Europe, Japan and the United States.
1-10
Cultural Differences
Let’s discuss that...........
1-11
Centralization or decentralization
As Pucik (2007: 201) declared: ‘Many firms competing
globally are being pointed in contradictory strategic
directions. In order to survive and prosper including
knowledge and management expertise. Decentralized
companies meeting these problems tend to veer towards
centralization until bureaucracy, lack of responsiveness and
the inability to retain good people locally leads the pendulum
to swing again towards centralization.
1-12
Centralization or decentralization
They attempt to maximize the benefits from both approaches in
order to achieve high integration while remaining locally
responsive. This can mean following the old adage of ‘think
globally and act locally’ and can get the best out of both worlds.
But it is a hard strategy to implement.
It requires managers with what Pucik calls a ‘global mindset’, who
can behave and act in a way that recognizes the global nature of
the firm and who can focus both on worldwide strategies and the
need to encourage the development of local initiatives and allow a
reasonable degree of local autonomy within a global framework.
1-13
PLUS
Strategic management is always about making choices
and this is particularly the case in international strategic
management.
The fundamental strategic choices are on the degree of
centralization/decentralization and
convergence/divergence to be adopted.
‘It is the utilization of organizational capabilities
worldwide that provides multinational companies with
competitive advantage’.
1-14
Multinational companies have to make strategic
choices on how to find and develop talented
managers with a global mindset and how to make
the maximum use of expertise by transferring
learning across units in order to ‘enhance an
organization’s capability to gain and use
its knowledge resources.
1-15
1-16
1-17
1-18
Resource Based Approach
Characteristics
- Internal firm based perspective
- Views competitive advantage as driven by firm
specific resources,
1-19
Being Better or Being Different
- Sustainable competitive advantage
a) Try to be better than rivals (positioning
approach)
b) Try to be different than rivals (resourcebased)
Canon, Virgin, Dell
1-20
What is a resource?
• A competence may be defined as a
deployment of resources and capabilities
which enable a firm to do smthg especially
well,
• This ‘something’ may be manufacturing
engines (Honda) product innovation (apple)
• Resources are inputs, capabilities are the
means of productively harnessing those
inputs.
1-21
1-22
1-23
Areas that distinquish the major resources?
1.Customer Value:competence must make a
real impact on how the customer perceive s the
org. And its products
2.Competitor differentiation: competence must
be competitively unique
3.Extendable: Core skills need to be capable of
providing basis of products or services that go
beyond those currently available.
1-24