Unit 1 Eihrm

Emerging Issues in HRM
SEMESTER – IV
UNIT - I
 Introduction
1. Changes are occurring today that requires human resource
managers to play an increasingly central role in managing
companies.
2. HR managers are facing many challenges in present business

scenario like Globalization, workforce diversity, technological
advances, changes in political and legal environment and
change in information technology.
3.All these challenges increase the pressure on HR managers to
attract, retain and nurture talented employee.
4.HR professional can’t ignore these challenges rather they ought to be
inline to design and execute innovative mechanisms of developing skills
and competencies of human resources to prepare them to accept the
emerging challenges.
2 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC
 Introduction
5.In modern time, HRM is moving away from
traditional personnel, administration, and transactional
roles, which are increasingly outsourced.
6.HRM is now expected to add value to the strategic utilization

of employees and that employee programmes
impact the business in measurable ways, hence, the new
role of HRM involves strategic direction and HRM metrics
and measurement to demonstrate values.

HRM Challenges - Introduction
1. Over the last two decades, there has been an unprecedented increase in the
number of organizations that have internationalized their operations.
2. The international movement of labour that has been concomitant with such
expansion of international business has meant that issues associated with the
management of human resources across International borders are increasingly
important to international human resource managers and academics. This
poses a lot of challenges to HR managers.
3. Due to the fluctuating economy as well as local and global advancements, there
are many changes occurring rapidly that affect HR in a wide range of issues.
4. In the Survey of Global HR Challenges: Yesterday, Today and Tomorrow,

conducted by PricewaterhouseCoopers on behalf of the World Federation of
Personnel Management Associations (WFPMA), several challenges for human
resource management were revealed.
Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC
4
5. This survey, which concluded that “despite national and
regional differences, there was remarkable unanimity,” disclosed some of
the top human resource management challenges as follows:
Change management (48%), Leadership development (35%), HR
effectiveness measurement 27%),Organizational effectiveness (25%).
6. But , typically, the main challenges of HR manager include adding value
to an organization to both the labour force and the business itself,
manage talent within the organization – try to attract and keep talented
and hard-working people in the organization; managing globalization,
Information Technology, business control, Information-workers and info-
management.

7. The world federation of personnel management association
(WFPMA)survey pointed out the most important top ten HR
challenges are leadership development, Organizational
effectiveness, change management, compensation, health and safety,
staff retention, learning and development, succession planning.
Staffing: recruitment and skill labour. Liz Weber has pointed out
that the most important challenges of the HR in business are layoffs.
8. In the view point of Gary Dessler, the most important challenges
of HRM,are technology, e- commerce, and work force diversity,
and globalization, ethical consideration of the organization which
may directly or indirectly affect the organization competitive
advantages, especially with technological advancement the
affect on recruitment, training and development and job
performance with great extent can be study in organization.

HRM Challenges - Types
1. Organizations are open systems and are, therefore, influenced by
the environment (internal as well as external ) in which they operate.
2. HRM has to deal with all the challenges that organization faces
and these are at the following levels:

HRM Challenges - Types
.Work Force Diversity • 1. Controlling Costs
Organizational Challenges
1
• 1. Productivity
Individual Challenges
Environmental Challenges
2. Globalization • 2. Improving • 2.Empowerment

Quality • 3. Ethics and
3. Legislation Social
• 3. Creating Responsibility
4.Technology Distinctive • 4. Job Insecurity
Capabilities • 5. Matching
•5. Evolving Work People and
• 4. Restructuring Organization
and Family Roles
6. Skill Shortages
10

 HRM Challenges - Types
1. Globalization of Business
1) Outsourcing and increased competition
2) The threat of terrorism
2. Economic and Technological Changes
1) Occupational shifts from manufacturing and agriculture to
service industries and telecommunications.
2) Pressures of global competition causing firms to adapt by
lowering costs and increasing productivity.
3. Technological Shifts and the Internet
1) Growth of information technology.

4. Workforce Availability and Quality Concerns
1) Inadequate supply of workers with needed skills for
“knowledge jobs”
2) Education of workers in basic skills
5. Growth in Contingent Workforce
1) Increases in temporary workers, independent
contractors, leased employees, and part-timers caused by:
a. Need for flexibility in staffing levels
b. Increased difficulty in firing regular employees.
c. Reduced legal liability from contract employees

6. Workforce Demographics and Diversity
1) Increasing Racial Diversity
2) MoreWomen in the Workforce
1) Single-parent households
2) Dual-career couples
3) Domestic partners
4) Working mothers and family/childcare
3) Significantly AgingWorkforce
1) Age discrimination
7. Organizational Cost Pressures and Restructuring
1) Mergers and Acquisitions
2) “Right-sizing”—eliminating of layers of management, closing
facilities, merging with other organizations, and out placing workers
a. Intended results are flatter organizations, increases in productivity,
quality, service and lower costs.
b. Costs are “survivor mentality”, loss of employee loyalty, and turn
over of valuable employees.
3) HR managers must work toward ensuring cultural compatibility in
mergers.
HRM Transformation
 Traditionally, the role of the Human Resource professional in many organizations
has been more closely aligned with personnel and administration functions that
were viewed by the organization as paperwork.
 In this environment, much of the HR role is transforming. The role of

the HR manager must parallel the needs of his or her changing organization.
 Successful organizations are becoming more adaptive, resilient, quick to change

direction and customer-centered.Within this environment, the HR professional,
who is considered necessary by managers and executives, is a strategic partner,
an employee sponsor or advocate and a change mentor.
 The HR professionals who understand these roles are leading their organizations
in areas such as organization development, strategic utilization of employees to
serve business goals, and talent management and development.

HRM Transformation

Transformation of HR

HRM Transformation
Focus on
building
human
capital
HRM
Transforma
Developme
tion Use of
nt of global information
HR technology
strategies
(IHRM)

CHANGING ROLE OF HRM
HR Managers should do the following things to ensure success:
 Use workforce skills and abilities in order to exploit environmental
opportunities and neutralize threats.
 Employ innovative reward plans that recognize employee contributions
and grant enhancements.
 Indulge in continuous quality improvement through TQM and HR
contributions like training, development, counseling, etc
 Utilize people with distinctive capabilities to create unsurpassed
competence in an area, e.g. Xerox in photocopiers, 3M in adhesives, Telco
in trucks etc.
 Decentralize operations and rely on self-managed teams to deliver
goods in difficult times e.g. Motorola is famous for short product
development cycles. It has quickly commercialized ideas from its research
labs.
 Lay off workers in a smooth way explaining facts to unions,
workers and other affected groups e.g. IBM , Kodak, Xerox, etc.
CHANGING ROLE OF HRM
HR Managers today are focusing attention on the following
a) Policies- HR policies based on trust, openness, equity and consensus.
b) Motivation- Create conditions in which people are willing to work with
zeal, initiative and enthusiasm; make people feel like winners.
c) Relations- Fair treatment of people and prompt redress of grievances
would pave the way for healthy work-place relations.
d) Change agent- Prepare workers to accept technological changes
by clarifying doubts.
e) Quality Consciousness- Commitment to quality in all aspects of
personnel administration will ensure success.
Due to the new trends in HR, in a nutshell the HR manager should treat
people as resources, reward them equitably, and integrate their
aspirations with corporate goals through suitable HR policies.

Dave Ulrich Model of HR Roles
Strategic Change
Partner Champion
Employee Administrative
Advocate Expert

STRATEGIC FOCUS
OPERATIONAL FOCUS

STRATEGIC FOCUS
OPERATIONAL FOCUS

STRATEGIC FOCUS
OPERATIONAL FOCUS

Changing Roles of HR Management
Note: Example percentages are based on various surveys.

Emerging HR Systems and Practices
1. Competency based HR Practices (CBHRP)

2. HR Shared Services (HRSS)
3. High Performance Work Systems (HPWS)
4. Learning Organization (LO)
5. Performance driven work culture
6. Virtual Team Building and Team Work
7. HR empowering systems and processes
8. People Capability Maturity Model (PCMM)
9. e-HR/HRIS
10.HR Score Card

Emerging HR Systems and Practices cont..
11.Knowledge Management
12.Career Anchors and Career Development
13.Competency mapping
14.Assessment/Development Center
15.360-degree feedback and appraisal
16.Appreciative Enquiry
17.HR Accounting
18.HRD Audit

“The future of HR – creating value from the outside in”
nning to Future
HR outside in means HR must turn outside business trends and stakeholders
expectations into internal actions.

Faces of Human Resources
 HR professionals try to be an analyst, business partner, consultant,
coach, leader, innovator, strategist, technologist, and more, and all at once.
 Sound HR leaders get involved in strategy, advise line managers, and
develop integrated practices that engage the workforce and make the
organization an attractive place to work. For all that, they mostly focus
inward.
 This HR transformational change needs to leverage the power of
information flow, technology and external stakeholders.
 That means widening the perspective about identifying the
stakeholders so they encompass all pivotal external participants –
including customers, partners, investors, suppliers and community
members. These groups can be the gateway to sustainable
organizational success.
Faces of Human Resources cont…
 Strategies to accomplish this out reach include:
I. Invite partners into your training sessions;
II. co-create employee performance measures with clients and suppliers;
III. build your reputation as an employer and external leader;
IV. manage the community’s overall perception of your firm;
V. involve customers in selecting new hires and rewarding current staff; and
VI. work with investors and shareholders on strategy development.
 HR professionals should join leaders in operations, finance, IT an

other disciplines in learning the “outside” perspective. HR
managers must look beyond their organizations and learn to
understand the business, social, political, economic and cultural
developments that might affect their firm or shape its
opportunities.

Six Competencies for the Future of
Human Resources

Six Competencies for the Future of Human Resources
1. Credible Activist: Follow your commitments; earn a reputation for
reliability and results. Become an authority in your field and proactively
contribute evidence-based recommendations to solve problems that affect
the organization.
2. Operational Executor: Act as function integrator, so that each element leverages
and strengthens the others. For example, when the need for new skills becomes
apparent in the performance management process, share that information
with those responsible for recruiting, learning and retention. Align HR’s efforts with
the business by interpreting corporate strategy and high priorities through HR’s
perspective.
3. Business Ally: Of the six competencies, HR professionals rank worst in their
technology knowledge and skills, yet this competency affects the business more
than any other. Expand your knowledge of IT beyond standard HR recruiting, learning
and performance-managementTools.
4. Organization Designer :Study your firm’s history and foundational documents; talk
with executives, employees, customers, investors and other stakeholders to develop
a clear knowledge of your organization’s image and how it stands out in its field.
5. Change Steward: Help your organization tackle change
rather than resist it.
6. Strategy Architect: In its new outside-in leadership role,
HR will shift and rebalance its existing competencies and develop
at least one new capability: the Strategy Architect. This
means studying the external influences on your field and your
organization.

Introduction :IHRM
1. 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.
2. 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.

Concept of IHRM?
1. International HRM (IHRM) is the process of
1) procuring,
2) allocating, and
3) effectively utilizing human resources
4) in a multinational corporation, while
5) balancing the integration and differentiation of HR activities
in foreign locations.
Objectives of IHRM
 To reduce the risk of international human resource
 To avoid cultural risks
 To avoid regional disparities
 To manage diversified human capital

Characteristics of IHRM
Need for a broader More involvement

More HR activities in employee
perspective
personal lives
Changes in
emphasis as the
workforce mix of Risk exposure More external
expatriates and influences
locals vary

Model of IHRM
HR Types of Employees Types of Countries

Activities •Home country nationals • Home country
•Host country nationals
• Procure •Third country nationals • Host country
• Utilise • Third country
• Allocate
IHRM

Category of Countries
• Country where • Country where • Country where
the company is the subsidiary neither
headquartered of an MNC is headquarter
functioning nor subsidiary
is present
Parent/Home
Country Host Country Third
Country
Example: If a business is headquartered in China and have operations in India, China is

the Parent/Home Country and India is the host Country. Any other country apart from
China and India are Third Country

Category of Employees
• Employees born • People who are

• Are citizens of the
and raised in a host citizens of neither
country where the
country. Citizens of the home country
MNC is
the country where or the host country
headquartered but
they live & work
live & work
elsewhere
Host-country Third-country
Parent-country
Nationals Nationals
Nationals
(HCNs) (TCNs)
(PCNs)

Sources of Human Resources
Parent/Home Host Country

Country Nationals
Nationals
Third Country
Nationals Inpatriates
Exptriates

Parent/Home Country Nationals
1. Parent country nationals (PCNs) are employees who are citizens of
and are hired from the nation where an organization has its
original and current headquarters (the parent country).
2. Are citizens of the country where the MNC is headquartered but live
& work elsewhere
3. The term parent country national usually is used only to
identify an employee who is posted to an overseas country as an
expatriate (overseas assignment of more than one year), as a worker
on a short-term assignment (less than one year), or as a
flexpatriate (several short-term overseas postings, sometimes
referred to as commuter assignments).
4. Often used
i. To start up operations (most common reason)
ii. To provide technical expertise
iii. To help the MNC maintain financial control over the operation
iv. In top management positions
v. To give promising home-country managers international experience
 Host Country Nationals
1. HCNs are staff hired from the country where the
International subsidiary is operating (the host country).
2. Citizens of the country where they live & work
3. They are familiar with the culture and know the language
4. They can often do a better job than home-country nationals
5. They are less expensive than home-country personnel
6. Host-country governments often prefer use of host-country
nationals
7. Hiring them is good public relations

Third Country Nationals
1.Third country nationals (TCNs) are citizens of neither the parent nor the
host country.
2.People who are citizens of neither the home country or the host country
1) 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.
2) A Mexican, employed by an American company, working in Argentina
3.Advantages of Third-Country Nationals
1) They often require less compensation than home-country nationals
2) If they are from the same geographic region as the host country and
also know the company's culture, they can often achieve objectives better
than other types of managers
3) Have cross-cultural skills
4) Provide a global or transnational image

Inpatriates
1. Persons who work in the parent/home country and are citizens

of a different country i.e. host country
2. Advantages of inpatriates
1) Help to develop global core competencies
2) Provide diversity and an international perspective in the
home office
3) Improve career opportunities for company managers
who are not from the home country

Expatriate
1. Any person who lives and works outside the country of which he/she is a
citizen
2. Includes home-country nationals, third-country nationals, and inpatriates
3. In most cases, expatriates must have work visas from the government of the
country where they live and work.
4. Example: Citizens of one EU country can live and work in other EU
countries (There are some restrictions on citizens of new EU member
countries.)
5. Expatriates are PCNs from the parent country operations, TCNs transferred
to either HQ or another subsidiary, and HCNs transferred into the parent
country.
6. Let us say John is a U.S. citizen. If John moves to France to live with no
immediate intention of going back to the US (but also no immediate
intention of becoming a French citizen) John is an American Expatriate. If
John goes to France to study, from his standpoint other Americans are
Home-country nationals, French people are Host-country nationals and
people from any country other than the US or France are Third-country
nationals.
International Assignments Create Expatriates

IHRM Approaches
1. Ethnocentric: key positions filled by nationals of parent
company.
2. Polycentric: host country nationals recruited to
manage subsidiary in their own country.
3. Geocentric: best people recruited, whatever their nationality.
4. Regiocentric: best people recruited within region in
which the subsidiary operates.

IHRM Approaches in Recruitment & Selection
Ethnocentric Geocentric
Polycentric Regiocentric
Approach Approach Approach Approach
Key management Host-country Seeks best Variation of

positions held by nationals hired to
people for key staffing policy to
parent-country jobs, irrespective
manage of nationality suit particular
nationals subsidiaries geographic areas
• Appropriate • Parent-country
• Underlying • Provides a
during early nationals occupy
principle of a 'stepping stone'
phases key positions at
global for a firm wishing
• P&G, Philips corporation
corporate HQ
• Colgate- to move from an
• HUL Palmolive ethnocentric or
polycentric
approach to a
geocentric approach
3 categories of employees can be hired – parent country nationals
( PCNs), host country nationals (HCNs) & third country nationals (TCNs)

Process of IHRM
HRP
Recruitment & Selection
Training & Development
Performance
Management
Remuneration
Repatriation
Employee Relations
Multicultural
Management

IHRM Activities
HUMAN •Difficulty in implementing HR in host countries

RESOURCE •Aligning strategic businessplanning to HRP & vice-versa
•Developmental opportunities for international managers.
PLANNING
•Ability to mix with organisation’s culture

EMPLOYEE •Ethnocentric,polycentric or geocentric staffing approach
HIRING •Selection of expatriates
•Coping with expatriate failure
•Managingrepatriation process
TRAINING & •Emphasison cultural training

DEVELOPMENT •Languagetraining
•Training in manners & mannerisms

Devising an appropriate strategy to compensate
expatriates
Minimizing discrepancies in pay between parent,
COMPENSATION host & third country nationals
Issues relating to the re-entry of expatriates into
the home country
Constraints while operating in host countries

need to be considered
PERFORMANCE
Physical distance, time differences & cost of
MANAGEMENT reporting system add to the complexity
Identification of raters to evaluate subsidiary
performance
Handling industrial relations problems in a

subsidiary
INDUSTRIAL RELATIONS Attitude of parent company towards unions in a
subsidiary
Union tactics in subsidiaries

Expatriate Assignment Life Cycle
Determining the Crisis &

need for an Reassignment
Adjustment Abroad
expatriate
Repatriation &
Post-arrival Adjustment
Departure Orientation &
Training
Selection Pre-assignment Crisis & Failure

Process training

Repatriation
1. The activity of bringing the expat back to the home
country
2. Can cause re-entry shock or reverse culture shock
3. Reasons
 Posting period over
 Children’s education
 Not happy with overseas assignment
 Failure to do a good job

Problems with Repatriation
 Career Anxiety
 Work Adjustment
 Loss of Status & Pay
 Coping with new Role Demand
 Devaluing the International Experience
 Social Factors

Main Challenges in IHRM
1. High failure rates of expatriation and repatriation
2. Deployment – getting the right mix of skills in the organization
regardless of geographical location
3. Talent identification and development – identify capable
people who are able to function effectively
4. Barriers to women in IHRM
5. International ethics
6. Language (e.g. spoken, written, body)

Main Challenges in IHRM
 Different labor laws

 Different political climate
 Different stage(s) of technological advancement
 Roles of religion e.g. sacred objects, prayer
holidays, etc
 Educational level attained
 Social organizations e.g. social institutions,
authority structures, interest groups, status systems

New Trends In International HRM
 International HRM places greater emphasis on a number of
responsibilities and functions such as relocation, orientation and
translation services to help employees adapt to a new and
different environment outside their own country.
 Selection of employees requires careful evaluation of
the personal characteristics of the candidate and his/her spouse.
 Training and development extends beyond information and
orientation training to include sensitivity training and field
experiences Managers need to be protected from career
development risks, re-entry problems and culture shock.
 To balance the pros and cons of home country and host country
evaluations, performance evaluations should combine the
two sources of appraisal information.
 Compensation systems should support the overall strategic
intent of the organization but should be customized for local
conditions.

Domestic HRM vs International 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.

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Emerging Issues in HRM

2. HR managers are facing many challenges in present business

6.HRM is now expected to add value to the strategic utilization

3 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

4. In the Survey of Global HR Challenges: Yesterday, Today and Tomorrow,

5 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

6 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

7 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

.Work Force Diversity • 1. Controlling Costs

2. Globalization • 2. Improving • 2.Empowerment

8 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

9 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

10 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

 In this environment, much of the HR role is transforming. The role of

 Successful organizations are becoming more adaptive, resilient, quick to change

12 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

13 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

14 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

15 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

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20 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

21 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

Note: Example percentages are based on various surveys.

22 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

1. Competency based HR Practices (CBHRP)

23 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

24 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

25 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

 HR professionals should join leaders in operations, finance, IT an

27 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

28 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

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31 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

32 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

Need for a broader More involvement

33 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

HR Types of Employees Types of Countries

34 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

Example: If a business is headquartered in China and have operations in India, China is

35 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

• Employees born • People who are

36 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

Parent/Home Host Country

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1. Persons who work in the parent/home country and are citizens

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Key management Host-country Seeks best Variation of

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Training & Development

46 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

HUMAN •Difficulty in implementing HR in host countries

•Ability to mix with organisation’s culture

TRAINING & •Emphasison cultural training

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Constraints while operating in host countries

Handling industrial relations problems in a

48 Compiled by S.Suresh Kumar,Asst.Prof.FMS,SSTC

Determining the Crisis &