1.

Introduction

BM025-3-3
International Human
Resource Management

Chapter Objectives
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

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Terms
HRM
IHRM

NAFTA
HCN
PCN
TCN

MNE
culture shock

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expatriate
inpatriate

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IHRM Chapter 1

Figure 1-1: Inter-relationships between approaches in the field

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Figure 2-1: A model of IHRM

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HRM Activities
An organizations HRM activities include:
1. Human resource planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Compensation (remuneration) and benefits
6. Industrial relations

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IHRM Chapter 1

Differences between domestic HRM & IHRM

The complexity of IHRM can be attributed to six factors:

1. More HR activities
2. The need for a broader perspective
3. Move involvement in employees personal
lives
4. Changes in emphasis as the workforce mix
of expatriates and locals varies
5. Risk exposure
6. Broader external influences
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What is an expatriate?
An employee who is working and
temporarily residing in a foreign country
Some firms prefer to use the term
international assignees
Expatriates are PCNs from the parent
country operations, TCNs transferred to
either HQ or another subsidiary, and
HCNs transferred into the parent country

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Figure 1-3: International assignments create expatriates

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Differences between domestic HRM & IHRM

The complexity of IHRM can be attributed to six factors:

1. More HR activities
2. The need for a broader perspective
3. Move involvement in employees personal
lives
4. Changes in emphasis as the workforce mix
of expatriates and locals varies
5. Risk exposure
6. Broader external influences
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IHRM Chapter 1

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More HR Activities

International taxation
International relocation
Language translation services
Host government relations

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Broader Perspective
No more a uniform compensation policy
Designing programs for more than one
national group of employees.
International perspective of expatriate
benefits

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More involvement in personal

lives

Housing arrangements
Benefits and allowances
Schooling for children
Spouse assistance

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Changes in emphasis on
workforce mix
Foreign operations will mature after a
period of time
The need for PCNs and TCNs will decline
Local staff become more trained
Will change planning, staffing, training and
development

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Risk Exposure
Human and financial costs of failure is
high
Direct costs, such as salaries and benefits
Other costs such as damaged
relationships with host country
Risks also include terrorism, diseases etc
Eg, World Trade Centre and SARs

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Broader External Influence

Economy
Political aspect
Governments Hiring policies

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Table
1-2

World top ten non-financial transnational corps.,

ranked only by foreign assets

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IHRM Chapter 1

Variables that moderate differences between

domestic HRM and IHRM
1. The complexity involved in operating in different
countries and employing different national
categories of employees
2. The cultural environment
3. The industry (or industries) with which the MNE is
primarily involved
4. The extent of reliance of the MNE on its homecountry domestic market
5. The attitudes of senior management

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IHRM Chapter 1

Figure
1-4

A model of the variables that moderate differences between domestic

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and international HRM

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IHRM Chapter 1

Discussion Questions
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.

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Tutorial Discussion
Impact of Globalisation on Human Resource Management.
Identify 5 challenges that you as an International HR Manager
would face. Provide a solution (how would you overcome) for
each of these challenges.
Discuss in groups of 4

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