International Human Resource Management (IHRM)
IHRM concerns the extent to which the core tasks change when HRM is practiced across national boundaries.On this basis, Morgan (1986) presents a model of IHRM based on the interplay between human resource tasks or activities, the national or country categories involved in HRM and the categories of employees in an international firm: • the tasks of HRM (human resource planning, etc.) • national/country categories involved in HRM tasks: 1.
the host country where a subsidiary may be located 2. the home country where the firm is headquartered 3. other’ countries that may be the source of labour, finance and other inputs • categories of employees of an international firm: 1.
host-country nationals 2. parent-country nationals 3. third-country nationals. In this model, internationalisation adds layers of complexity to the task of HRM within a particular firm. Based on the work of Perlmutter MNCs then face three strategic choices to cope with this complexity: * ethnocentric, * polycentric and * global/geocentric An ethnocentric strategy is where a company uses the same HR practices overseas as it does at home.By contrast, a polycentric strategy involves a company following local HR practice in its overseas operations. A global strategy is where a company attempts to implement common HRM policies for all its overseas operations .
Of course, this implies an element of choice for senior managers and the reality is that hybrid strategies will emerge. Torrington et al. (2005: 695) argue that International HRM is also concerned with decentralisation: As an organisation increases its international activities, it inevitably steps up the degree of decentralisation, but internationalisation is not simply a form of decentralisation.It is the most complex form of decentralizing operations and involves types of difference – language, culture, economic and political systems, legislative frameworks, management styles and conventions – that are not found in organisational growth and diversification that stay within national boundaries. How the international HR manager identifies and copes with these ‘types of difference’ will be the subject of this course.A final point about international HRM is that MNCs will also wish to use HRM policies as mechanisms for the central coordination and control of international operations, in addition to shaping the organisational culture. (Myloni 2002: 182).
Inevitably, there are a number of models of International HRM that attempt to explain how the strategic objectives of the organisation are balanced with local employee needs and values . In that case, it is perhaps more useful for managers to focus on specific HR policies and practices within the context of international organisations.Armstrong (2001) identifies the following: • Employment policies – possible approaches: • fill all key positions with parent country nationals • appoint home country nationals • appoint the best people regardless of nationality. • Recruitment and Selection – for international assignments, look for: • competency – technical, language skills, motivation etc. • previous overseas experience • evidence that the person shares the values of the culture in which he or she might work – ‘culture adaptability assessments’ • family circumstances – both the person and spouse/partner adaptable to working overseas. Career Planning – requires tailoring to further the international perspective of the organisation. • International Employee Development – the aim is to enable people to become more effective in their present job in an overseas location; account will need to be taken of cultural factors (in terms of how development programmes are delivered), and the extent to which there is central direction of programmes from the organisation, although they may be delivered locally.Human resource management (HRM) refers to the activities an organization carries out to utilize its human resources effectively These activities include: * determining the firm’s human resource strategy * staffing * performance evaluation * management development * compensation * labor relationsHRM can help the firm reduce the costs of value creation and add value by better serving customer needs HRM is more complex in an international business because of differences between countries in labor markets, culture, legal systems, economic systems, and so on HRM must also determine when to use expatriate managers (citizens of one country working abroad), who should be sent on foreign assignments, how they should be compensated, how they should be trained, and how they should be reoriented when they return home Firms need to ensure there is a fit between their human resources practices and strategy In order to carry out a strategy effectively, employees need the right training, an appropriate compensation package, and a good performance appraisal system.