INTERNATIONAL HUMAN RESOURCE
MANAGEMENT
Presented by:
Shumaila Hafeez
Ayesha Zaheer Malik
Hadia Naeem
Syed Ali Zargham Bukhari
Laique Ur Rehman Abbasi
MS-HRM
AGENDA
Human Resource Management (HRM)
Why IHRM
Theoretical Frameworks In International HRM
Model of IHRM
Human Resources in Developing Economies
Difference between Comparative and International HRM (IHRM)
WHAT HAPPENS WHEN HRM GOES TO
INTERNATIONAL LEVEL????
The International Human Resource Management(IHRM) is defined
as the interplay among three dimensions:
1. HRM Activities
2. Countries of operation
3. Type of Employees
INTERNATIO
NAL HRM-
MORGAN
MODEL
(1986)
Source: Adapted from P. V. Morgan, International Human Resource Management: Fact of
fiction, Personnel Administrator, 31,9, 1986, p. 44
DIFFERENCES BETWEEN DOMESTIC HRM AND IHRM
INDUSTRY TYPE
The industry in which a multinational firm is involved is of considerable
importance because patterns of international competition vary widely
from one industry to another. Porter (1986).
According to Porter:
Industry type
competition
Multi
Global
domestic
Industry
industry
MULTI-DOMESTIC INDUSTRY
Multidomestic industry, one in which competition in each country
is essentially independent of competition in other countries.
Role of HRM Function:
More domestic in structure and Orientation (Porter Value Chain
Model 1985)
Example: McDonalds
GLOBAL INDUSTRY
The competitive position of companies in that industry depends on
performance across all markets.
The global industry, one in which a firm's competitive position in one
country is significantly influenced by its position in other countries.
Role HRM Function:
Deliver international support required by primary activities of
Multinational. (Porter Value Chain Model 1985)
Examples: Aircraft companies, Computer manufacturing companies.
RELIANCE OF THE MULTINATIONAL ON ITS HOME-
COUNTRY DOMESTIC MARKET
Small market demand in their home country
High market demand in their home country.
United Nations Conference on Trade and Development (UNCTAD)
made an annual survey on foreign direct investment:
1. Nestle (Switzerland).
2. Thomson (Canada).
Coca cola and McDonalds are ranked 27th and 39th respectively.
ATTITUDES OF SENIOR MANAGEMENT
Senior Management should have a strong international orientation.
Inadequate information, a lack of international perspective frequently
results in major difficulties in international operations
(Desatnick/Bennett 1978).
CULTURE
Culture is usually used to describe a shaping process.
Culture shock - a phenomenon experienced by people who move
across culture
In IHRM one has to fully appreciate the cultural differences.
CONVERGENCE APPROACH
Etic refers to culture-common aspects of behavior.
If researcher imposes etic approach it assumes universality across
culture.
Etic approach or convergence hypothesis based on two key
assumptions:
1. principles of sound management that held regardless of national
environments
2. Universality of sound management practices would lead to societies
becoming more and more alike in future.
DIVERGENCE APPROACH
Emic refers to culture-specific aspect of behavior.
Divergence approach- the behavior of individuals within these firms
is maintaining its cultural specificity.
MANAGEMENT AND NATIONAL CULTURES
The importance of Nationality
Political
Sociological
Psychological
What Distinguishes Different
National Cultures????
DIMENSIONS OF NATIONAL CULTURE
INDIVIDUALISM VERSUS COLLECTIVISM
Individualism
Preference for a loosely-knit social framework in which individuals
are expected to take care of only themselves and their immediate
families.
Collectivism
Preference for a tightly-knit framework in society in which individuals
can expect their relatives or members of a particular in-group to look
after them in exchange for unquestioning loyalty.
POWER DISTANCE
This dimension expresses the degree to which the less powerful
members of a society accept and expect that power is distributed
unequally. The fundamental issue here is how a society handles
inequalities among people.
UNCERTAINTY AVOIDANCE
Uncertainty Avoidance dimension expresses the degree to which the
members of a society feel uncomfortable with uncertainty and
ambiguity.
Weak Uncertainty avoidance
Strong Uncertainty avoidance
MASCULINITY VERSUS FEMINITY
Masculine role
Feminine role
CULTURAL ENVIRONMENT
Culture refers to a system of shared meaning held by the
organizations members and the distinguishes organization from other
organizations
Managers often face challenges due to cultural differences.
People need to learn the culture of the host country before starting the
business otherwise it creates problem for the management, creates
negative feeling among people which can lead to decreasing profits.
INSTITUTIONAL THEORY
Institutional perspective:
Social influence and pressure to adopt appropriate HRM practices
Institutional theory:
organizations are under pressure to adapt to and be consistent with their institutional
environment, organizations attempt to acquire legitimacy and recognition by
adopting structures and practices viewed as appropriate.
Pillars of institutional processes:
Regulatory
Cognitive
normative
ISOMORPHISM
Three major types of isomorphism (DiMaggio and Powell , 1983) that affect the
organizations practices and structures.
1. Coercive isomorphism :
where there is a powerful constituency (government) which imposes certain
patterns on the organizations
2. Mimetic isomorphism:
where organizations in the situation of uncertainity adopt the actions exhibited by
organizations that are viewed as successful.
3. Normative isomorphism:
where professional organizations act as disseminator of appropriate organizational
pattrens which are adopted by the organizations that are under the influence of
professional organizations.
HOST COUNTRY EFFECTS
CONT….
Host country economy
Labor market
Host business practices
SUBSIDIARY FACTORS
Number of expatriates
Knowledge exchange relationships
Role and status of HR department
Size of the subsidiary
Industry characteristics
Human Resources in Developing
Economies
Human Capital
The skills, knowledge, and experience possessed by
an individual or population, viewed in terms of their
value or cost to an organization or country.
Ways Companies develop Human Resources in
developing economies
Compete aggressively with larger employees for local talent
Hire expats
Parachute in talent
Develop in-house training programs
Substitute technology for human capital where possible
Bring in talent for short term for specific assignments
Recruiting senior hires for permanent positions
Identifying and screening Candidates
Identifycandidates from personal network
Poach workers from competitors
Use a trial period for screening
Use variable compensation to mitigate risk
Challenges in hiring and firing
Unattractive career choice.
Candidates prefer working in large companies with recognizable
brand names.
Older, experienced managers remain conservative about career
choices.
Employees do not understand about equity or do not see it’s value.
Labor laws vary from country to country and can cause difficulties in
firing low performers without just cause.
Managing Employees
Culturalnorms and labor laws
Working hours and load of work
Relationship between pay and productivity
What is Comparative HRM?
What is International HRM?
DIFFERENCE BETWEEN COMPARATIVE &
INTERNATIONAL HRM
Comparative HRM is largely concerned with questions about why and
to what extent there are differences in HR practices and other macro
level factors across countries.
IHRM is more focused on issues associated with the management of
employees across national borders in MNCs.
IHRM has therefore been interested in questions; for example do
MNCs try to reproduce similar practices across all of their subsidiaries
or do they adjust their HR practices to host country patterns.
Key challenges:
Research in international and comparative HRM has had to contend with three key
challenges: marginality, parochialism and ethnocentrism.
A marginal field of inquiry
Parochial tendencies
An ethnocentric bias
