The means of International Human Resource Management

IHRM means International Human Resource Management. It is an art which helps you to manage different people. It’s not only about managing people but also people who hold different culture. Before we try to understand and go deep about IHRM we need to first understand what is HRM? Once we have understood HRM we can easily understand IHRM. HRM means Human Resource Management which in simple words means managing the people within an organization. Any or many all decisions made by the management and the practices followed which directly affects the employee of a company is known as Human Resource Management. It only resource and practice for the people who work for the organization. (international human resource management (IHRM))

What is IHRM?

IHRM can be defined in many ways. However International Human Resource Management (IHRM) is the process of: –

-acquiring,

-designating, and

-effectively using the human resources

-in a multinational company or organization, while trying and maintaining

-the balance of integration and differentiation of HR activities in the foreign locations

Today world seems to be an international small village. Earlier it was so difficult even to communicate with people in foreign. Now things are very different. It seems as if any place in the entire world is just a miles away from us. Markets have really grown, and it come together big time and now things seem to be minute. Dubai companies and many other country companies have started working hard to come up and meet the challenges of operating in the International Market. To make this happen in the best way and feasible way HR plays the major role. Their activities have changed as required now by the Global Market. (International Human Resource Management)

As you are dealing with International people International Human Resource Management IHRM comes into the picture. In simple and straight words it is characterized by increased complexity of HR activities, awareness of the culture and building strong relationship with the employees and their families too, also trying to meet their expectation as much as possible as you are dealing with people across the Globe. Not only this, even the gelling with the management across the Seas is very important to make things better.

The way of doing Business in Dubai and other countries have changed drastically. The Dubai economies have now changed their way and are welcoming with open hands to the international market. Even FDI i.e. Foreign Direct Investment’s magnitude indicates the attractiveness of UAE market. (international human resource management (IHRM))

To make this happen in reality i.e. to expand business globally, International Human Resource Management plays the major role. There are many activities that International Human Resource Management has to do which include planning of human resource i.e. employees; managing the compensation i.e. the perks that would be paid, training, etc. Training again is vast term when we talk in terms of making business international/ global. It means we need to train people across the world and they have to be trained on culture etc. Even the planning of managing compensation and their performance has to be done very carefully and patiently. It has to be thought a lot before rolling out and decision. (Bermard, 2010)

Identification of a problem and development of researchable research questions/hypotheses

IHRM should be used to lower the risk of global human resource and to reduce cultural risk with avoiding the regional disparities and hence trying to manage the diversified human capital.

Literature Review

IHRM or International Human Resource Management is an upgraded version of HRM i.e. Human Resource Management which means the managing people across the globe. This is not an easy task as you can see your employees but yes this helps a lot. In simple words its about managing the team and the company across the globe. To make this successful is very difficult and that too with keeping everyone satisfied too. (International Human Resource Management)

Models of IHRM (PCN, HCN, TCN)

There are different Models of IHRM. They are:-

PCN

HCN

TCN

Let’s discuss all of them individually. These are categorized in terms of countries/Nation.

PCN- Parent Country National

All Employees who are born and they also live in the Parent country comes under Parent Country National. The Headquarters of the Multi National Company is also present in the Parent Country National i.e. PCN.

HCN- Host Country National

All Employees who are born and they also live in the Host country comes under Host Country National. The office of the Multi National Company would be available in the Host Country National i.e. HCN. This is the country where the Multi National Company is planning to either open a branch or would already have a branch.

TCN- Third Country National

Any employee who is not born either in Parent Country or in Host company would come under Third Country National (TCN). (International Human Resource Management)

Advantage and disadvantage of using PCN, HCN, TCN

The Advantages and Disadvantages of all the models i.e. PCN, HCN and TCN are there in the appendix.

Difference between domestic and IHRM

There are some differences between domestic human resource management and international human resource management. These are minute differences with some problems and can be tackled if been analyzed thoroughly before implementing it in other global market. (international human resource management (IHRM))

Points

Domestic HRM

International HRM

HR Activities

Activities are less as its in house only

Activities are a lot like Taxation, Orientation of Culture and Administration services etc

Â

Involvement in Employees

The involvement in employees is less

The involvement in employees is more. It is more in their personal lives like taking care of their family, children etc

Â

Needs

Needs is not so high

They need to cater multiple needs

Â

Risk Exposure

As its in house hence risk in minimum

Risk is high which needs to be tackled smartly like terrorism, expatriate failure etc

Â

Cultural Environment

Its same as its in the same country

Different as its in other host countries

Â

Senior Management

Change in attitude of Senior management not to be so high

Change in the attitude of senior management can be high

Â

Complexity

Complexity is not so high as its in the parent country

As you are dealing with other country with varied nationalities of employees hence should be considered (International Human Resource Management)

Variables that moderate differences between domestic and international HRM

There are few variables that moderate the difference between the domestic human resource management (HRM) and the international human resource management (IHRM). They are:-

Involvement of industry/industries in the Multi National Company

Range of reliance of MNC on Parent Country

Risk Exposure in Host Country

Variables that moderate differences between domestic and international HRM

Complexities involved as dealing with varied nationalities of employees

Cultural Environment

Attitude of Senior Management

Risk Exposure in the Host Country: – This has to be dealt very seriously as there can be risk and that too high risk like for example Terrorism expatriate failure etc and has to be dealt accordingly. Hence when we check International HRM this factor has to be kept in mind and utmost care has to be given to it. (International Human Resource Management)

Attitude of Senior Management: – Again this is an important factor as in how is the attitude of senior management towards it. Most of the time, they are so emotionally attached that it becomes difficult to do something i.e. to ask to relocate and work in all together a new place with new people and may be completely new culture too.

Cultural Environment: – If you are in the Host country then you are lucky but if you are outside of the Host country then you have a problem and hence have to be dealt accordingly. This is one of the most important factors when dealing with the expatriates. (International Human Resource Management)

Involvement of Industry/Industries in the Multi National Company (MNC): – Again before planning for the placement of International resource management we need to check the involvement of industry or industries with the MNC. The feedback should be taken from all of them.

Needs: – If it’s Human Resource management for the Domestic people the need of the employee / employees is not as high as it is when it’s for the international hiring. You need to check everything and the most important is the taking care of their families and making them comfortable with the new culture and environment.

Culture environment

We all know that Culture is the essence of any society. You need to understand the culture of a given area before you plan to make it a host country. The study of culture most difficult when the product or the service you are planning is culture bound. It has to be thoroughly read and should be taken care of. Once this has been done then it becomes easier to deal with other important things. But yes you need to understand it thoroughly before implementing or planning about other factors. There are different approaches of studying the Culture. (The Cultural Environment, 1997) They are:-

Anthropological approach

Maslow approach

The main elements of culture are as below (The Cultural Environment, 1997)

Material culture: – It refers to technology, tools, and artifacts. Before you plan of making a country as the host country you need to check the material availability like transportation, modes of communication availability, media availability power, distribution etc in that country. These factors can either let your business grow or would drop it depending on your requirement. For example in many African areas you do not have transport to carry refrigerated products. Hence this factor has to be taken seriously.

Language: – Again language is very important factor. Which language is used and the pronunciation has to be considered. For example if the Parent Country language is English and the selected Host country language is Chinese it would be difficult to make the co-ordination properly. These factors have to be kept in mind.

Aesthetics: – Aesthetics refers to good taste and beauty which can be expressed by kind of music, dance etc. Kind of Aesthetics followed in that Country.

Education: – Education anyways would be an important factor. You need to know the kind of education available in that area so that the hiring of employees is not difficult.

Religion: – Religion should be considered as in kind of religion being followed. The religion followed mainly in Abu Dhabi is Islam. That is the official religion in Abu Dhabi but you would also find people from Africa, India and Pakistan. (Visit Abu Dhabi)

Hofstede’s contribution: – When we talk and check about Culture we need to check about Hofstede as well. We need to see the Individualism, Integration, Moral discipline of that area in order to ensure the business would be easier and friendly.

Attitudes and values: – Attitudes refers to the economic activities and Values to the religious foundation. You need to check this out so that you can gain material and wealth in that area. Abu Dhabi follows simple Values and Attitude.

Social organization: – The kind of social organization followed in that country, like for example they believe in nuclear or extended family. Social organization would include caste, age, political groups etc. In Abu Dhabi people are highly professional.

Once these Cultural factors are been analyzed thoroughly we can move forward with the same. It’s anyways very important and should be considered in top and utmost priority. It would become very difficult if these factors are not been analyzed and properly checked before thinking about something else. Once these are being checked and thoroughly kept into mind we can move further. (The Cultural Environment, 1997)

Hofsted’s framework of national culture

This is the study in which you analyze how culture influence values in the organizations. When we talk and check about Culture we need to check about Hofstede as well. We need to see the Individualism, Integration, Moral discipline of that area in order to ensure the business would be easier and friendly. Once these Cultural factors are been analyzed thoroughly we can move forward with the same.

The Expatriate

Expatriate are the employees who work in a foreign country and reside their only. Any employee who is not in their Parent Country but any other Host Country or from Host country working in any other country would be known as Expatriate. It is very difficult to make this happen and manage them for the HR as you need to take care of them i.e. the employees and their family too. Expatriates can be from the Parent Nation working in any other branch of the world or an employee from Host country working in the headquarters. Hence there are mainly above type of expatriates. They can be working in any other branch of the country from the Parent country.

International assignments create expatriate

As anyways once company thinks of expanding the business expatriates comes into the picture. To get things settled in the right manner you will have to outsource your trained people the new project or proposed branch. It can be on temporary basis or on the permanent basis depending on the management decision completely plus the mentality of both the employer and the employee. Most of the times company like to send their most tenure people on temporary basis so that they can get that proposed plan started properly and then manage it from their parent country. This is where IHRM comes into the picture and this is where you have to see all models of International Human Resource Management i.e. IHRM which are Parent Country National (PCN) , Host Country National (HCN) and Third Country National (TCN). The IHRM has to play a vital role in finding the right kind of model. Once it has been analyzed and finalized they can work religiously on it to get that done. It can be explained in a much better way by the below diagram.

Difference between traditional and sort term assignment

In today’s world as we all know the cost has gone up drastically and everything is very costly, hence tradition expatriate assignments are on international assignments. In this type of assignments you have assignments like short term assignments, rotational assignments and many more like contract basis assignment and virtual type of assignments. The short term, assignments are the most popular one in these days as you do not have to pay a lot attention on short term assignments that traditional one and more-over it’s less costly than traditional assignments. While there are similarities to traditional long-term assignments, the differences pose special HR challenges. (International Human Resource Management)

Challenges of 360 feedback in a multinational corporation

360 feedbacks are mostly used in Human Resource department or in organizational psychology. This feedback i.e. the 360 feedback is also known as multisource feedback. If it is been used effectively it can be one of the most powerful tool to be dealt. The entire process of receiving feedbacks and giving feedbacks is very important anyways and by using this method it becomes easier. There are multiple steps involved in it. Once the cycle is competed you have the result in front of you. This assessment is applicable on yourself on your Boss, other bosses, peers, the suppliers, internal customers, family and friends, staff and External Customers too. The most important usage of 360 feedbacks is: –

Performance Management

Team Building

It validates training and also other initiatives

Part of organized training and development (360 degree feedback, 2008)

These are some most important usage of 360. There are many companies which are using 360. Some of them are: –

HCL

Infosys

Reliance

Aditya Birla

Tata Finance

Career Lab

Wipro etc.

The main advantages of using 360 are: –

It gives accuracy and hence its better

It is being accepted world wide

The method is easy and it’s fast to use. Also it’s easy to be implemented.

When you use this it helps in promoting open communication which is again important (What is 360 Degree Feedback?)

The main Challenges of using 360 can be as follows: –

No Follow -up: – Even after implementing if there is no follow-up done it cannot be used effectively. The follow-up has to be done on timely basis in order to achieve an accurate result.

No Accountability: – If there is no accountability, again the feedback would not be right hence it’s again as important as doing follow-ups.

It does not measure things like an employee performance objectives.

The 360 feedback is also not focused on any technical or non-technical job skills

It’s recommended not to use 360 feedbacks for few things i.e. it should not be used to measure things like attendance, sales etc.

Though it’s a tool with many advantages still it cannot measure if an employee is meeting the minimal requirement of his/her job.

It does not have any development plan

The trust lacks in 360 feedbacks. Some where there is fear in it.

You get support though you lack support from the senior people.

There can be some issues with the planning as well. (360 degree feedback, 2008)

These few challenges are been faced in a multi-national corporation.

Challenges face IHRM when hiring expatriate and change face expatriate himself.

There can be and are actually many challenges in front of International Human Resource Management when they try to hire expatriate. The issues and challenges can be as below: –

Some or the other family issues

Adjustment problem of the Manager

Spouse not able to adjust to the new environment.

Level of emotional or Personal maturity of the Manager

Not capable of handling large responsibilities and that too across the world

Adjusting and managing in new environment

Technical issues (international human resource management (IHRM))

These can be some of the major issues that the IHRM would face in hiring an expatriate. Along with this if there is a language barrier that would hamper big time. Hence these things have to be kept in mind and planned accordingly. Once the plan is in picture the orientation of it would be easier.

Research Justification

Change in Forces

Competition Globally

Restructuring of Organization

Acquisition of new Companies and employees

Merging with another Companies etc

In today’s world there is a lot of global competition. Companies are merging and acquiring new companies. They are restructuring their company and the technology is changing day by day. IHRM would really help them to grow faster and professional.

MNE require

The flexibility

Need to share the knowledge

Response of Local people

Growth and Survival

Response of Managers

Mindset to be changed in global way

Assignments globally

Communication would be horizontally

Research Methodology

All the data that is been collected to make a research would be termed as Research Methodology. There are many benefits of doing this. Some of them are:-

It helps to understand how to use the information’s available.

It develops interest in the research

It provides references for the research

Helps in Evaluating

It helps you to know the behavior of other people in the research. (Visit Abu Dhabi)

Depending on the kind of research you can select any one of the four methods available which are: –

Qualitative

Example of Qualitative are: –

Experiments

Surveys

Correlated

Quantitative

Examples of Quantitative are: –

Case Studies

Biography related

Ethnography

Mixed (Quantitative and Qualitative) and

Critical and Action oriented.

For this research I have selected Qualitative Research as this gives a good idea what should be implemented and how it should be done.

Qualitative Methodology

Qualitative methodology in this project seems to be the best because when we do the surveys it helps us to understand the issues if any and gives us the solution to it too.

Data Collection

When you go for Data Collection you should be very careful and should do that with complete attention as all your further steps and decisions are based on the Data Collection and hence ignoring on not paying attention at any level can be harmful. You need to keep many other things also in mind as in how to do it and from where to do it. You should meet various companies HR Manager and the HR head to take ideas and suggestions which would help you to analyze the following research in the best way.

It was difficult to finalize which data is more important and should be considered hence, both primary and secondary data has been taken into consideration so that all the aspects of problem and facts related to it could be resolved in the best and proper way. Some of the key information collected through secondary sources had been depicted in previous section. In this section you would find Interview and Questionnaire that was been conducted in order to provide empirical evidence to the conclusion that will be derived from this research.

Interview

Interview was conducted with HR Manager and the HR head and following questions were asked.

Q1. Do you think IHRM Would work in a better way than HRM for hiring new staffs/ employees?

Ans. IHRM which means International Human Resource Management, According to me, there is only one major difference between IHRM and HRM and that is “I”. If you are in the Human Resource department of an organization, your main KRA is to hire people for the organization. It completely depends on the management of the company whether it wants you to to hire for the domestic branch or for the international branch. You would anyways have the Job Description of the required employee which you would have to search either on the online portals available or you would be looking for some reference and then you would be hiring the person as being asked by the management of the company.

This is understood that you might have some problem in looking for such person as you would be conducting the rounds on the telephone and you would not be able to see the candidate. Hence your judgment of finding the right candidate would completely depend on your past experience. It’s always advised that for international hiring you should recruit a HR who has well past experience.

Q2. Which model of IHRM do you prefer?

Ans. As such there is no preference as all of the three are important at their place. You cannot go only for one of them, if you are looking for international expansion. You would need all of them i.e. PCN, TCN and HCN. The important factor is that you should be able to manage and use the best option available.

Q3. Do you think you face or you would face any problem while hiring expatriates?

Ans. As such there in no major issues in hiring any expatriate as at the moment the world seems to be very small and each and every person in today’s world is looking for better opportunity. Just by offering something better that their previous offer and or offering better that what they expect and what they deserve, they are ready to move where so ever they are asked to. Yes there might be some issues with the shifting of the family of the expatriates as it is very difficult for them

Q4. Still if asked to list down the challenges that an International recruiter would face while hiring an expatriate what would be the challenges?

Ans. There are some challenges that might come across the Recruiters but if dealt in the right fashion it should not be a problem for them. Yes if it is not been dealt in the right manner then it might happen that it becomes havoc for them and then they might also feel this job of recruiting a tedious and never ending job. Some of the challenges that they might come across are:-

The manager of that expatriate is emotional with him/her and would not like to lose him from this company; hence it might become a difficult situation to handle.

Another can be spouse to get adjusted to the new environment. This could be very difficult if he is being placed or transferred in another country.

There can be some problem in the family and hence the expatriate either does not agree to relocate or quits later on.

If the expatriate is at the managerial level then his/her level of handling internationally should be checked. If it’s a wrong hire company might have to suffer big time for the same.

Then there can be some technical issues too.

These can be some challenges that a recruiter who is hiring internationally can face but if they work on it in a proper way then it should not be a problem for them.

Questionnaire

International Human Resource Management is the need of the day.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Finding expatriates in today’s world is not difficult.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Any employee in today’s world and also in the generation of this upcoming world believes in working in the Parent country then moving out and working there.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Research Methodology provides references for the research and also helps to understand how to use the information’s available.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Making the management of the company understand the use of international HRM would not be so difficult.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

There can be challenges in front of the human resource team while hiring expatriates but if worked properly it can be resolved. The only thing to be kept in mind is you dealing with a human being.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Word of mouth is the best way to decide about a product and take concrete decision about it. Hence checking and taking suggestion before implementing would help to understand in a better way.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

International Human Resource Management (IHRM) and Human Resource Management (HRM), the difference is only that in IHRM you hire internationally while in HRM you hire in the same company and for the same organization.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Expatriate in simple words are the employees who work in a foreign country and reside their only with or without their family.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Risk is high in International Human Resource Management which needs to be tackled smartly like terrorism, expatriate failure etc.

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Sampling

Sample size: 100

Sampling is done on the basis of occupation and organization. All samples are from multinational organization because research is on IHRM. One person at random is chosen from one designation in any organization. During the sampling process, diversity of organization is taken so that it can truly represent population. Some samples are from Tourism industry, some are from banking & some are from manufacturing etc.

Result: –

The result of the Interview and the Questionnaire raised are as below: –

Interview:-

After the interview this seems to be clear that International Human Resource would bring some difference in the way of working for many of them. People would start getting used to it in the coming days.

Questionnaire: –

After checking the questions which were been distributed to the maximum people which can be covered we have the following details of the answers selected by them: –

Question Number

Strongly Agree

Agree

Neutral

Disagree

Strongly Disagree

Total

Question 1

100 Question 2

100 Question 3

100 Question 4

100 Question 5

100 Question 6

100 Question 7

100 Question 8

100 Question 9

100 Question 10

100 Total

449

387

66

40

58

Hence after going through the answers its recommended that once its been discussed with the top level management and the HR department and the HR head you should start working on implementing the International Human Resource Management (IHRS) keeping all the models in mind and keeping other factors (explained above) in mind. Once everything is been analyzed and understood implementing would not be a problem.

Discussion

Discussion of Key Findings

After going through the above mentioned statistics it’s clear that International Human Resource Management and its models are need of the day. The market i.e. the global market is becoming smaller day by day and the cost is going higher in the same manner, hence it’s better to begin international recruitment today than doing it never. There are also certain initiatives that are being taken in order to make sure that International Human Resource Management does not fail in any case and are being observed.

Comparison of findings with old researches

After going through all the above specified discussion it shows and gives a positive response that International hiring is the need of the day. In earlier days as everything was not as costly as today hence it was easier for rest of the things but now as things are changing tremendously hence this is important. Everything seems to be very small. This world seems to be minute and hence there are people ready to work anywhere in today’s world unlike in previous generations. Now things have changed. People i.e. expatriate’s are ready to relocate and hence being the need of the time the international hiring team should grab this opportunity.

Conclusion

As explained earlier in the findings and in the comparison too, international human resource management is the need of the day. Global market is getting smaller day by day. It’s easier to find people if you just tweak a bit in things like negotiations and relocations. Yes you face some issues with the expatriate’s families as it’s difficult for them to adjust in the completely new environment. Also its difficult if you need to take care of the expatriate’s families but one this is clear that now is the time for the International recruitment.

Recommendation

Following are few of the recommendations that can be followed by International Human Resource Management in order to take care of the stated problem,

There should be detailed analysis done of the problem so that it could be easier to attain root causes of the problem and once it’s understood then suitable action can be taken to solve it.

More expatriates to be looked for as it’s easier to be found and are less costly. This might also be easier for the human resource team and the work can be done in the required or estimated time.

References

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Jrank. (n.d.). Retrieved November 25,2010, from http://www.jrank.org/business/pages/836/international-human-resource-management-%28IHRM%29.html

ICMR. (n.d.). Retrieved November 25,2010, from http://www.icmrindia.org/courseware/Intro%20to%20Hrm/hrm-DS3.htm

Docgestion. (n.d.). Retrieved November 26,2010, from http://docgestion.isuisse.com/im4.pdf

FAO. (n.d.) Retrieved November 27, 2010, from http://www.fao.org/docrep/w5973e/w5973e07.htm

Visit Abu Dhabi. (n.d.) Retrieved November 28, 2010, from

http://www.visitabudhabi.ae/en/about.abudhabi/language.religion.aspx

Slide Share (n.d.) Retrieved December 14, 2010 from http://www.slideshare.net/gunjankanwar/360-degree-feedback-2555460

Customer Insight (n.d.) Retrieved December 14, 2010 from http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp

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