International Human Resource Management: Challenges and Contemporary Practices

This report analyses the challenges faced by the IHRM in the areas such as cultural management especially in terms of international recruitments. It also shows the implications of these cultural variations on the IHRM practices. This report also reviews the literature on the HR practices in the Cross-border M&A, International Alliances and SMEs.

INTERNATIONAL
HUMAN RESOURCE
MANAGEMENT

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Contents
INTRODUCTION.................................................................................................................................1
Implications for contemporary IHRM practice......................................................................................1
Key literature on contemporary practices in IHRM...............................................................................3
Influence on contemporary practices of IHRM and what managers can do...........................................5
Conclusion.............................................................................................................................................6
REFERENCES......................................................................................................................................7
INTRODUCTION
International Human Resource management practices have changed over the years. These
changes have been noticed due to the fact that cultural, economic and political environment
has changed. The changes in the procedures related to International staffing recruitment and

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selection and cultural ideologies of the MNC’s have led the companies to rethink about the
challenges that are faced by them. There is difference in the culture in different countries and
this variations needs to be managed in an appropriate manner (Reiche, Stahl, Mendenhall &
Oddou, 2016). In the recruitment and selection of candidates, organisation’s culture and the
culture of that country plays a very effective role. This report analyses the challenges faced
by the IHRM in the areas such as cultural management especially in terms of international
recruitments. It also shows the implications of these cultural variations on the IHRM
practices. This report also reviews the literature on the HR practices in the Cross-border
M&A, International Alliances and SMEs. In the last segment, it provides details about the
influence on the contemporary practices and its implications on the manager’s in the MNCs
due to Cross-border M&A, International Alliances and SMEs.
Implications for contemporary IHRM practice
Cross border merger and acquisition is understood as the either two company from different
countries merges with each other so as to become a greater force or one company from one
country, gains control of other firm from other country. International Human Resource
Management plays a major role in the cross-border mergers and acquisition. In merger and
acquisition, staffs of two different companies starts working with each other. In cross border
mergers, strategic human resource management is very much essential (Tarique, Briscoe &
Schuler, 2015). Due to this, companies had to face many kinds of challenges as people are
from different cultural backgrounds and at the same time they also have to ensure that proper
coordination is maintained in them.
The IHRM practices will also affect in terms of fact that due to merger and acquisition the
organisational structure will change. The policies related to the way in which rewards and
benefits are provided differs from company to company. In case of cross-border mergers and
acquisitions, they have to make a plan so that new incentives and reward system may not
demotivate employees of one company. IHRM of the firm must have a plan about the way in
which recruitment and selection of the staffs needs to be done in the new countries. A
glocalised strategy in the case of managing HRM across borders may not be highly
beneficial. This is because the problems in the management of human resource generally
arise due to localised problems and the factors that are present at the local levels (Stahl,
Björkman & Morris, 2012). In case of acquisition the problems related to controlling staffs
can be easy while in the case of mergers, it become more complex.

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International alliances are very common these days. In the Airlines Industry, it is one most
widely used strategy by the company. In such alliances two or more companies helps each
other in their operations while ensuring their autonomy. In the case of International Alliances,
since companies had to do work with each other hence maintaining collaboration is a big
challenge for the IHRM. A higher collaboration is needed at each levels of the organisational
structure (Weber & Tarba, 2010). In the case of international alliances and SMEs, IHRM had
to rethink about the ways in which they will communicate with each other. Making a formal
code of practices is always a difficult task for any company.
Cultural disciplines of the employees of both the companies needs to be take care of. They
will face implication in transferring message hence a less complex communicational
infrastructure will be needed within the organisation. In the International Alliances IHRM has
to improve the way in which they deal with conflicts between the employees of both the
companies. This is because there organisational behaviour is different and the way they make
strategies also differs. In the case of international alliances, it is the responsibility of HR
managers of both the firms to make collaborative framework where they can improve their
overall practices and reduce the chances of conflict in the group.
The social orientations in different countries are different hence they will have to adjust the
way in which they recruit and select people. The recruitment and selection has to be on the
basis of the social orientation. Recruitment and selection is also guided by the amount of
technology being used in the country. In the countries where the technological advancements
are higher, IHRM takes use of technology in the process of recruitment and selection. This
might be a challenge for the company when they go from the higher technologically
advanced companies to lower technologically advanced nations. In such cases IHRM also
had to change their approach in terms of employee engagement i.e. both the countries may
give different type of priority to the employee engagement and it is directly linked with the
employee motivation (Harzing & Pinnington, 2010). If the IHRM fails to give a platform to
the employees to have their words then it can be a serious problem. This is more difficult in
the case of the countries where employee unions are powerful. This is because they will have
to improve the ways in which they negotiate with the employee unions. IHRM which is not
used to dealing with employee unions will face problems in the case when the companies are
from the countries where employee unions are powerful. The implications on IHRM practices
can also be seen in terms of decision making process, as the decisions will be made seeing the
political policies in both the countries. Since the company’s culture is also influenced by the

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country’s culture hence IHRM will have to improve the ways in which they will have to
manage organisational behaviours.
Key literature on contemporary practices in IHRM
As discussed in the above section that there are large amount of people challenges
confronting any organisation when it comes to managing international HRM. Brewster,
(2017) states that in the case of Merger and Acquisition across borders, IHRM has to rethink
about the strategies they are using for improving the managing their workforce. This is
because the behaviour of the employees within the organisational context changes from
country to country and that too according to the culture that they come from. Whenever a
company acquires other company there are many employees coming from different cultural
backgrounds. It is not easy to manage all these people easily that when the organisational
structure, the working culture and organisational behaviour differs. . The bigger the
magnitude of merger and acquisition, the bigger is their challenges.
First thing that HRM has to do is that it must ensure that cultures of both the countries are
protected. The company that has acquired other should not enforce their culture over that
company’s employees. This creates resistance from their side. A common minimum program
must be designed by the company so as to improve the coordination among the employees
(Noe, Hollenbeck, Gerhart & Wright, 2017). The staffs of the acquired companies always
feel that they are under the threat of the uncertainty whether they will be able to survive in the
new leadership or not. Lot of negativity gets spread in the workforce when their senior
management comes from other countries. In such situation the role of communication by the
IHRM becomes very much important. IHRM has to ensure that the communication medium
that will be used by the firms should be in the ways that both the countries employees will
understand. IHRM communication practice needs to be managed appropriately.
Horwitz, (2011) believes that in both cross-border mergers and acquisitions and international
alliances, companies had to face the challenge related to way policies will be made in the
companies. This is because the companies are from the different countries and both the
countries have different type of HRM policies. Due to this the IHRM has to make sure that
they comply with all the policies in both the country so as to avoid any kind of legal
compliances. In the past there are many examples where companies are not able to handle
international HRM and hence failed to do successful business (Huang & Zhu, 2016). One of

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the examples in this regards is Tata Company acquiring Corus. Tata was unable to understand
the problems they are facing in the IHRM. Tata was not ready to give high salaries to
employees but since Corus was giving higher salaries to their employees. This created a
discontent in their minds and hence often the company was facing strikes. Continuous
confrontations were seen between the employees and management. Various times the
leadership stated that employees are not as much effective as they are in India. The leadership
stated that the employees of India work more for the company as compared to UK. It was not
welcomed by their employees. This was affecting the productivity and coordination among
the employees. After a few years of acquisition, Tata had to sell Corus. Company was unable
to understand the organisational behaviour of the people in UK due to change in their
working culture. Similarly there are examples of merger, which did not succeed because
companies were not able to coordinate with each other so as to gain the objectives they have
set for themselves.
Teerikangas, Stahl, Björkmann & Mendenhall, (2015) believes that M&A or any other kind
of international alliance has to be made checking the ability of the IHRM to handle the
country’s dynamics. These challenges become greater for countries like India where the
cultural diversity is big or the countries of Africa where the cultural believes are totally
different. For instance IHRM has to ensure that they provide holiday’s to the people of that
country on their festivals even if they do not agree to give it in their parent nation. For
effective management of human resource in the time of M&A and international alliance, it is
crucial that IHRM does a heavy analysis of the employees in that country so as to understand
their behaviour as a worker. It is also a fact that most of the employees at the lower levels do
not remains satisfied in the case of such strategic decisions and hence the IHRM will have to
motivate them to achieve higher production from them. This is also seen in terms of loyalty
and commitment towards the company (Cooke, 2016). The people who are committed to
their company often do not remain committed to new alliance of any kind. Companies that
start forcing the employees of other company to do things in their manner often fail to
manage the problems in HRM.
These literatures have been selected as it gives the exact idea about the impact on the IHRM
practices due to intercultural alliances among different countries.

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Influence on contemporary practices of IHRM and what managers can do
International Human Resource Management has to make sure that they have a plan for
managing the challenges they face due to M&A across borders and International partnerships.
This is essential for avoiding the conflicts that can arise within a firm. The influence on the
contemporary practices of the IHRM can be understood through following points:
Communication: Communicational practices or the flow of the information plays an
essential role in the management of Human Resource. The practices such as the way
employee from one level to another transfers message changes in the case when cultural
dissimilarity arises in between two nations or the corporate culture within these two firms
(Luo, 2016). Managers can make a reorganised structure where the cultural differences
between both these nations have to be taught to employees from both these nations.
Intercultural communication training must be provided to the employees.
Recruitment and Selection: Since the laws of all the countries suggest that equal
opportunities must be provided to the people irrespective of their differences hence
recruitment and selection process in both the nation differs. This can differ in terms of
technology that is used within the organisation as well as the type of candidates that has been
recruited. Since the educational infrastructure within the nation also differs hence their
qualification level also differs. At the time of recruitment and selection the IHRM has to
prepare their job design accordingly (Hurst, 2013). Managers in the MNCs can work towards
rebuilding the training module that can help the company to fulfil the gap in the educational
requirement of the company and the average educational background of the people in the
country. Expecting the same set of employees having same skills in both the nations can be a
mistake.
Work-life balance: The loyalty and the amount of work that an employee from different
nations does differ from country to country. A company cannot estimate that employees of
both the nations will have same requirement for work-life balance (Ghobadian, Rugman &
Tung, 2014). The IHRM practices need to change according to it. If a company fails to do so
then a serious discontent may arise in the minds of employees. A manager must be able to
understand the requirement of people that changes from country to country and assign the
roles accordingly in which they can adjust and do work effectively.
Rewards and Incentives: In different countries, different reward and incentive structures are
present. It is crucial for the companies to follow reward and incentive scheme of individual

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countries and provide them accordingly. This is necessary for motivation and satisfaction of
employees. If companies are not able to do this then the productivity of the employees may
decrease (Sears, Aguilera & Dencker, 2012). It might also have effect on the employee
relations and the amount of efforts put by the employees in regards to company’s objectives.
Managers can improve the way in which rewards and incentives are provided within the
organisation. This can be purely being on the basis of performance management system
which must work with certain kinds of metrics. Managers must also support the employees at
the time when the changes are done within the group. For this communicational motivation is
also required within the firm.
Promotions: One of the biggest challenges in the cross-national M&A or strategic alliances
is the promotions of the employees. Since the promotions have to be done between the
employees of two companies hence the promotional criteria must be selected wisely. The
base of the promotions should only be their performance irrespective of their nationality
(Gomes, Sahadev, Glaister & Demirbag, 2015). Companies that prefer promotions for the
employees that are from the same nationality always create a discontent among the workforce
from other nations. Managers must create a balance in the way promotions are being done
within the firm. Proper criteria must be set for doing promotions within the firm so that
everyone gets an equal opportunity to get promoted within the organisation.
Conclusion
From the above based report it can be concluded that IHRM faces different types of
challenges related to employee’s management when cross-border merger or acquisition or
strategic alliances takes place. IHRM practices are largely affected by this kind of
partnerships. These problems gets widen as the people from both the countries have different
cultural orientation and they are known to be working under different kind of environment.
Communication, Recruitment and Selection, Work-life balance, Rewards and Incentives as
well as Promotions are some of the IHRM practices that get affected in such kind of
partnerships across borders.

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‐Cultural Management, 126-141.
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Ghobadian, A., Rugman, A. M., & Tung, R. L. (2014). Strategies for firm globalization and
regionalization. British Journal of Management, 25, S1-S5.
Gomes, E., Sahadev, S., Glaister, A. J., & Demirbag, M. (2015). A comparison of
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cases in international human resource management. Taylor & Francis.

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