International Human Resource Management: Meaning, Role, and Differences with Domestic HRM

This article explores the meaning, role, and differences between International Human Resource Management (IHRM) and Domestic HRM. It discusses the importance of managing cultural diversity, conflict management, and maintaining a balance between external and internal environments. The article also highlights the advantages and disadvantages of IHRM for Audi AG, a German automobile manufacturer operating globally.

INTERNATIONAL
HUMAN RESOURCE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................6
REFRENCES...................................................................................................................................7

INTRODUCTION
Human resource is termed used for workforce which works in an organisation so that
predetermined objectives can be achieved. It is also a function that is concern with dealing about
personnel and challenges related to recruitment, selection, compensation, training, development
and management. In order to be successful in international market it is important that business
are effective in the process of Human resource management (Brewster and et. al., 2016). It
involves procurement, allocation and effective utilisation of workforce, thus international HRM
deals with all this activities at global level. Audi AG is German brand which is auto-mobile
manufacturer which are indulge in designing, engineering, production and marketing luxury
vehicles.
MAIN BODY
Human resource is management term which is used to define workforce of an
organisation and all related functions are performed by specific department. Audi AG being a
international brand which deals in many countries across globe and operates in different region
of world. Domestic HRM or just simple HRM is process by which organisation ensure that
effective and efficient utilisation of human resources so that business objectives are achieved
(Reiche and et. al., 2016). Such department is concerned with activities related to personnel of
company like acquiring, training and development, motivating and retaining so that efforts are
maintained in order to increase overall performance of Audi AG. The main objective of domestic
HRM is place right employee at right job profile within specified time so that resources are used
effectively. The importance is that every product or services has human effort, hours and mind
and any organisation can not survive without employees. Thus it is important that HRM practices
are performed effectively so that personnel can be retained for longer in Audi AG and pit efforts
to achieve business objectives.
There are different functions of HRM which can be divided into two broad categories:
Managerial functions: There are different activities that are included in this function
like Planning which is process of setting goals and objectives and also formulating course of
action to achieve it. Another is Organising which involves determination of structuring and
allocation of tasks and Staffing is related to selecting and training of employees for specific job
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profile. Directing is another function which involve process of motivating and putting efforts so
that personal and organisational goals can be attained. Last is controlling which involve process
of taking action in case of deviations in outcomes and standard performance.
Operative functions: These are activities which are related to specific process of HRM
like Selection which is procurement of suitable candidate to job profile in organisation. Another
function is Development which is process of enhancing skills and knowledge so that employees
are able to perform effectively (Noe and et. al., 2017). Another is deciding wages and salaries as
form of Compensation so that it can contribute efficiently in achieving organisational goals. Last
is Maintenance which involve activities like to safeguard and promote employees so that flexible
and friendly working environment can be provided to personnel.
Even being Domestic HRM there is many areas and aspects which can lead to increase in
scope for activities in Audi AG. Some of them are as follows:
Personnel Aspect: All Activities are concerned with planning about workforce like recruitment,
selection, training and development, etc. which helps in placing candidate at right job profile so
that overall productivity can be enhanced.
Welfare Aspect: HRM activities deals with working conditions and facilities like transport,
medical amenities, rest rooms, health-safety and accommodation. All this aspect related to
warfare and safety measured for employees in an organisation.
Industrial Relations Aspects: This aspect covers unions, consultation and collective bargaining,
grievance management and settlement of disputes, etc. All such are performed to maintain
relations with employees and outside parties which have direct and indirect impact on business
operations.
According to Patrick Fitzsimons, 2019, Human Capital Theory is termed used to refer
accumulated inventory of personal, social, competencies, knowledge, attributes which comprise
ability to earn economic value. This theory describes individuals as economic unit and
investment can be done according to value they contribute in society. Assumption of Human
Capital Theory is based on assumption that it revolves on immeasurable nature as human capital
can not be stored. It makes it difficult to observe and analyse as it can not be utilised fully as
well. The application of this theory is that it has both planning and measurement utility and it
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allows individual to take decisions about future opportunities. In case of Audi AG it has practical
implementations as it helps in determining economic vale of training and development provided
by company to increase skills and knowledge. It also helps organisation in calculating future
returns it is doing on while investing on training and development (Dickmann, Brewster and
Sparrow, 2016). Human Capital Theory also determine risk associated with investment and on
return about opportunity cost.
International Human Resource Management is thus important for company so that cross national
issues can be solved and relationship between activities of organisation and external environment
can be maintained.
There is importance that Audi AG maintains HRM activities in international regions due
to following regions:
Emphasis on Core Competency: It is unique strength of business in terms of different resources
which helps in gaining competitive advantage in industry. Due to this reason Audi AG has
restructured its business operations and diverse it according to core competencies of diverse
workforce working at different locations.
Reorganization: Not only the activities related to restructuring but also reorganization takes
place when business needs to deals with International Human Resource Management (Bratton,
and Gold, 2017). This is done on the basis of level of management and span of control Audi AG
wants to maintain in hierarchical structure at different locations.
Workforce Empowerment: There is need that in order to achieve organisational objectives and
gain competitive advantage in industry employees need to be motivated. In this main role is
played by HRM activities as such increase role in organisation and authority is given accordingly
so that they can be empowered to get involve in managing operations as well.
There are three dimensions of International Human Resource Management which plays
important role in its effectiveness, are as follows:
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Three activities: International Human Resource Management is broadly involved in three major
activities while operating at global level. Audi AG also performs processes like Procurement,
Allocation and Utilisation as these cover major HR functions of organisation.
Three types of employees: While operating at global level Audi AG need to deal with personnel
who belongs from parent country of company. Another is from host country where company is
operating and third is country nationals who belongs from different region but working at various
locations of world (Brewster, Mayrhofer and Farndale, 2018).
Three types of countries: In International Human Resource Management there are different
type of country is involved like Home country which is origin of Audi AG. Another is Host
country in which company is operating other than its originated region and third is that country
from where resources and finance is procured for operations.
There are many advantages and disadvantages for Audi AG while operating activities of
International Human Resource Management, some of them are as follows:
Advantages: While maintaining International Human Resource Management there are different
benefits like equal employment opportunities are provided to personnel (Wilton, 2016). Along
with this fair and justice environment is provided to ensure accountability of Audi AG. There is
standard process for conflict management in organisation which leads to retention of personnel
effectively.
Disadvantages: Besides benefits there are many drawbacks which needs to be recognise like
there is need that Audi AG pays more resources and expertise from home country to operating
region. There are more chances that conflict may arise due to cross cultural employees at
different level of organisation. Major management roles are employed by employees from home
region which may lead to disappointment in operating location.
Domestic and International Human Resource Department are carried out by organisation
so that HR practices can be effectively applied at different operating premises of company. There
are many differences in activities of HR Department so that processes are effective in accordance
to internal and external environment in which business operates. The key differences are as
follows:
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Meaning: HRM activities are involved in managing employees while operating in
country in which business is originated from like in case of Audi AG it is Germany. Thus all the
HRM activities that are performed in same country is known as domestic HRM. On the other
hand, International Human Resource Management is activities that are processed into three
different nation like Parent, Host and Third country. It is important that due to cultural diversity
and variations in legal and social differences in environment it is significant that all procedure
are carried out effectively (Budhwar, 2016). In the context of Audi AG it is not necessary that
operations that are carried out in Germany are effective in accordance to Domestic HRM. There
are chances that even in home country it is needed that International Human Resource
Management must be carried out due to diversity in workforce.
Role: Domestic HRM includes play major role in selection, training and development,
retention, motivation and remuneration. There are negotiation for salary, conflict management,
controlling actions and all other activities as there is less impact of external markets in the
originated region. It is necessary that all such processes are performed effectively but there are
other activities as well which need to be taken into consideration so that overall productivity can
be improved. In case of International Human Resource Management there is need that Audi AG
achieve balance in controlling and coordinating local working environment and foreign
subsidiaries. This will help to be effective in operations as activities will be confined with micro
and macro environment of business and perform accordingly (Cascio, 2015). In creating this
balance it is essential that other activities are not disturbed and employees are treated wit same
dignity in respect so that fair environment and equal opportunities are provided to diverse
workforce.
Cultural Differences: Domestic HRM need not to deal with differences in cultural
diversity of employees and most of them are from same communities of society. There might be
chances that minority of personnel working are from different culture and face issues in case of
same HRM practices of Audi AG. In context of International Human Resource Management
there are personnel who belongs totally from different culture and need to treated equally. Thus
need of adapting suitable HRM practices at international level is important. While maintaining
such balance there are chances that expertise from home country of Germany might feel insecure
and less important while working in different region of world.
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Perspective: Domestic HRM has narrower perspective as its scope is limited to selective
HR related issues only which are confined to local region. This often leads to mis - management
and controlling actions as home country is known as headquarter which has to deal with every
operation across the globe (Banfield, Kay and Royles, 2018). In relation to International Human
Resource Management it has broader concept than domestic HR department as it has to deal with
cultural diversity, conflicts management, legal rules and norms, retention of employees, etc. Due
to many activities and procedure there are chances that International Human Resource
Management department of Audi AG is not able be effective in operations.
CONCLUSION
It can be concluded from above report that Human Resource is term which is used for
workforce that are valuable assets. Human Resource Management is the process which is involve
in selection, training, development, retention and all related aspects that are counted as issues.
Domestic Human Resource Management is related with process which are performed in home
country of organisation and have limited scope and functions. On the other hand, International
Human Resource Management is process by which organisation deals in culture diversity,
conflict management and balance between external environment and internal competencies.
There is difference between domestic HRM and International HRM on the basis of meaning,
role, cultural differences and perspective.
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REFRENCES
Books and Journals
Banfield, P., Kay, R. and Royles, D., 2018. Introduction to human resource management.
Oxford University Press.
Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave.
Brewster, C. and et. al., 2016. International human resource management. Kogan Page
Publishers.
Brewster, C., Mayrhofer, W. and Farndale, E. eds., 2018. Handbook of research on comparative
human resource management. Edward Elgar Publishing.
Budhwar, P. S., 2016. International human resource management. In Encyclopedia of Human
Resource Management. Edward Elgar Publishing Limited.
Cascio, W. F., 2015. Managing human resources. McGraw-Hill.
Dickmann, M., Brewster, C. and Sparrow, P. eds., 2016. International human resource
management: contemporary HR issues in Europe. Routledge.
Noe, R. A. and et. al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Reiche, B. S. and et. al., 2016. Readings and cases in international human resource
management. Taylor & Francis.
Wilton, N., 2016. An introduction to human resource management. Sage.
Online
Fitzsimons, P., 2019. Human Capital Theory and Education. [Online] Available through:
<https://link.springer.com/referenceworkentry/10.1007%2F978-981-287-588-4_331>
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