International Human Resource Management

This document discusses the differences between international and domestic HRM practices, factors influencing HRM practices, complexity in IHRM, and the impact of cultural environment on HR practices.

INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
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TABLE OF CONTENT
INTRODUCTION
Human resource management (HRM) is defined as the approach to manage
employees or human resources of the organisation (Brewster and et.al. 2016). It
includes various activities such as recruitment, selection, induction, motivation,
compensations and other strategies to maintain good relations between employees and
employers. With globalisation and improved digital technologies majority of the
organisations in hospitality industry are going international with aim to maximise their
market share. With increasing demand of such brands it has also become vital for the
companies to manage their human resources effectively so that service quality and their
brand aspects can be maintained. However there exist various considerable differences
between international human resource management and HRM practices at domestic
levels. For ensuring the success in international market companies must evaluate the
factors influencing their HRM practices. The report will evaluate the three variables
which moderate the difference between international and domestic HR practices.
Domestic and international HRM
HRM emphasises upon strategic and effective use of human resources of the
organisation. As corporate strategy international HRM helps organisation to gain
competitive advantage so that companies can enhance their performance and potential
of employees can be explored fully (Crawshaw, Budhwar and Davis, 2017). In
globalisation context there is huge difference between operations at local and global
level which causes difference between management of human resources. practices at
international level as compare to domestic levels (Reiche and et.al., 2016). The key
consideration which brings this difference is that for organisations such as hotel Hilton,
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KFC, McDonald and other organisations or hospitality it is required to manage their
human resources and operational activities as per international policies.
Basis for difference International HRM Domestic HRM
Functionality The functions of HR
department also seem to
diversify with the
internationalisation of the
organisational services.
With the service expansion
at international level
companies may require
individuals who will travel
from part of the world to
other. In such situations
along with the
compensatory benefits to
employees, organisation
also gives facilities to take
care of the families or
children of such employees
(Reiche, Harzing and
Tenzer, 2018). This kind of
measures help organisation
to assist employees so that
they can remain focused
towards work while
travelling from one place to
other.
At domestic level
organisations like Thomas
Cook may only provide
training or health care
services to their employees.
Risk factors In addition to these
operational and functional
In domestic environment it
may not be necessary for
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aspects it has been also
observed that international
HRM is more risky than
domestic one because in
international context
external forces are either
uncontrollable or not known
to the organisation fully
(Rees and Smith, 2017). In
international HRM
heterogeneous functioning
is an integral element of the
IHR practices.
the organisations to take
the consideration of
relocation, international
taxes, and orientation of
language translation needs.
On the other hand these
elements are essential and
integral part of the
international HRM
practices.
Factors diminishing or accentuating difference between HRM
practices
Complexity
One of the key factors which accentuate the domestic and IHR is the nature of
complexity involved at both the levels. In the international market there are more severe
consequences and risks of failing in terms of financial as well as human resources. For
international corporations failure of HR functions may prove to be more risky and
devastating (Crawshaw, Budhwar and Davis, 2017). For instance when companies such
as hotel Hilton has management plan for domestic level only then their training
sessions, operational strategies, recruitment procedures as well as motivational
techniques depends upon domestic environments. In international environment the
costing and methods of these HR functions may vary drastically. The reason which
induces complexity in international HRM practices is that within IHRM organisations
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have to manage people from different cultures, values and backgrounds. Thus
organisation is required to not only explores or utilises the skills or capabilities of
employees but also involves personal life of employees, greater emphasis on training as
well as more controlling of external influences. IHRM also consist of employees from
various nations and thus is also influenced by huge differences and possibilities of
conflicts among different individuals (van Harten and et.al., 2017). This complexity of
employees at large scale makes it vital for organisation to adopt differentiated practices
for international working.
Since international regulations vary differently it is challenging and extremely
complex for an organisation to change its policies and functioning differently in different
nations (Dickmann, Brewster and Sparrow, 2016). For instance Hilton hotel pay different
monetary benefits to its employees in domestic environment as well as in international
environment. Along with the complexity it also increases cost burden on organisation. In
international market the employee management cost is usually three times higher than
that in domestic country (Zheng, 2017). In domestic market organisations like Hilton
hotel used to affect by only some particular types of external forces like terror attacks or
political risks. However with internationalisation the economic stability of other countries,
their integration of multinational organisations is also an important factor which affects
compensation packages, organisational regulations, work policies and other
considerations of human resource management (Budhwar, 2016).
Complexity due to management aspects of HRM:
Another important factor which increases the complexity of IHRM is expatriate
management. At domestic levels organisation may not require such kind of activities
and HRM functions are limited to only some of the functions like recruitment, talent and
performance management and training of the employees. However, as organisation
work internationally it becomes necessary for their IHR department to expatriate its staff
members. Expatriate is refereed as employee of an organisation who is transferred or
located into foreign region, apart from their home destination where international
operations of firms are operated (Milanović, 2017). For example as Hilton hotel works in
US, UK as well as in Asian regions like India. Thus for effective operation of the
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activities organisation can locate some of its top management employees from US or
UK to India so that they makes operations of organization in Indian market successfully
implemented.
Thus by using expatriate management organisation management transit values of their
organisational culture to new market and prepare their employees with international
skills. This additional aspect makes IHRM too complex from the management and
functional perspective (Sekiguchi, Froese and Iguchi, 2016). Execution of functional
activities is also challenging task for the companies in international market because in
such markets HRM activities increases multi fold. For instance in domestic market it can
be easy for HR department to ensure the resource availability however internationally
HR department may also require finding suitable suppliers for resources and then HRM
also need to ensure that resources and approaches meets cultural and legal
consideration of international boundaries. In addition to the expatriation management it
is also the responsibility of HR department of the organisation to conduct functions such
as cross country relocation, international tax policies, transnational labour legislation
and resource management in diverse locations.
Functional heterogeneity as means of complexity in IHRM:
Another complexity aspect which increases the gap between IHRM and domestic
HRM is increased complexity in terms of functional heterogeneity and increased
involvement of personal lives of individual employees (Al Ariss and Sidani, 2016). All
functions of HRM must be carried out with heterogeneity so that all stakeholders are
satisfied including government of host country. In domestic environment hotels are well
aware of the training needs and other resources for the organisation. Strong positioning
in the local market, support from the government and customers, well known and
controllable supply chain also makes it an easy task for the HR department to meet the
needs of resource management. Contrary to this in cross cultural setting, companies
like Hilton may not find suitable environment (Wood and et.al. 2018). They may face
less cooperation or increased cost of management and greater competition from the
other domestic organisations of host country. This makes resource management a
critical challenge for the HR department at international level.
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Complexity in cost and resource availability:
With domestic level companies have limited or negligible liability towards the
personal life of employees. However in international management it acts as crucial part
of the expatriate’s management. It acts as another implication of complex nature of
IHRM. For better expatriate management organisations also relocate the families of
employees across the countries so that productive outcomes from employees can be
assured. Thus along with the employee, their families must also understand the cross
cultural environment so that overseas assignments can be completed without any
distraction or barriers from the personal life of employee. This result in great complexity
involved in HRM practices at international level because employee motivation and
resource management becomes too important and huge.
It is also the responsibility of human resource department of the organisation to
utilise resources in effective and cost efficient way. It helps to increase productivity of
employees and to meet the financial aspect of the organisation (Sposato and Rumens,
2018). In international HRM organisations are also responsible to relocate families of
their employees and thus it includes substantially high cost involve in training, travelling
and other expenses for improving performance in international assignments. It builds a
wide gap between HRM practices at both levels and companies are required to develop
its HRM strategies differently at international level (Al Ariss and Sidani, 2016). In foreign
countries the health and security risk of the employees and their families is also
increased in multi folds due to factors like climate variations, wars, terrorism, epidemics
and social crime rates. It only enhances the difference between HRM practices
differently in different markets.
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Cultural environment (Suggest: please discuss very briefly cultural environment)
Cultural differences encourage organisations to manage cultural differences
which have greater impact upon international HRM. With internationalisation Hilton hotel
is not only providing services to people from different culture but is also employing
people from various cultures. Thus members of organisational teams may possess
different attitude and values towards work and personal life (Tung, 2016).
Hilton hotel operates in different parts of the world and thus is required to
manage employees which meet its operational needs. Cultural environment is assumed
to be one of the crucial factors which make international HRM different. As broad
perspective international HRM focuses on three different types of employees which
belong to host country, third country nationals and parent country (Ayentimi, Burgess
and Brown, 2018). Thus for Hilton it is difficult task to manage workforce from such
diversified cultures, tradition, religion and language. For example in domestic HRM
practices organisation recruit and select human resources from parent company. Thus
their management in domestic environment and well known regulations is quite easy.
However with organisations such as Thomas Cook or other event management
companies which also require their employees to conduct foreign tours for work or
operational purpose there is need to deal with concepts of IHRM (international HRM)
instead of domestic HRM. To provide satisfactory services to customers in different
countries or at international level HR managers are required to train and develop their
employees so that culture and traditions of alien country can be understood and
integrated with services. The employees of Hilton hotel or Thomas Cook travel will not
be able to provide services to customers if they will not understand the cultural and
religious aspect of the country.
For instance in Japanese culture Hotel Hilton may require its employees to be
highly polite while in US organisation require employees who are obsessed with the
work and goal achievement. Similarly in Asian regions like China and India employees
of Hilton are expected to respect the traditional and religious values of the region. These
considerations are vital for organisation so that targeted customers can make
themselves connected with the organisation.
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If employees will not understand the cultural diversity then it will not be possible
for them to provide services to the diversified customer segments. Different nationalities
have different stereotypes which affect the working of employees and thus ultimately
affect the HR practices and functioning such as recruitment or performance appraisals
(Wood and et.al. 2018).
However it also depends upon the organisation to standardise their HR policies or to
customise them as per the requirements at different domestic levels. Though
localisation may seems to be complex and costly but in long term it gives sustainable
and more productive results. In international market there is greater control of the
external influence on HR functions.
Apart from the political, financial, technological and competitive factor culture is
considered as an essential ingredient in HRM. While working in domestic nations Hilton
hotel and similar organisations does not have to make many efforts to understand the
cultural aspect as they are well aware of it and are grown in the same culture from
years. However working in international market is completely different as organisations
are required to first understand the culture of their international market (Fan and et.al.
2019). On the basis of this understanding companies formulate or modify their HR
strategies. Culture has significant impact on the HR practices as all staff members may have
different cultural perspectives. Thus for successful management of employees it is necessary
that cultural dimensions must be understood. It helps in effective communication and
management of staff members. According to Hofstede’s cultural model, HR department must
consider following dimensions of culture in its practices:
Power distance index: It is the extent to which staff members or less powerful members of
organisation accept unequal power distribution. The lower value of PDI is not good sign for the
HR department as it can discourage employees and can make them feel that their identity is not
valued. Internationally due to high cultural differences organisation can find it hard to maintain
high degree of PDI.
Individualism vs collectivism (IDV): Individualism refers that a higher emphasis is given to
personal goals or self image while in collectivism priority is given to group or teams.
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Internationally if organisation desires to manage its resources then it must try to build a culture
that all individuals feel secure and a feeling of collectivism can be developed among them.
Uncertainty avoidance index: It is defined as extent up to which ambiguity is tolerated within
organisational culture. Domestic HRM practices have lower level of uncertainty index as
compare to IHRM because organisation is well aware with taxation policies, regulations and
their counter strategies.
Masculinity vs Femininity: Attitude towards sexuality varies from one culture to other. In
different nations there are different regulations and perspective towards gender equality and
roles. Thus with IHRM practices organisation may need additional efforts to understand and
manage its activities as per this cultural dimension.
Short and long term orientation: Domestic HRM emphasis on present situations so that quick
results can be obtained while for successful IHRM organisations are required to have long term
and persistent goals.
Restraint vs Indulgence: These dimensions are defined as the extent up to which society fulfil
its desires. This extent affects the operational activities of organisation and thus human
resources are managed accordingly. IHRM may face varied extent of social suppression or
gratification towards their needs and practices of organisation.
HR managers at international level are required to consider the cultural variations
reflected in terms of expectations, behaviour, values, communication styles and
negotiations. It not only affects any single HR function but also regulate all dimensions
of HRM activities in terms of cost, complexity and managerial aspect (Milanović, 2017).
The motivation techniques as well as training programs are also designed in
accordance to the cultural elements of the operating country. The culture of organisation
may vary in international boundaries depending upon the cultural values of their
employees in different nation. This aspect is vital as it directly affect the customer
engagement and success of organisation in foreign environment.
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Attitude of HR or senior management to international operations
The attitude of HR managers or senior authorities makes it further complicated
and challenging task to manage human resources at international level. HR managers
of Hilton hotel when operates in domestic market holds a different perspective in terms
of scope and extent of activities. In domestic practices for most of the assignments
organisation expect that employees are well aware of the needs of customer
requirements and external forces (Lee, Lin and Huang, 2017). Thus training needs are
lower and managers have high expectations of efficiency. On the other hand for
international context event regular HR activities like recruitment and training may prove
to be highly complicated and resource and time involving.
Thus for international assignments senior management tend to design and
implement more effective training frameworks for their employees. These training
programs not only involve work or operational related aspect but also include methods
so that employees can prepare themselves in adjusting or understanding themselves in
completely new or unknown business environment. Thus managers in international
practices are not only liable for the work related operations but are also expected to
manage other support activities like visa formalities, training and resource management
at greater level so that overseas job location can be made productive and efficient
(Trivikram, 2017). In international HRM practices it is also necessary for managers to
have broader perspective for successful HR management. This attitude of managers
can also affect the success of organisation and HRM within company. Internationally
managers have to undergo various analyses and critical factors which influence the
decision making. These factors have limited effect or interference at domestic level. For
instance at domestic level managers may have lot of choices for the recruitments and
employee legislations may also seem familiar and easy to them. However
internationally, companies must have suitable knowledge of international packages and
their determinants like cost of living and fringe benefits.
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In domestic HRM practices managers used to have no involvement in personal
life of employee because they have concern with only productivity of the employee. At
domestic level managers have strong belief that to establish balance between personal
and professional life is responsibility or choice of an individual only. Thus HR
department does not have any liability or responsibility towards it. This attitude is also
the result of the fact that since employees is living in the domestic environment there
are no such additional complexities in personal life which needs to be managed by
senior management. Contrary to this when working with international work force
employees also required emotional and psychological support to deliver efficient
outcomes. Thus managers also focus on the personal life of employee and other factors
which can influence the productivity of their talented workforce (Ayentimi, Burgess and
Brown, 2018). Due to this reason HR managers strictly show greater involvement in
lives of employees so that they can make themselves comfortable in unfamiliar
international environment. Employee may also not aware of the legal practices of the
host country, culture aspects and health care facilities.
Thus HR managers at international level also focus on broader aspects including
health and wellbeing of their employee, personal and emotional requirements along with
the availability of organisational resources. It has been also observed that at domestic
level HR practices and authorities seems to be more confident. Their familiarly to
domestic market, customer segment as well as competitors, makes organisation quite
confident and less worried about HR practice efficiency. However in IHRM, managers
may not take HR issues with so light or flexible mood. The failure to HR practices or
regulations in the international market can cause huge damage to brand value of
organisation as well legal troubles. Thus with IHRM managers always try to ensure that
there are no such inefficiencies at international level which creates any conflicts or
controversies.
As a result international HR managers are more conscious and active towards
their HR policies because a slight loop hole can create adverse publicity at international
level which is harmful for the growth of organisation. This difference in the perspective
of managers at both domestic and international perspective is one of the crucial
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elements which distinguish both the practices (Ayentimi, Burgess and Brown, 2018).
However some organisations like KFC which follow standardisation techniques used to
give same importance to the HR practices but still there exist a difference in perspective
of HR managers. International operations involve greater risk, significance and
operations and thus related HR activities are also giving more importance in the
organisation for long term success. For enhancing productivity of employees senior
managers also try to retain positive attitude and willingness to understand the cultural
variations and ways to make attempts to positively integrate them with the
organisational objectives. The willingness of the managers from headquarters also
increases the significance of the efforts to discuss difference between IHRM and
domestic HRM practices.
CONCLUSION
It can be concluded from the above discussion that HRM practices play crucial
role in the success of an organisation. Thus while exploring international markets it is
mandatory for the organisations to understand the need of variations in HRM so that
they can deliver quality services to the customers. The report has discussed the impact
of culture, complexity and perspective of HRM authorities towards the diverse
international and local needs of their customers and other stakeholders. It can also be
concluded that for strong positioning in the competitive market it is essential that
companies must emphasis on improving productivity and efficiency of their work force.
This is not possible without appropriate HRM strategies which may differ from market to
other. It can also be concluded that integration of these differentiating elements can
enhance the HRM strategies of organisation and can also lead to long term success in
international market.
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