International Human Resource Management: Trends and Challenges Report

This report provides a comprehensive overview of the trends and challenges in International Human Resource Management (IHRM). It begins by defining IHRM and highlighting its increased importance due to globalization and the shift from hierarchical to network organizational structures. The report then delves into specific challenges, including the rapidly changing worker profile, addressing the skills gap, and the need to engage and retain a dynamic workforce. It examines the demographic shifts in developed and developing nations, the growing importance of women in the workforce, and the challenges of managing generational differences. The report also discusses the evolving definition of "skill" and the disconnect between education and job requirements, emphasizing the need for collaboration between educational institutions and corporations to address skill shortages. Furthermore, it explores the complexities of employee engagement and retention in a diverse workforce, highlighting the need for customized benefits and motivational strategies. The report concludes by underscoring the need for HR professionals to adapt to future demographic, technological, and societal changes to ensure organizational success in a globalized business environment.

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Trends and Challenges in International Human
Resource Management (IHRM)

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Contents
Introduction...........................................................................................................................................2
Trends and Challenges in International Human Resource Management................................................3
Rapidly changing profile of the workers............................................................................................3
Finding “Skilled” workers and understanding the definition of “Skill” based on the nature of work 6
The problem to Engage and Retain a Dynamic Resource..................................................................9
Alignment of best technology for Global Strategic Management....................................................11
Conclusion...........................................................................................................................................12
References...........................................................................................................................................13
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Introduction
A multinational corporation (MNC) must hire, motivate, retain and effectively utilize the
service of people in its international offices, as well as in the home office at the parent
country. So, this is basically a Human Resource Management at an international level, and
thus, is called International Human Resource Management (IHRM). IHRM is more complex
and at a completely different level than the usual Human Resource Management, as it is
aimed at managing an organization’s human resources at an international level for the
purpose of achieving organizational objectives and also, to achieve a competitive advantage
over the competitors at both National and International levels (Albu & Morosan-Danila,
2009).
In contrast to the Domestic Human Resource Management (DHRM), an International Human
Resource Management needs a broader perspective, as the work force mix of every country
varies and so do the differentiating factors that affect them. So, in IHRM there is more
exposure to risk and there are more influences of the external factors than the internal factors.
Globalization of business, which leads to mobilization of resources is one of the major factors
of organisations’ growing interests in the International Human Resource Management. IHRM
becomes all the more necessary to minimize the risk of underperformance/failure in the
international assignments, as it is focused on effectively managing the company’s human
resource on a global level. Companies these days are moving from traditional hierarchical
organisational structures to a network level structure. IHRM plays a significant role in
implementing and control of strategies in an international business.
In a globalized business of a Multi-National Corporation, things are very volatile. The
business’s needs, demands, structure, etc. is always changing. The role of a Human Resource
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Manager is to meet the needs this rapidly changing organization. Organisational success
depends on its ability of being more adaptable, resilient and flexibility to change its
directions. The organisations today are becoming more and more customer cantered. So, a
Human Resource professionals needs to learn how to effectively plan, organize, lead and
control the Human Resource, along with being aware of the major future demographic,
technological and societal changes, to prepare themselves accordingly (Markoulli, 2017).
Trends and Challenges in International Human Resource Management
Rapidly changing profile of the workers
The demographic differences between the developed and developing nations is placing a
greater pressure on both government and private sector to improvise their methods for
education and retaining a diverse working population which is changing at a fast pace.
According to a survey of 636 C-level and senior executives by The Economist Intelligence
Unit, sponsored by the SHRM Foundation in 2013, “the People Management is cited to be by
far the most substantial challenge that companies face over the next five to ten years”.
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A major number of women workers are projected to enter in the international workforce in
upcoming years. Also, the companies need to adapt themselves for this new definition and
structure of the employees which include a significant portion of temporary and part time
workers. On top of that, there is a pressure to manage the generation gap between the workers
these days, focusing on the requirements of older generation employees versus the newer
generation of employees. Companies these days face a void in leadership positions as the
experienced and old age employees are leaving the organisations after approaching their
retirement ages (Economist Intelligence, 2017). “Age” will continue to be a threat to
companies all over the world because just like any other resource, the Human Resource can
also be used for a limited period of time before it gets depleted. Thus, companies need to
come up with some effective solutions where the older generation passes the ‘Baton’ to the
newer generation effectively (Bolchover, 2013). There needs to be a great focus on the
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subject as to how the skills and experience of an old employee can be passed on to a new and
relatively young employee.
Making the younger population “Work Ready” over the world, is very challenging due to
high unemployment rates over many countries. Whereas, for the people who are employed
and remain employed in future, it is very important that their skills and talent remain relevant
to the employers. For this to happen, governments, corporations and education sector must
collaborate to restructure the educational system in such a way that it prepares the upcoming
generations for the jobs in future. If there is collaboration at the planning stage itself, it can be
ensured that the necessary education and skills can be imparted to the youth, so that they
don’t fail in the Skill department when it comes to finding jobs. Similarly, it is beneficial for
corporations in such a manner, that they lay out their requirements of the skills and the
human resources they receive in future will be tailor made, based on their specifications.
Thus, they won’t face the labour shortages in the upcoming years (Crabtree, 2013).
Over the years, companies have also face problems to maximize the contribution of women
in the workforce. Based on a research, “A mere 13 out of the largest 500 companies in the
world by revenue had women CEOs in 2012, a proportion of just 2.6 percent.” The major
reason for this handful contribution of women in the top management is always stated as that
a Woman needs to look after her family, thus, she cannot focus on the work. Whatever the
reason for women to struggle in the male-dominated society, companies are losing out on a
talent which they find with much difficulty. This issue has been taken up by the politicians,
time to time, with women empowerment as one of their key agendas when they win the
election. Therefore, it is possible that in the near future, companies may get pressurized from
the government to increase a proportion of female work force both in total number as well as
in the managing roles. Therefore, the corporations must be ready beforehand, by identifying
their skilled high –potential female work force and also identifying ways to keep these
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females interested and committed to the organisation. Mentorship programs, involving the
senior women executives providing coaching to the younger female employees of the
company. The major challenge would be to keep the female employees engaged to the work
when they take leaves due to provide time to the family. Perhaps continuous communication
and the option to work from home can keep their interest piqued, allowing them to focus both
on family as well as work. If we talk on a broader level, the Human Resources managers will
have to meet the demands of their female work staff to equal salary and promotions in
addition to the bunch of other benefits (Childcare, work from home, etc.). The thing with
employee benefits is that there is no fixed set that meet all the requirements of each and every
individual and keep them satisfied. Thus, a customized mix of these benefits must be used to
include a varied and international workforce (Group, 2010).
Finding “Skilled” workers and understanding the definition of “Skill” based on the nature of
work
Definition of skill, in respect of work is ever evolving. On top of that, the conventional
education does not provide the cluster of qualities that one needs to do a work effectively.
There are always gaps between the actual skills of a worker than the required skill to perform
a job. As per the 2013 EIU/SHRM Foundation survey, “executives reported that the current
disconnect between the skills fostered by education and those they actually need will
represent a very considerable obstacle in the coming years.”
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This implies that in the upcoming year, it will be more difficult to for the Human Resource
professionals to analyse and judge the skills of an applicant based on their education. On top
of that, there are no standards to categorize the education overall the globe, thus, it becomes
all the more difficult in IHRM to choose the qualifications for a job very carefully, when
hiring across the borders. The education not only varies between the countries, but also
within the different institutions of the same country. So, in order to make wiser decisions
related to hiring, an HR must be aware of these differences (SAP Company, 2017). This will
enable the HR to make an informative decision while filtering out the candidates based on
their educational qualifications, for a particular job. To increase the knowledge of skill sets
required to execute the functions, the HR must synergise with the relevant departments of the
organization, while hiring.
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Many executives are of the belief that there will be severe skill shortages in the near future
due to low rate of births and unchanging education systems. Thus, as mentioned above, the
organisations and education systems need to collaborate and come out with such an
educational system that can help their fear to not come true (Department of Health, 2014).
In another survey done by the Economist Intelligence Unit in 2012, the executives worldwide
revealed, “The most problematic recruitment challenges, by a substantial margin, relate to
technical/engineering roles, and to the strategy and corporate-development function”.
The executive stated that it is very difficult to find an executive these days which is well
versed in strategy execution and the ability to solve complex problems. Companies these
days, are not able to find the people which can become their beacon of light between the
unpredictability and cut throat competition.
For a position in the lower level of hierarchy, HR is constantly facing a lack of good
communication and soft skills within candidates. Moreover, these candidates also lack in the
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creative and adaptive ability, which makes it a hard job to train them for the work. The lack
of such basic skills is the reason of huge unemployment rates in the world economy.
Thus, the companies need to engage in a multi-level approach, to get the skill which they
require. The organisations should take more initiatives to address and take up this issue to the
governments. And ask for a collaboration between them and the educational institutions to
redevelop the curriculums to fit their needs. They need to address the methods and means of
imparting knowledge to the young ones, so that it enables them to develop the skills, which
could act as a bride to the skill void in the near future. To start, the companies could organise
various workshops, events and training programmes, by partnering with the educational
institutions. These programs can be fitted right into the regular curriculum and adjusted
accordingly. So, this will address the issue to provide the necessary skills in short term, while
companies, government and educational institutes synergise to revolutionize the education in
a long term.
The problem to Engage and Retain a Dynamic Resource
“Human Resources” or a company’s workforce is a Resource, like any other resource and it is
very dynamic in nature. As discussed above, that the profile of workers is ever-changing in
today’s world and thus, their motivational factors and their expectation levels change too. It is
very necessary for Human Resource department to know what matters to the workers. Is it
money...? Recognition...? Or perhaps, freedom to work. The fact is, answer to this question is
also no longer definite. The needs and motivations of people change individually. Even on
the broader level, it is very difficult find a common factor of motivation due to a diverse
workforce; based on ethnicity, religion, gender etc. So, the HR professional need to make of
mix of these benefits and use this mix wisely, as and where required, to keep the workers
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engaged (Miller-Merrell, 2017). The company will need to adjust their financial
compensation and retention strategies in such a manner, that they can also provide for the
people who are not driven enough by just money (Technologies, 2012). The task of the HR is
not just to hire an employee. They also need to make sure that the people they hired are
engaged and satisfied with the company and are working up to their full potential. They also
need to make sure that the people do not resign in a short tenure, as it will waste all the
investment that was made by the company, in order to hire them. This investment is
Interview cost, training cost, opportunity cost of letting another able candidates go, etc.
Engaging the workforce is not a child’s play, as most of them are not engaged anyway. As
per Gallup’s study of 142 countries, it was found out that only 13% of the overall
international workforce was “engaged”. In other words, it could be said that, internationally,
only 13% of the employees are committed to their jobs. A majority, about 63%, among these
working population does not feel engaged to their work, which clearly states that the lack the
motivation to do work. The rest 24% of this population has been termed as ‘Actively
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Disengaged’. These are the people, who are not just unhappy with their jobs, but also spread
rumours and negativity among their colleagues (Heathfield, 2017).
The younger population, also termed as ‘Generation Y’ is hard to please and difficult to
retain. Most of the younger working population have very low commitment to the
organisation. They are the people who are too eager to grow and make a name for them. Even
if they are committed to work, it is very difficult of the HR to retain them. The HR needs to
explore variety of techniques and a mix of benefits to retain these kind of employees (Haines,
2015).
It is very important to have a right mix of the motivational strategies in those corners of the
world, where there is a cut throat competition for the preferred skills within the individuals
for the job. In this world, where Multinational companies are expanding at a fast pace, local
entrepreneurship is blooming and the number of skilled young workforce is expected to fall,
the battleground between companies will become exceptionally harsh. In one of its studies,
McKinsey reported that the senior managers of the multinational corporations, working in the
business units situated in China, switch the companies at a rate of 30-40 percent each year,
which is approximately five times higher than the global rate.
Alignment of best technology for Global Strategic Management
Technological advancements of the present world have enabled the Multi-National
Corporations to expand at a very fast rate, as the modes of communication have minimized
the distance gaps to a great extent. Tools such as the Teleconferencing has allowed the teams
within different borders to work in a collaboration. It not only saves on the travel costs, but
also has negated the relocation costs, that a company may had to bear for relocating the
employees overseas for a sort term project (Long, 2016).
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Establishment of Virtual Teams have a helped, any organisations in variety of ways. It has
enabled the companies to increase their pool of knowledge regarding a market, through
individual team members. With the help of technology, many job profiles are evolving which
calls for a change in HR policies to manage their policies and programmes to fit the
requirements of their virtual workers. The company may face challenges among the countries
which are not technologically advanced.
Conclusion
In the end, it can be concluded that IHRM is both similar and entirely different from the
traditional Human Resource Management. The various trends that we discussed above also
pose a major challenge to the International Human Resource managers. Identifying these
challenges in advance and preparing for them is the best way to tackle them. The final test for
an international HR manager will be that when time comes, how much he had prepared the
organisation for the challenge that it faces.
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References
Albu, O., & Morosan-Danila, L. (2009, December). Current trends in HRM. Retrieved from
https://www.researchgate.net/publication/46525559_CURRENT_TRENDS_IN_HRM
Bolchover, D. (2013). Global CEO appointments: A very domestic issue. Retrieved from
http://highpaycentre.org/files/CEO_mobility_final.pdf
Crabtree, S. (2013, October). Worldwide, 13% of Employees Are Engaged at Work.
Retrieved from http://news.gallup.com/poll/165269/worldwide-employees-engaged-
work.aspx
Department of Health. (2014). Knowledge and Skills Statement for Social Workers in Adult
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https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/
411957/KSS.pdf
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https://www.td.org/Publications/Blogs/Management-Blog/2015/11/5-Ways-to-
Engage-and-Retain-Millennials
Heathfield, S. (2017, July). Top 10 Ways to Retain Your Great Employees . Retrieved from
https://www.thebalance.com/top-ways-to-retain-your-great-employees-1919038
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Long, D. (2016). 5 Growth Conversations to Engage and Retain Your Employees. Retrieved
from https://www.decision-wise.com/5-growth-conversations-to-engage-and-retain-
your-employees/
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http://www.empleo.gob.es/es/sec_bep/bibliotecas/central/Novedades/
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Human_resource_management_review.pdf
Miller-Merrell, J. (2017). On-Demand Webinar - Rethinking Employee Motivation:
Strategies to Engage, Develop and Retain. Retrieved from
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rethinking-emp-motivation-fy15q4/
SAP Company. (2017). Values-based diversity: what it means and why it matters. Retrieved
from https://www.successfactors.com/en_us/lp/values-based-diversity.html
Technologies, I. W. (2012, June). Infosys Has Trained 100,000 Graduates at Mysore
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