International HRM: Managing Cultural Diversity Challenges

This report delves into the complexities of international human resource management (IHRM), emphasizing the significant challenges posed by cultural diversity. It highlights the essential roles and responsibilities of the international HRM department, including managing home, host, and third-country employees. The report identifies key challenges such as compliance with international laws, the navigation of cultural diversity, and the administration of equitable benefits and compensation. It underscores the importance of cultural diversity in fostering innovation and improving relationships with foreign clients, while also addressing potential issues like miscommunication, cultural misunderstandings, and the impact of language barriers on team coordination and productivity. The report further explores how cultural diversity can lead to societal benefits by enabling organizations to understand and meet the needs of diverse populations, and how it can provide insights into overseas customer demands, ultimately influencing organizational success.

Running head: HUMAN RESOURCE MANAGEMENT
Human resource management
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction......................................................................................................................................1
Challenges of international HRM....................................................................................................2
Key issue: cultural diversity and its importance..............................................................................3
Challenges faced by international human resource department: Cultural diversity........................5
Possible solutions of the challenges:...............................................................................................7
Conclusion.......................................................................................................................................8
Reference List..................................................................................................................................9

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Introduction
International HRM can be defined as a complete guideline, a structure of activities and
processes that are maintained by the unit in an international level order to achieve organizational
success. International HRM especially focuses on international success, both from domestic and
international perspective. International HRM is a mandatory unit of all multinational companies
and organizations. Almost in all the multinational companies, international HRM is an important
department. The tasks and functions of human resource department in international organizations
and companies are also varied and valued (Certo 2018). There are certain characteristic features
that international HRM is characterized with. International HRM department in any company has
a broader perspective towards its employees. The unit of international GRM delves deeper into
the personal lives of the employees. The department is also exposed more to risk and external
influences. As already discussed, the roles and responsibilities of the international HRM
department is varied and different. This department carry out the responsibility of both the
national and the international human resource department. Apart from the traditional roles and
functions of human resource department in any organization like recruitment, selection, training
and development, performance appraisal and dismissal of the employees, the department also
looks into international matters like expatriate management and global skills management.
International human resource management specifically deals with three branches of
management. Home country employees, host country employees and third country employees
are the three branches that international HRM deals with. In the context of home country
employees, the headquarter is situated in the same place as the organization. The international
HRM department manages the employees of host country where the employees are of the same

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nation of the place of organization (Ang and Van 2015). International HRM department also
manages third country employees where the employees are working in a organization belonging
from a different country. That is, employees working in headquarters of a certain organization
though they do not belong to that country by origin.
Given the fact that the role and responsibility of international HRM is diverse, so is the
complexity of its job role. Employees at international HRM go through a number of challenges
and job complications. Some of the key challenges that international human resource department
go through are listed below
Challenges of international HRM
Compliance with international laws: Expansion of any business overseas or the global market
place requires a number of rules and legal connotations to be followed. The laws can be varied
and at times can be grossly complicated to understand. Expanding a business overseas would
require the organization to adhere to the tax liabilities and labor laws of the specific country
which are expected to be different from the origin country. Expanding business into different
countries may also require an organization to pay value added tax (Barak 2016)
Cultural diversity: Cultural diversity and its maintenance is perhaps one of the most critical task
that is handled by department of international human resource management. It is not an easy task
to mange people that are from different culture, different background, from different ethics and
language. While on one hand, the human resource department feel that adapting a cultural
diversity in workplace on one hand brings in fresh ideas and thoughts in the company, on the
other hand it also invites much complication in work process.

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Benefits and compensation: Benefits and compensation refers to the concept that employees will
be paid in cash or kind for their efforts towards company. This approach on one hand while is
beneficial to domestic companies, while on other hand carrying this approach may raise up some
issues between domestic and international employees. For example, benefits of holidays in Asian
country’s festive season may be a peak in Western countries. While the employees working in
the home countries will be able to take leave during their festive season, since it would be a lean
season for the company as well. Thus the Asian employees working in Western organizations
suffers (Stone and Deadrick 2015). Thus, discrepancy and dissatisfaction crops up between
employees. This dissatisfaction further results in employee attrition rate and also leaves an
impact on the organizational structure and the working process.
Key issue: cultural diversity and its importance
Importance of cultural diversity in the context of international human resource
management: international human resource department has a hug role to play in then over all
context of an organization. The inflation and the deflation of the company largely depends upon
the human resource department and the kind of the employees this department recruit for the
company. The human resource department encourages the recruitment of employees belonging
from different culture in an organization (Cascio 2018). The prime reason behind encouraging
such an approach is inculcating fresh and innovative ideas in an organization. People of different
culture and cultural belief have different set of ideals and thought processes. The way an
employee would look for a solution towards a certain problem would be no doubt different from
an employee with another cultural background. There are different approaches to learn from.
This multiple approach towards a certain issue brings an opportunity to the company to share and
learn new skills and ideas (Story et al. 2014).

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There is no iota of doubt that multinational companies are always prevalent with
workload. In such a scenario, the international human resource department aims at providing the
employees with a little leisure during the working hours. Cultural diversity and its maintenance
again plays a very important role in this context (Dickmann, Brewster and Sparrow 2016). The
human resource managers and officials celebrates the important functions and festive days of all
the cultures within the workplace. For example, the human resource managers may plan to mail
all the employees to dress in certain dress code during the Halloween. The human resource
managers may also celebrate the festival of lights and colors by letting the employees wear
bright colored outfits on a particular day. Likewise, Ester or Navratri may also be celebrated. The
point is, though it does not provide the employees with holidays, yet it largely reduces stress and
workload of the employees (Gomes et al. 2015). It is scientifically proven that maintaining a
free, frolic and colorful work culture helps to lighten up stress building factors significantly. The
employees in turn also get to learn about the culture and practices of the other workers. This not
only lightens up the mood but also at the same time helps to strengthen the bond amongst the
employees (Reiche et al. 2016).
Having employees from different cultural background also helps the international human
resource managers to deal with foreign clients. For example, the presence of employees of the
same culture and ethnicity induces a feeling of oneness to the foreign clients. The clients in the
process may take more interest in the business deals just for the fact that an organization or a
company gives a homely feeling. Having people within the organization from different cultural
background also helps to serve the society better. That is, if an organization has employees from
different cultural background, the organization as a whole will be able to understand the needs
and demands of different sections of society (Allen et al. 2015). Not only that, since the context

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is about multinational companies, having cultural diversity in workplace allows the organization
to get a clear insight about the demand and wants of customer overseas. Having such an insight,
an organization would be able to understand better which particular country if it may serve
would fetch the organization with better profit.
Challenges faced by international human resource department: Cultural diversity
While the human resource managers are responsible for recruitment of diverse employees
of different cultural origin, at the same time, this department is also responsible to keep a check
about the maintenance of equality in workplace. It must not be that the voices of employees of
certain cultures are left unheard. All the employees must feel that they are equally important for
the company and are contributing towards the organizational benefit in equal amount (Bader,
Schuster and Dickmann 2015).
The human resource department faces the challenge of dealing with the employees in the
context of their team and respective departments. For example, it is likely that all the
organization in the Asian countries follows deferential cultures. Due to this reason employees
from Japan or India recruited in organizations in the USA would not be speaking up in meetings
and conferences. Remaining calm and quiet and listening to the speeches is a mark of respect.
This is their cultural learning. On the other hand, employees from the Western countries
recruited in organizations of Vietnam and Malaysia would definitely speak and express their
honest opinion in meetings and conferences. Since, employees hailing from the Western
countries emphasize in flat organizational hierarchy, they are likely to open up and speak in
front of hierarchy. The issue crops up when the leaders or the managers misinterprets the
language style and communication of these employees. At times, the managers and the leaders

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fail to understand the cultural perspective of these employees. The employees hailing from
Western countries may be misinterpreted as rude and over spoken, while the employees from the
Asian countries might be looked upon as uninterested, reluctant and casual by the western
organizations. The continuation of this process of misreading and misunderstanding the group
members may result in clash within team, poor team bond, lack of coordination and thus the
same would result in organizational working structure. Lack of team support and lack of team
coordination without any iota of doubt would result in lower rate of team productivity. In a wider
perspective, if most of the teams face the same issue then the overall production of the
organization will be hampered. This is a chain reaction, that is, lower the rate of productivity,
sales would be low and that would again impact on the holding of salaries of the employees
(Brewster 2017).
Apart from misinterpretation of managers and employees that may have detrimental
impact on the organization, misunderstanding between the employees of different cultural
background may also have the same affect on an organization. Overcoming misunderstanding
based on cultural perspectives may be a challenge to the employees and to human resource
department since employees are recruited by them. Sometimes the persisting challenges between
the employees are hard to overcome. For example, the everlasting political fight between India
and Pakistan may be an issue for an Indian and a Pakistani employee working for the same
organization. Similarly, the negative cultural; stereotypes between the British and the French
employees, between the Polish and the German employees may impact on the overall team
coordination and bond.
Language and communication can be a major issue. It is imperative that the employees
understand each other’s language. Miscommunication may lead to major misunderstandings

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between employees. Language barriers does not impose only a single challenge to the
employees, it imposes a range of challenges (Farndale et al. 2017). Taking a scenario that all the
employees in a particular organization are speaking English language even then the way an
Indian would pronounce words would be different from an African, again the accents of the
Americans would not match the accents of British. Thus, there would be a gap in language and
communication process within the organization. Apart from verbal communications, non-verbal
communications also play a major role. Non verbal communications like gestures, body
language, making eye contact are essentially a part of the culture that the employees belong to. It
would be note worthy to assert that these are vastly different across cultures. For instance,
shaking hands with seniors may be considered a good and friendly act in Western countries
(Rees and Smith 2017). On the other hand, the same act might be looked down upon in the
eastern countries.
Employees hailing from the western side of the globe might be regular in this act, that
might be taken wrong by the eastern seniors. In Morocco, handshake is considered a healthy sign
only if done within the same gender. In the United States it is mandatory to introduce oneself
with the first mane and a form handshake. Again discrepancy arises. Language and
communication if is not clearly made within teams, the team members would not be able to have
a feeling of oneness. The feeling of an outsider would not only hamper the work of the team but
would also leave a major impact on the total organizational working process.
Possible solutions of the challenges:
There is no iota of doubt that cultural differences between the employees do create a
negative impact on employee relationship as well as the organizational structure. However, there

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are certain cultural stereotypes that also leaves a positive impact. The international human
resource department must focus of the positive aspects of the cultural differences, its notion and
stereotypes (Brewster 2017). For instance, the notion that Asians hold more of intelligence and
Americans hold more of confidence can be encouraged among the employees that would bring
about a positive energy in the workplace. This is not a stereotype and thus can be encouraged to
bring about a healthy competition in the workplace.
Training and development is imperative. The international human resource managers
must provide the leaders and the managers of all the team with proper training regarding the
cultural ethics and norms of all the employees persisting in the team. It is imperative to train the
managers and the leaders of the team about the different cultural practices so that the employees
does not feel aloof or unwanted in the team. Also, having diversity in workplace may raise the
problems of language and communication. In order to mitigate that, the human resource
department can arrange for language and communication sessions. It is crucial to communicate
both verbally and in written with the team members in order to understand their issues. Again,
style of communication also matters (Gomes et al. 2015). For example, the French speak softly
than the Australians. Soft spoken French should not be taken for granted by the team leaders,
neither the loud Australians must be held as too jovial for work. The HRM must clear the
cultural practices with the leaders and the managers and also ask them to make team meetings
about the same. This approach will not only result in a good team bonding, but will also show
better productivity.

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Conclusion
In the concluding segment, it can thus be said that the role and responsibilities of
international HRM does not end at only selecting, recruiting and placing the employees in a
particular organization. Delving deep, it has been found that international HRM faces a number
of issues in dealing with employees from different cultures and national background. The report
focuses on the issues of cultural diversity in workplace and its importance. The reader of the
report would be helped to get a clearer insight about the need of cultural diversity in an
organization in the context of HRM and the issues that international HRM faces. The report also
suggests possible recommendations for the issues which if followed, will be able to curd the
problems at greater level.

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Reference List
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