International Human Resource Management (IHRM) Report

Desklib provides solved assignments and past papers to help students succeed.

IHRM
1

Table of Contents
INTRODUCTION............................................................................................................................. 3
BODY.............................................................................................................................................. 4
Conclusion................................................................................................................................... 10
2

INTRODUCTION
International human resource management is the procedure that manages the people across
international boundaries with the help of the multinational companies. It includes people
management at worldwide level. Companies which are operating at the global level comprise
multinational and international firms. International firms are those firms whose operations take
place in subsidiaries overseas relying on manufacturing capacity and business expertise of the
parent company. Multinational firms are ones where the number of business in different
nations is managed as a whole from the centre and here the autonomy degree varies (Brewster
et al., 2016).
This assignment will throw light on the key factors that underpin the difference between
international and domestic HRM. It will include the analysis of the cultures, structures and
process in global and domestic settings. And will also cover the recommendations for
supporting the organizational performance. The theories will be covered in relation to the
cross-cultural management, cultural diversity and language and communication in context to
the international human resource management. For this assignment, HSBC has been selected
and with reference to the HSBC, key factors will be discussed reflecting differences between the
HR in context to the international and global context.
3

BODY
Reiche et al (2016) has threw light to define the IHRM that reflect the issues that rose from the
business internationalization and strategies, policies and practices of the HRM which are
pursued by the firm in context to the business procedure. IHRM is the process of HR
management in the business operations within the two countries.
Bratton and Gold (2017) have also stated that IHRM is the process of management that is
utilized by the different business within the international level. The main purpose of IHRM is to
accomplish the HR at MNC that will provide the organization with the opportunity to expand
their business in the global market and along with it remaining the market leader in its host
nation.
Difference between IHRM and Domestic HRM:
There are varieties of differences between IHRM and Domestic HRM as HRM deals with the
employees of national boundary only. IHRM need to deal with more than three nations. In
domestic HRM, HR manager deals with the people of the same culture and shared the same
societal norms and the same values while international HRM is different. Here HR needs to deal
with people from different cultures with different perspectives, management and performance.
IHRM considers the different cultural backgrounds of staff and people (Tarique et al., 2015).
IHRM: it addresses a broad range of HRM activities. It also addresses the HR issues that are
related to the employee’s belongings to more than one country. The HR manager here put
more and greater engagement in the personal life of employees. This pursues greater risk in an
international context (Pudelko et al., 2015). IHRM need to manage various external factors such
as foreign country government regulations. International business must motivate, procure,
retain and effectively utilizing services of people both at the foreign plan and corporate office.
The procedure of allocation, procuring and effective utilization of human resource in
international business is called IHRM. It can also be defined as the activities aimed at managing
organizational human resource at the global level to meet objectives of the organization and to
gain a competitive edge over the competitors at a national and intricate level.
4

Figure 1: IHRM
[Source: Farndale et al., 2019]
While Domestic HRM addresses the narrow range of the HRM activities. It addresses only issues
of the HR which are related to the staffs in a single country and it. It has limited risk in the
domestic context. There are very limited factors through which the organization deals with it.
The purpose of the international HRM is to gain the competitive edge with hiring and improving
the efficiency, skill and productivity by the process of allocating, procuring, assigning,
performance appraisal, training and development and compensation for the effective utilization
of the HR in the global environment. The ultimate goal of any organization is to meet the
customers’ needs and to get the market leader position. Business internationalization can bring
higher changes in the strategies of the organization, structure of the organization, HR activities
and approaches (Farndale et al., 2019).
MORGAN's three-dimensional models of HRM:
The model explained by Morgan discusses the three kinds of HR activities, countries and types
of employees.
5

Figure 2: Morgan Model
Source: Sims, 2019
International HR activities:
IHRM activities include main functions of the operative human resource such as procurement
that includes HR planning and induction. The second main activity is the allocation and it
includes the plan to use the human resources among the different projects. Effective Human
resource utilization of HR is the third activity of HR that helps to maximize the skills and human
resources efficiency and productivity. The activities of HR activities cover all major activities like
HR recruitment, planning, selection, training and development, performance evaluation etc
(Sims, 2019).
Types of employees in IHRM:
The human resources are recruited from different countries. Here countries of different
countries contribute their efficiency and skills for the organization growth. They are mainly
three kinds which are home and parent country residents, host country nations and third
country nationals. These are being differentiate on the basis of the company headquarters,
company citizens, and various countries citizens (Budhwar, 2016).
Home country of Parent Country Nationals (PCNs)
Home country nationals are the staff of the organization and these are the country citizens of
the home country and where headquarter is located.
Host Country nations (HCNs)
6

Host country nationals are the country citizens where the subsidiary is localized and when nay
organization hires the country nationals
Third country nationals (TCNs)
TCNs are the residents from third countries and they are not the country citizens of the home
country and nor the citizens of the subsidiary country.
Staffing Approaches
On the basis of the recruitment of the key and main managerial position of MNC different
approaches are being explained:
Ethnocentric Approach:
As per this approach, the organization believes that the home country employees can perform
in a better manner for fulfilling the vision, mission and objectives so that the main position of
the manager related to subsidiary can be meet (De Cieri, 2017).
Advantages: The organizational culture can be adapted in an easy manner with help of main
decisions of the management such as mission, vision and objectives. It is also possible to
remove communication barriers.
Disadvantages: Variations in cross-culture may result in difference among staff. The subsidiary
may have the risk to lose the experienced and skilled employee due to the ethnocentric
approach (Dowling et al., 2017).
Polycentric Approach
In this approach, all the managerial vacancies are filled with nationals employees of other
country. Many of the organization are adopting this method as u assist in meeting the
organizational objectives with having a good idea of local beliefs, culture and values.
Advantages: Host country managers can get idea about the needs of local area and it also
creates job satisfaction.
Disadvantages: It may create the scope of better cooperation and coordination and here quick
control is not possible.
Geocentric approach
As per this approach, the organization hires neither the host country nationals the home
country nationals. They hire employees on the basis of the concept of the right people for the
7

right job. Here organization hires the right people and suitable individuals for the actual
operation of the corporate.
Advantages: It creates the scope for hiring the skilled employees a best talented for the world
and it also ensures a competitive edge and it also helps in decreasing the clashes and unfair
treatment.
Disadvantages: Hiring employees as per this method is costly and here the chances of cross-
cultural management increases (Harzing and Pinnington, 2014).
CULTURE
Cross cultural management:
It is the procedure that addresses the management of the cultural differences that may arise
across the business organization. Conduction of the business at the global level needs a
company to have a balanced understanding of the different cultures. As for instance the
management strategies of HSBC many work well in one nation while it may not work well in
another country (Marchington et al., 2016). One of the main strategies that need to be
implementing by IHRM of HSBC is to implement for gaining knowledge about cultural diverity.
Every country must have its own set of values philosophies and values and these will be
reflected in the manner those economies and societies operate. The culture varies at the
international level. The HR department needs to deal with single and one culture in the
domestic HRM while in the international HRM It needs to deal with cross culture and people of
different regions. HSBC manage the people and culture from the different nation with the
appropriate strategy and it also deals with the examination of human behaviour in the
organization from domestic and international perspectives (Harzing and Pinnington, 2014).
The Hofstede cultural model can be better understood by the Hofstede model, culture was
referred as the collective people programming in a culture that referred as the values of the
culture that refers to the particular affairs. One of the conclusions reached by the model was
that the cultural values within a county are more similar than the individual values from the
different nations. According to Hofstede, there are five cultural dimensions and which are:
Power distance: This is the level by which the power is distributed in an unequal manner
among the employees in between the lower positions and higher positions. HSBC can distribute
8

power among the employees on the basis of the choice of the nations. Domestic County can
have different while international can have different (Tarique and Briscoe, 2015).
Individualism vs collectivisms
In the first one, the organization provides the priority to oneself only while for the other the
focus is on the needs of the group. HSBC also applies the power in relation to the need in the
organization.
Uncertainty avoidance
Here individual tries to reduce the risk they face in the situation. Countries with long traditions
and history have high uncertainty avoidance while other nations have low uncertain avoidance.
Thus HSBC needs to decide for the same (Harzing and Pinnington, 2014).
Masculine-femininity:
This has the tough value dominant as for instance money, success etc. Feminine reflects
dominant such as care of personal relationships, other care and quality of life etc. It is the
extent to which cultures differentiate between gender roles. Male orientations are features by
excellence and ambition while female orientations have more propensities towards the quality
of life and harmony (Tarique and Briscoe, 2015).
RECOMMENDATIONS
It is highly recommendable to HSBC to put more attention to the associate and personal well-
being of employees. There is more risk involved in the global HRM so efforts must be put to sort
out the issues. The management of HSBC must be ready to face the results of international
practices in advance. The cultural issues must be considered in advance and must put steps to
solve the cross-cultural aspects of the organization. It must also be considered by the HSBC to
differentiate between the strategies in relation to the national and international aspect
(Dowling et al., 2017).
9

CONCLUSION
Hereby it can be concluded from this report that this essay has provided the analysis of the
difference between global and international HRM. It has also provided the main factors that can
differentiate between the two concepts. The culture, process and system of both the system
have also been explained with the help of the concepts and models.
10

REFERENCES
Bratton, J. and Gold, J., 2017. Human resource management: theory and practice. Palgrave.
Brewster, C., Vernon, G., Sparrow, P. and Houldsworth, E., 2016. International human resource
management. Kogan Page Publishers.
Budhwar, P.S., 2016. International human resource management. Edward Elgar Publishing
Limited.
De Cieri, H., 2017. International human resource management: from cross-cultural
management to managing a diverse workforce. Routledge.
Dowling, P.J, Festing, M. and Engle, A.D. (2017) International Human Resource Management
7th ed. Cengage Learning EMEA
Farndale, E., Horak, S., Phillips, J. and Beamond, M., 2019. Facing complexity, crisis, and risk:
Opportunities and challenges in international human resource management. Thunderbird
International Business Review
Harzing, A.W. and Pinnington, A. (2014) International Human Resource Management, Sage
Marchington, M., Wilkinson, A. Donelly, R. and Kynighou A. (2016), Human Resource
Management at Work. London: CIPD.
Pudelko, M., Reiche, B.S. and Carr, C., 2015. Recent developments and emerging challenges in
international human resource management
Reiche, B.S., Stahl, G.K., Mendenhall, M.E. and Oddou, G.R. eds., 2016. Readings and cases in
international human resource management. Taylor & Francis.
Sims, R.R., 2019. GLOBALIZATION AND HUMAN RESOURCE MANAGEMENT. Human Resources
Management Issues, Challenges and Trends:" Now and Around the Corner", p.31
Tarique, I. and Briscoe, D. R. (2015) International Human Resource Management: Policies and
Practices for Multinational Enterprises (Global HRM), Routledge
Tarique, I., Briscoe, D.R. and Schuler, R.S., 2015. International human resource management:
Policies and practices for multinational enterprises. Routledge.
11