Issues and Challenges

inGlobal HRM

By:

Alpana Yadav

Bhawana

Jyoti

Komal Dagar

Parul Sohu

Sheena Goel

What is IHRM?

International HRM (IHRM) is the process of:• Procuring,

• Allocating, and

• Effectively utilizing human resources in a multinational corporation,

• While balancing the integration and differentiation of HR activities in foreign locations.

Factors that Influence the Global Work Environment

Forces for Change

• Global competition• Growth in mergers, acquisitions and alliances• Organization restructuring• Advances in technology and telecommunication

Impacts on MultinationalManagement

• Need for flexibility

• Local responsiveness

• Knowledge sharing

• Transfer of competence

Managerial Responses

• Developing a global “mindset”• More weighting on informal control mechanisms• Fostering horizontal communication• Using cross-border and virtual teams• Using international assignments

IHRM V/S DOMESTIC HRM

• Encompasses more functions,

• More heterogeneous functions,

• Involves constantly changing perspectives,

• Requires more involvement in employees’ personal lives,

• Influenced by more external sources

• Involves a greater level of risk than typical domestic HRM.

TRENDS

• Integration of the world’s economies and business globalization continues unabated

• International trade is growing more rapidly than world output

• Foreign direct investment (FDI) flows are increasing• The number of cross-border, inter-firm agreements has

risen dramatically • Social, economic, and political developments throughout

the world changed the way global business is conducted

contd.

• The external environment greatly influences HRM activities

• Each country has its own:• Laws• Business customs• Workforce characteristics• Political climate• The most difficult challenge to overcome is the “people

challenge”

Issues in IHRM

• Managing international assignments• Employee and family adjustment• Selecting the right person for a foreign assignment• Culture, communication and gauge• Language and communication

Other International Issues to be addressed by HR

• Clarifying taxation issues• Coordinating foreign currencies, exchange rates• Compensation plans• Working directly with the families of employees• More involvement in employees personal life, facility etc.• Different HR systems for different geographic locations• More complex external constituencies, foreign

Governments, political and religious groups• Heightened exposure to risks such as health, terrorism,

legal issues, human and financial consequences of mistakes

Barriers to effective global HRM

• Variations• Perception of HR• Attitude and actions of headquarters towards HR• Resistance to change• Cultural differences in learning and teaching styles

Main challenges in IHRM

• High failure rates of expatriation and repatriation

• Deployment – getting the right mix of skills in the organization regardless of geographical location

• Knowledge and innovation dissemination – managing critical knowledge and speed of information flow

• Talent identification and development – identify capable people who are able to function effectively

• Barriers to women in IHRM

• International ethics

• Language (e.g. spoken, written, body)

contd.

• Different labor laws• Different political climate• Different stage(s) of technological advancement• Different values and attitudes e.g. time, achievement, risk

taking• Roles of religion e.g. sacred objects, prayer, taboos, holidays,

etc• Educational level attained• Social organizations e.g. social institutions, authority

structures, interest groups, status systems

The Cultural Nature of Global HRM

• Cultural differences between nations can influence the effectiveness of HRM policies and practices

• HRM must be congruent with the cultural orientation of the workers

• Hefstede says cultures vary in five dimensions:• Individualism versus collectivism• Power distance• Avoidance of uncertainty• Masculinity• Long-term versus short-term orientation

The Concept of “Fit” in Global HRM

• “Fit” is the degree to which HRM policies are congruent with the:

• Strategic plan of the organization• Work-related values of the foreign culture• Internal fit: making sure HRM policies facilitate the:• work values and motivation of employees• External fit: the degree to which HRM matches the:• context in which the organization is operating

• Discrepancies in International compensation: The “discrepancies” most cited are listed in the order of how often they were mentioned as being major problems:• • Base Salary

• Overseas Premiums • Housing Allowances• Education Allowances• Cost of Living Allowances• Tax Equalization• Repatriation Allowances• Performance Based Incentive

• The biggest HR challenge facing any globally oriented corporation is finding competent managers

• An expatriate manager (PCN) comes from the corporation’s home nation

• Relocation can be troublesome, regardless of the managers country of origin

• The challenge is to capitalize on the diversity of a global workforce without suppressing cultural heritage

The Expatriate Manager in the MNC

• Managing the expatriate’s adjustment process is a primary focus of GHRM

• The difficulty of this task has increased because sales and production shifted closer to markets

• There is higher use of host country and third country management

• There is a concurrent increase in the number of “inpats”• Both inpats and expats can have a difficult time adapting

to their new surroundings

Selecting the Expatriate Manager

• Factors associated with expatriate success:• Good technical and language skills

• Strong desire to work overseas

• Specific knowledge of overseas culture

• Well-adjusted family situation

• Complete support of spouse

• Behavioral flexibility

• Adaptability and open-mindedness

• Good relational ability

• Good stress management skills

Legal and Ethical Climate of GHRM

• International business is conducted in a maze of:• International trade agreements

• Parent country laws

• Host country regulations

• Ethical behavior challenges may also be encountered:• Environmental regulation, may be weaker

• “Gift giving” or “greasing” may be common practice

contd.

• Regulations regarding employment discrimination vary from country to country

• Ethical dilemmas between profits and the preservation of basic human rights may also exist

• Resolving ethical issues is not an easy task

Labor Relations & the International Corp.

• Labor relations issues that may arise in the international environment:• Unions

• Labor laws

• Less emphasis on written contracts

• How much participation employees are entitled to in HRM policies

contd.

• Employee participation is guaranteed in Germany• South Korea’s giant industrial firms, the chaebol, control

every aspect of worker’s lives

• Government business regulations may differ• In Singapore, annual wage adjustments are set by a national

council and strikes are nearly impossible

• There is no simple solution to the labor relations problems with which MNCs and GCs are confronted• Labor has been trying to establish global labor organizations