Differences Between Ghrm and Ihrm

7/31/2019 Differences Between Ghrm and Ihrm

1/25

Click to edit Master subtitle style

5/23/12

Divya Lekshmi P.MBA IB

DIFFERENCES BETWEEN

GLOBAL HRM & DOMESTIC HRM


2/25

5/23/12

HRM

HRM refers to those activities undertaken by an organization toeffectively utilize its human resources.

These activities would include at least the following:

Human resource planning Staffing

Recruitment

SelectionPlacement

Performance management

Training and development

Com ensation remuneration and benefits


3/25

5/23/12

International HRMHRM as a set of activities aimed managingorganisational human resources at international level toachieve organisational objectives and achieve competitiveadvantage over competitors at national and international

levels .

- French

The core aim of HRM remains constant regardless of theinternational context. In short, International HRM isconcerned with maximising the human capital of theorganisation to achieve organisational goals.

- Dowling


4/25

5/23/12

A Model of IHRM- Morgan (1986 )

International HRM as the interplay among these three dimensionshuman resource activities, types of employees, andcountries of operation.


5/25

5/23/12

What does IHRM add into the TraditionalFramework of HRM?

The three broad HR activities: Procurement, allocation, andutilization (These three broad activities can be easily expandedinto the six HR activities listed above)

The three national categories in international HRM activities: (1)

the host-country where a subsidiary may be located, (2) the home-country where the firm is headquartered, and (3) "other"countries that may be the source of labor or finance or otherinputs.

The three types of employees of an international firm: (1) host-country nationals (HCNs), (2) parent-country nationals(PCNs), and (3) third-country nationals (TCNs).


6/25

5/23/12

Parent country nationals (PCNs);

PCN-a person working in a country and temporarily residing in aforeign country other than their country of origin.

Also referred to as an expatriate.

Some firms prefer to call such employees international assignees.

Long periods of assignment (perhaps 4 5 years or more) may runthe risk of de facto employee status in the host country, so thatlabor laws or the host country apply.


7/255/23/12

Host country nationals (HCNs)

They are those employees of an organization who are the citizensof the country in which the foreign subsidiary is located.

Third country nationals (TCNs)

These are the citizens of a country other than the country wherethe organization is headquartered and the country that is hostingthe subsidiary

TCN describes individuals of other nationalities hired by a

government or government sanctioned contractor who representneither the contracting government nor the host country or area ofoperations.

This is most often those performing on government contracts in

the role of a private military contractor.


8/255/23/12

For example,

IBM employsAustraliancitizens(HCNs) in itsAustralian

operations,often sendsU.S. citizens(PCNs) toAsia-Pacific

countries onassignment,and may sendsome of itsSingaporean

employees on


9/25

5/23/12

Variables that Moderate Differences betweenDomestic HRM and IHRM


10/25

5/23/12

Complexity Involved

The complexity of operating in foreign countries and employingworkers from different countries is a key variable that makesdomestic and international HRM different-Peter J Dowling

The complexity of international HR can be attributed to six

factors:

1. More HR activities

2. The need for a broader perspective

3. More involvement in employees personal lives4. Changes in emphasis as the workforce mix of expatriates and

locals varies

5. Risk exposure

6. Broader external influences


11/25

5/23/12

1. More HR Activities

International HRM addresses a broader range of activities thandomestic HRM. These include

International taxation,

Coordinating foreign currencies and exchange rates,

International relocation,

International orientation for the employee posted abroad,

Expatriate administrative services

Host government relations

Language translation services


12/25

5/23/12

2. The Need for a Broader Perspective

Administering programs that are equitable for more than onegroup.

Human resource managers working in an internationalenvironment face the problem of addressing HR issues of

employees belonging to more than one nationality. Hence, theseHR managers need to set up different HRM systems for differentlocations. Human resource managers in a domestic environmentadminister HR programmes to employees belonging to a singlenationality.


13/25

5/23/12

3. More Involvement in Employees PersonalLives

Ensure expatriates understand

Housing arrangements

Healthcare

Compensation (cost-of-living allowances, premiums, taxes)

Visa requirements

Schooling

International HRM requires greater involvement in the personal life of employees. The HRmanager of an MNC must ensure that an executive posted to a foreign country understands

all aspects of the compensation package provided in the foreign assignment, such as cost ofliving, taxes, etc. The HR manager needs to assess the readiness of the employees family torelocate, support the family in adjusting to a foreign culture through cross-cultural training,and to help in admitting the children in schools. The HR department may also need to takeresponsibility for children left behind in boarding schools in the home country by theemployees on foreign postings. In the domestic environment, the involvement of the HR

manager or department with an employees family is limited to providing family insuranceprogrammes or providing transport facilities in case of a domestic transfer.


14/25

5/23/12

4.Risk Exposure

There is heightened exposure to risks in internationalassignments. These risks include the health and safetyof the employee and family. A major aspect of riskrelevant to IHRM today is possible terrorism. Several

MNCs must now consider this factor when decidingon international assignments for their employees.Moreover, human and financial consequences ofmistakes in IHRM are much more severe than in

domestic business. For example, if an executiveposted abroad returns prematurely, it results in highdirect costs as well as indirect costs.

Expatriate failure


15/25

5/23/12

5. Broader External Influences

Government

Economy

Labour standards and costs

Taxation

Health and safety

Laws, compliance regulations, codes of conduct

International HRM has to deal with more external factors thandomestic HRM. For example, government regulations about staffing

practices in foreign locations, local codes of conduct, influence oflocal religious groups, etc. If an American organization is sanctionedlicense by the Indian government to set up its subsidiary in India, the

American company is under legal obligations to provide employment


16/25

5/23/12

II. The Cultural Environment

Defining culture

a shaping process overtime that generates relative stability,reflecting a shared knowledge structure that accentuates variabilityin values, behavioural norms, and patterns of behaviour.

Defining culture shock

many adjustments to new cultural environments in short periods oftime, challenging peoples frames of reference in that their sense ofself (nationality) comes into question.


17/25

5/23/12

Prior rather than posthoc

Do national differences represent cultural differences?

Emic etic aspects of concepts or behaviourEmic culture specific (specificity/divergence)

Etic culture common (universality/convergence)

cultural awareness

cultural differences

differences in work-related values


18/25

5/23/12

III. Industry Type

build shared genuine belief that cross-cultural

learning will result in more creative and effective ways ofmanaging people


19/25

5/23/12

IV. Reliance of the Multinational on itsHome Country Domestic Market

NAFTA

UNCTAD


20/25

5/23/12

V. Attitudes of Senior Management toInternational Operations

Fostering a global mindset

Think globally

Globally oriented staff


21/25

5/23/12

The first and most basic premise is that domestic HRM isconducted at a national level, whereas international HRM isconducted globally. The impaction from this is that InternationalHRM is often more strategic in nature because it considers how

core employees from around the world will work together. Secondly, domestic HRM can be introverted and is only

concerned with managing employees at a national level, whereasinternational HRM requires the management of up to three types ofemployees; local, national and host.


22/25

5/23/12

Thirdly, domestic HRM is generally concerned with a limitednumber of activities at a local or national level such as recruitmentand selection and training and development. In contrast,international HRM is concerned with more complex matters such

as expatriate management and relocation.Fourthly, domestic HRM is less complicated due to less influence

from the external environment. IHRM is very complicated as it isaffected heavily by external factors such as cultural distance andinstitutional factors


23/25

5/23/12

Domestic Human Resource Management International Human Resource Management

Staffs are placed within the national

oundaries.

Staffs work outside their national boundaries.

Less number of Rule and Regulations to be

anaged.- mostly employment and taxationules of the home country.

Very high number of rules and regulations which are related to

taxation, employment rules, language translating services, workpermit etc.

There is uniform policy in administration Broader Perspective- Management has to be done according Host

Country Nationals (HCNS) , Parent Country Nationals (PCNS) and

Third Country Nationals.(TCNS)

No special attention into the personal life.

Confined to crche and cultural interactions.

Special attention to personal life of expatriate employees- cultural

training, schooling of children, employment opportunity for

spouse.

Challenges are confined to the situation of a

particular country.

IHRM management has to be ready to face challenges like

underperformance of expatriate employees, diplomatic

relationships between host country and parent country, currencyexchange rates which are variable and may impact the benefits of

TCNS and PCNS.

Special Training is not required for Socio

Cultural adaptation.

Special Training for expatriates so that they might not face

unnecessary hassles in the alien socio cultural environment.


24/25

5/23/12

Conclusion

The complexity involved in operating in different countries andemploying different national categories of employees is a keyvariable that differentiates domestic and international HRM, ratherthan any major differences between the HRM activities

performed.

In addition to complexity, there are four other variables thatmoderate (that is, either diminish or accentuate) differences

between domestic and international HRM. These variables are thecultural environment; the industry (or industries) with which the

multinational is primarily involved; the extent of reliance of themultinational on its home-country domestic market; and theattitudes of senior management.


25/25

5/23/12

References

Human Resources Management; The Key Concepts - By ChrisRowley, Keith Jackson

International business - By Frank McDonald, Fred Burton, PeterDowling

International Human Resource Management: ManagingPeople in a Multinational- By Peter Dowling, Marion Festing,Allen D. Engle

Human Resource Management - By Durai

Date post:	05-Apr-2018
Category:	Documents
Upload:	divuuz
View:	227 times
Download:	0 times

Differences Between Ghrm and Ihrm

Documents