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  • Subject Name : Human Resource Management

International Human Resource Management

Introduction to International Human Resource Management

With the steady pace in globalization today, the business market is well-connected the to the world. Businesses are moving from domestic business transactions, to cross-border business transactions Due to this globalization and with the ease of mobility and communications between countries organizations are now able to operate at a global level. A successful and efficient working of any organization or business requires a collective effort from among all the function of the organization. Amongst these, staffing is the one of the most important function of this process and is responsible to ensure the optimum and the best use of the human resource or the workforce of the company to achieve the organisational goals. With the changing times and every changing dynamics of the business environment, human resource management has emerged as a very important function for all the organizations and businesses (Brewster, et.al., 2016). It is important for companies with operations across different regions to formulate their management strategies in conjunction with the working style and employee needs and demands of that particular region. Such organizations develop and employ international human resource management strategies to fulfil this requirement. The presented article gives an overview of the concepts of international staffing and recruitment and the importance of developing efficient international human resource management systems for organizations having its operations in various regions across the globe.

Review of Literature

International human resource management (IHRM) in simple terms can be explained as a series of activities or processes to employ a company’s human resource management strategies for their operations across domestic borders or at the international or global level. These international human resource management strategies strive to meet organizational objectives. They help the businesses to achieve competitive advantage at national and global level.

Budhwar, (2016) explains international human resource management as, implementing the human resource management strategies and its activities. It also includes activities of necessary immigration facilities for prospective and current expatriate employees, for firms operating in domestic and international countries. It can also be explained as a strategic process of procurement, allocation, effective and efficient utilization of human resources capital in a multinational company. If a company simply exports its products, with only some small operations in foreign locations, then the international human resource management is relatively easier. International human resource management is a broad concept and essentially involves many concepts of personnel management. International human resource management process comprises of similar activities as that of domestic human resource management like planning, recruiting, staffing, and so on.

Domestic human resource management is operated in one nation and international human resource management activities are operated in different countries and across different regions. It consists of basic human resource management functions like recruitment, selection, training and development, performance appraisal and dismissal performed at a global level. It also comprises of other activities like global skills management, expatriate management and so on (Rees and Smith, 2017). The process of international human resource management activities comprises handling and handling of the three types of employees at international offices as follow:

  • Employees of domestic country –this includes the workforce living in the domestic operating nation of a firm or where the company’s head quarter is located, example, an American working in America for a firm with its headquarters in America itself.
  • Employees of host country− these include the employees living in the country in which the company’s subsidiary is located, for example, an American employee working in some foreign country.
  • Employees of third country− this includes the employees who are not from domestic country or host country, but are employed at the additional or corporate headquarters. For example, an American MNC, which has a subsidiary in America, may employ a French person as the manager of that subsidiary, who is thus a third country employee.

Management of human resource in home country becomes relatively easier due to lesser impact of the external environment on its operation. International human resource management is comparatively more complicated because it is largely impacted by the cultural dissimilarities, institutional factors and other such external factors (Kang& Shen, 2013).

  • Importance of international human resource management:

Globalization has an impact on the national and international operations of a firm. The companies need to constantly adapt to increasing homogenization across the globe. Due to this expansion it is essential for these businesses to standardize their practices and operating processes. These also including altering their human resource management strategies as well, in order to exercise their control (Brewster, et.al., 2016). Companies when operate across international boundaries one of the major tasks for such companies is to address and manage the dissimilarities of employee work style due to cultural clash and to integrate it strategies effectively in that region.

  • Functions and roles of international human resource management

According to Budhwar, (2016) international human resource management is inter-relation between three aspects: human resource activities, the types of employees and the different regions in which an organisation is operating in. Complexities in these variables differentiates international human resource management from domestic human resource management.

Human Resources include are all the people that work collectively or in one capacity and contribute to attain the common aim of the growth of a business. Thus, employee management is defined as a strategic approach for effective management of people or employees in a company such that they contribute to business to gain a competitive advantage (Rees and Smith, 2017). Similarly, international human resource management can be described as formal systems developed for the management of people of an organization across all the regions in which that organization operates.

Staffing is a process of recruiting the right personnel who are responsible for the organization’s growth. This function helps to ensure that the business always has the right people in the right positions. Staffing is in simple terms finding, choosing or selecting, and appointing or placing good and efficient employees to achieve the organisations strategic goals (Wood, Cookee, &Demirbag,2018). Due, to dynamic changes in the business environment staffing has become difficult for organizations. It becomes more difficult to implement this in other countries as compared to home countries due to clash of cultures and other factors. The companies possess a challenge in deciding on the mix of local employees, employees from the home country, and even people from third countries that will best meet organizational goals. According to Reiche, et.al, (2017) for staffing an overseas operation, cost is a major factor to be considered.

Hiring and then deploying people to positions where they perform effectively is the basic aim for most organizations, domestic or international. Recruitment is the activity of searching and appointing potential and good quality job candidates in sufficient numbers to help the organization to maximize its performance. Selection is the process of gathering information for the purposes of evaluating and deciding which candidates should be appointed in particular jobs. Recruitment and selection are distinct processes and both processes need to operate efficiently if the firm to manage its staffing process. After selection and appointing the appropriate personnel for a company the human resource management team also provides induction and orientation to the employees (Bratton and Gold2017). International human resource management also involves imparting training to the employees for their growth and development. Some of international human resource management roles suggested by Tung, (2016) are building commitment of the senior leadership, training managers, monitoring HR processes, supervision and management of implementation of global values and systems, to ensure these leaders are well equipped and have expertise to deal with global challenges, building strong internal and external networks, keeping abreast with latest trends and developments, and mobilizing resources to staff project teams effectively.

  • Factors contributing to development of international human resource management

There are four factors that contribute to the need to develop international human resource management system. Understanding these factors are important as the human resource activities in a global firm differ from a domestic firm. These factors include cultural diversity, workforce diversity, language diversity, and economic diversity (Reiche, et.al, 2017)

Issues related to employee dissatisfaction are more commonly observed in the business industry nowadays. Organizations are minimizing the number of employing domestic employees to foreign locations for long periods (Colling, Wood& Szamosi, 2019). Often low performance rates are observed in these employees as employees placed in other countries face cultural isolation. Multinational companies employ control on international subsidiaries by transferring their human resource management practices to their subsidiaries. It is essential for companies to devise human resource policies which help in global integration and also adapt to the local pressures (Reiche, et.al, 2017). International human resource management has an integral function to develop a stable and cohesive configuration or system of interrelated activities by considering different economic, cultural and social factors. This helps to achieve a standardized employee or human resource management practices, which in turn enables to optimize the business activities and maximize employee performance. When a company transfers work patterns from one nation to another region, national patterns collide, and employee relations may not be easy to combine (Kang& Shen, 2013).

An example which explains the importance of international human resource management is of BMW. BMW a German car manufacturing company had set up one of its subsidiary office in United Kingdom (Chiang, et.al, 2017). This company initially promised long-term job securities to the employees in United Kingdom. The company however was unable to understand the cultural differences of the workforce at United Kingdom. Due to this failure, BMW witnessed resistance from employees. This disturbed situation gave rise to conflicts between the employee and the management of the company.

The above example thus helps to understand the importance to develop and implement a strategic international human resource management to its cross-border operations to ensure effective and efficient human resource management so as to fulfil their end goal and gain competitive advantage. Some of the companies like IBM, Procter & Gamble, Pepsi and Coca Cola have large international business network and international experience. The success of such companies can be explained by their capability and efficiency of focusing on recruiting the right people at the right place (Saheem, Festing& Darwish, 2016).These companies have also effectively and efficiently facilitated dissemination of knowledge and innovation and have recognised the need of constantly identifying and developing talents on a global level.

Conclusion on International Human Resource Management

The rapid growth in industrialisation and globalization organizations now operate across many regions on the globe along with their home countries. Human resource managers of such organizations cannot afford to ignore the international influences on their work. Thus, it is essentially for such companies to develop management strategies to suit the diversities of the region in which their operate. Developing effective human resource management strategies is also a key part of this. International human resource management is the process of implementing the human resource practices and strategies on a global and international level, in accordance to adjust with the working style and diversity of that region in which the companies is operating. International human resource management play significant role in providing solution to global business issues. International human resource management has both functional and strategic similarities to domestic human resource management.

It involves performing almost the same activities as of domestic human resource management like recruitment, selection, performance management, compensation, training, industrial relations. It is closely linked to the business strategy of the organization. Domestic human resource management is concerned with managing limited number of human resource management activities at the national level and international human resource management is concerned with managing additional activities such as expatriate management.

Recommendations on International Human Resource Management

Due to technological growth and advancement in globalization the business world has shown a rapid growth. Companies have now moving further from home country operations to new markets crossing their borders, to increase their market share and market capitalization.

The human resource is progressively is integral part and directly responsible for the success of an organization. Moving in global economy, it is essential for businesses to amend their traditional ways of managing people. It is recommended for the MNCs to have a strong international human resource management system. Companies with its operations in other countries often face pressure of global integration. To adapt to these global differences, it is essential for the businesses to alter their business practices and processes. Employees of such multinational companies often tend to resist changes and differences. Also, employees of multinational companies working outside their home countries have often are subject to cultural shock. All these factors hinder the employee performance and creates obstacles for the companies to gain competitive advantage. Thus, building and developing international human resource systems for these companies is an essential part of the human resource management function (Saheem, Festing& Darwish, 2016).

Also, the organizations and human resource managers should identify and understand the differences in the variety of factors that impact the operation of employees and human resource management strategies. It is recommended for organizations to effectively address the cultural diversity, workforce diversity, language diversity and economic diversity (Rees and Smith, 2017).

However, in global context human resource managers must achieve two somewhat conflicting strategic objectives. First, they must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved (Chiang, et.al, 2017). At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings. This flexibility can be achieved by encouraging the employs to express their views, opinions and problems about a certain policy and then altering that policy keeping these views of the employee in mind. It is recommended for the companies with a global human resource perspective to have an adequate understanding of different cultures, motivation factors of people from different societies, and how they are reflected in the structure of international assignments. Diversity of various types in a multinational firm implies that the human resource management practices should be tailored and customized to suit the local conditions.

The basic implication to address these diversities is that same set of human resource practices is not suitable for all cultures, the companies should consider forming human resource management practices with cultural characteristics of the countries concerned. Employee diversity considers that various categories of employees not only bring their skills and expertise but also their attitudes, motivation to work or not to work, feelings, and other personal characteristics. Management of such with pre formulated human resource management practices may not be effective and efficient but a more focused and wholistic approach which understands the differences and employee views, needs to be adopted and developed so that formulated human resource management practices become tailor-made.

References for International Human Resource Management

Brewster, C., Houldsworth, E., Sparrow, P & Vernon. G. (2016). International resource management. London: The Charted Institute of Personnel and Development.

Budhwar, P.S. (2016). International resource management. Retrieved from: https://www.elgaronline.com/view/nlm-book/9781783475452/C170.xml?

Chiang, F.F., Lemanski, M.K. &Birtch, T.A. (2017). The transfer and diffusion of HRM practices within MNCs: lessons learned and future directions. International Journal of Human Resource Management, 28(1), 234-258.

Colling, D.G., Wood, G.T., & Szamosi, T. (2019). Human resource management: a critical approach. New York: Routledge

Kang, H & Shen, J. (2013). International recruitment and selection practices of South Korean multinationals in China’, The international journal of human resource management, vol. 24, no. 17, pp.3325-3342. 

Reiche, S.B., Stahl, G.K., Mendehall, M. & Oddu, G.R (2017). Reading and cases in international human resource management. London: Routledge

Rees, G. &Smith, P. (2017). Strategic human resource management: an international perspective. London: Sage Publications.

Saheem, W.H., Festing, M. & Darwish, T. (2016). International human resource management in Arab Gulf states – an institutional perspective. The International journal of human resource management, 28(18), 2684-2712.

Tung, R.L. (2016). New perspectives on human resource management in global context. Journal of World Business, 51(1), 142-152.

Wood, G., Cookee, F.L., &Demirbag, M. (2018). International Journal of Human Resource Management (IJHRM) Special Issue on: International human resource management in contexts of high uncertainties. The International journal of human resource management, 29(7), 1365-1373.

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