Human Resource Management summary
Chapter 1
As all forms of organizations have increased their global activities, all of their management funtions
have required adaption to the global environment, including HRM.
- Internationalization and how it has impacted HRM
International Human Resource management (IHRM): study and application of all human resource
management activities as they impact the process of managing human resources in enterprises in the
global environment.
- HRM in the MNE is playing an increasingly significant role in providing solutions to business
problems at a global level.
- Examine how HRM policies and practices can best support the rapid advance of
globalization.
- Every business and person confronts constant global pressure for competitive excellence
Drivers of internationalization of business
Driver Impact on internationalization
Decreased trade barriers through trade Negotiated to facilitate and increase trade
agreements and treaties between member countries (WTO, EU,
NAFTA)
Search for new markets and reduced costs New markets and lower cost operations found in
other countries
Rapid and extensive global communication Made possible with new technologies and
facilities international collaboration and easier
communication and control among operations.
Rapid development and transfer of new Technological advances are global, created
technology including improved transport everywhere, and shared across borders, making
global commerce possible
Increased travel and migration, exposure to new Billions of people experience other countries
countries and cultures and cultures every year and develop new
attitudes and expectations
Knowledge sharing across borders With global education, travel, trade, and
internet, knowledge and ideas are spreading
across borders rapidly
e-commerce International and increasing rapidly
Homogenization of culture and consumer Increasingly consumer demands are the same
demands everywhere
Global internet and social media, television, All media are now shared everywhere and
music, movies, sports, participated in by everyone, creating global
expectations
Competitiveness of emerging markets MNEs Internationalization largely came from
and SMEs developed countries. Now there are innovative
and competitive firms everywhere, much world
economic growth is located in emerging markets
Internationalization/globalization: ever-increasing interaction, interconnectedness, and integration of
individuals, companies, cultures, and countries.
- These connections are real, powerful, all-encompassing, and increasing in importance
- International business continues to grow in terms of the numbers and types of enterprises
conducting business across borders, the amount of foreign direct investment (FDI), and the
value of trade between countries.
- Enterprises from small or developing and emerging markets are also contributing increasingly
to global trade as are all micro-MNEs
,Fortune 500: list of the largest publicly traded and reported firms in the world, based on revenues.
Wall street journal: largest firms as determined by their market capitalization.
Financial times: based on market capitalization in all the major stock markets globally
Harvard Business Review: Ranking of the best-performing CEO’s
United Nations Conference on Trade and Development (UNCTAD): tracks the world’s transnational
corporations (TNCs), analyzing how important these firms are to the global economy.
- Transnational Index (TNI): Based on the composite of a firm’s average percentage of its
foreign assets, sales, and foreign employment to its total assets, sales, and employment, which
identifies the relative importance of foreign business activity to the world’s largest firms.
- Largest firms by foreign assets not necessarily the largest by sales, number of employees, or
as percentage of total.
- The opening of markets and the appearance of competitive foreign firms and their products in
virtually every marketplace puts intense pressure on every enterprise to develop the capacity
to operate at lower costs and with greater speed, quality, customer service, and innovation.
Different settings of IHRM:
Headquarters of multinationals: working in the central or regional headquarters of the traditional
MNE.
- Most common situation for HR managers who confront international responsibilities.
- Focus is from the center out to the subsidiaries, developing and overseeing HRM practices in
all foreign operations and administering the movement of employees between hq and foreign
locations.
Home-country subsidiaries of foreign-owned firms: working in home country but being employed by
a local subsidiary or acquisition of a foreign MNE.
- HR manager likely to receive end of policy and practice coming from the foreign
headquarters.
- Integration of local culture plus the foreign organizational culture into local operations
- Different communication styles, worker motivation philosophies, and organizational
structures and frequent lack of understanding of the host country cultures, markets,
employment laws and practices can cause problems for the local HR manager. (Also for
domestic)
Domestic firms: hospital, farms, dry cleaners, resorts, contractors, restaurants, etc.
- Hiring of employees who come from another country, culture, and language
- Dealing with competition from foreign firms for customers and suppliers.
- Capital which may come from foreign-owned firms, or competition from these firms for
resources, including employees.
- Possibility of going global: establishing small offices in other countries
- Recruiting from overseas to meet need for specialized skills
Government agencies and NGO’s:
- HR managers have to be internationally savvy in order to effectively carry out their
responsibilities, and they often have much experience from which they teach their private
sector counterparts.
- Government agencies, their embassies, and the hundreds of non-governmental organizations
(NGOs) are also global in scope
- Send hundreds of people from parent countries to overseas operations
- Employ many local and third country people to staff their activities around the globe
,Development of IHRM:
- HRM managers are being called upon to contribute increasing expertise to
internationalization
- Complex arises from whether a local HR manager are from headquarters, the host-country, or
from a third-country, as they end up being sandwiched between their own national cultures,
traditions, and experiences and the ones of the firm.
- Integrate and coordinate policies and practices taking place in diverse environments and with
people of different backgrounds.
Differences between HRM and IHRM: Geographic dispersion, multiculturalism, different legal and
social systems, and the cross-border movement of capital goods, services and people that are faced
add complexity to an IHRM’s job.
• IHRM is responsible for more HR functions
• IHRM is responsible for a broader expertise and perspective
• IHRM is responsible for greater involvement in people’s lives
• IHRM is responsible for dealing with and managing wider mix of employees
• IHRM is responsible for more external factors and influences
• IHRM is responsible for a greater level of risk
Evolution of the IHRM professional:
- Establishment of Global Professional in Human Resources (GPHR) certification by the
Human Resource Certification Institute (HRCI) in 2003 was turning point in the
professionalization of IHRM -> six domains
o Strategic HRM
o Global Talent Acquisition and mobility
o Global compensation and benefits
o Organizational effectiveness and talent development
o Workforce relations and risk management
o Core knowledge of IHRM
- Field continues to grow as a business discipline and academic field of study
- As organizations have internationalized, so has IHRM
New challenges:
- Attracting, engaging, and retaining thousands of MNE employees in many different countries
to achieve strategic global business objectives
- Aligning core HRM policies and practices with the new requirements of competing
internationally, while simultaneously responding to local issues and requirements in each
country of operation.
- Enhancing global competencies and capabilities within the IHRM department, including the
developing global centers of excellence, shared service centers, global talent management,
and mastering the necessary HR due diligence in cross-border mergers and acquisitions.
Chapter 2
Strategic International Human Resource management (SIHRM): How international business strategies
support IHRM and enhances these same strategies. Part of IHRM that focusses on creating and
implementing IHRM policies and practices to help achieve an MNE’s international vision and
objective (international strategy).
- For IHRM managers to make an effective contribution to global success, they must contribute
to be a part of the global strategic management of the business.
- focuses on creating and implementing IHRM policies and practices that help achieve an
MNE’s international strategy
- In an ideal world, a firm conducting international business will be actively engaged in
strategic planning and management processes on a global basis. Including a regular
environmental analysis or scan to determine its strategy.
- Evaluation of success of implementation of chosen strategy is needed to make any changes
and re-evaluate the strategy
, Strategic management: approaches that managers employ in running a company and that are derived
from the firm’s vision and objectives.
- The opening of markets and the appearance of competitive foreign firms places pressure on
virtually every major industry in every country.
- IHRM managers must develop the capability to assist in international development and
various levels of global operations
- Increased intensity of competition places great pressure on firms to develop the capacity to
operate at lower cost and with greater speed, quality, customer service, and innovation.
Strategy: signals an organization’s commitment to specific markets, competitive approaches, and
ways of operating.
Company’s strategy: game plan management has for positioning the firm in its chosen market arena,
for investing money and people in the development of particular business capabilities, for developing
sustainable competitive advantage, for please customers, and thus, for achieving superior business
performance.
Senior executives devise specific strategies for their organizations because:
- The need to actively shape how their firm’s business will be conducted
- The need to mold the independent decisions and actions initiated by departments, managers,
and employees across the company into a coordinated, company-wide game plan
Evolution of the multinational enterprise: as a firm internationalizes, it moves through stages and in
each stage it must make a choice of methods for market entry.
- These market entry choices will partially be dictated by the firm’s own internationalization
approach, the options it has in particular countries, the timing of its entry into the market, and
the risks it wants to bear.
- As firms pass through the various stages, they increase their degree of international activity,
and therefore, their IHRM responsibilities become increasingly complex.
Chapter 1
As all forms of organizations have increased their global activities, all of their management funtions
have required adaption to the global environment, including HRM.
- Internationalization and how it has impacted HRM
International Human Resource management (IHRM): study and application of all human resource
management activities as they impact the process of managing human resources in enterprises in the
global environment.
- HRM in the MNE is playing an increasingly significant role in providing solutions to business
problems at a global level.
- Examine how HRM policies and practices can best support the rapid advance of
globalization.
- Every business and person confronts constant global pressure for competitive excellence
Drivers of internationalization of business
Driver Impact on internationalization
Decreased trade barriers through trade Negotiated to facilitate and increase trade
agreements and treaties between member countries (WTO, EU,
NAFTA)
Search for new markets and reduced costs New markets and lower cost operations found in
other countries
Rapid and extensive global communication Made possible with new technologies and
facilities international collaboration and easier
communication and control among operations.
Rapid development and transfer of new Technological advances are global, created
technology including improved transport everywhere, and shared across borders, making
global commerce possible
Increased travel and migration, exposure to new Billions of people experience other countries
countries and cultures and cultures every year and develop new
attitudes and expectations
Knowledge sharing across borders With global education, travel, trade, and
internet, knowledge and ideas are spreading
across borders rapidly
e-commerce International and increasing rapidly
Homogenization of culture and consumer Increasingly consumer demands are the same
demands everywhere
Global internet and social media, television, All media are now shared everywhere and
music, movies, sports, participated in by everyone, creating global
expectations
Competitiveness of emerging markets MNEs Internationalization largely came from
and SMEs developed countries. Now there are innovative
and competitive firms everywhere, much world
economic growth is located in emerging markets
Internationalization/globalization: ever-increasing interaction, interconnectedness, and integration of
individuals, companies, cultures, and countries.
- These connections are real, powerful, all-encompassing, and increasing in importance
- International business continues to grow in terms of the numbers and types of enterprises
conducting business across borders, the amount of foreign direct investment (FDI), and the
value of trade between countries.
- Enterprises from small or developing and emerging markets are also contributing increasingly
to global trade as are all micro-MNEs
,Fortune 500: list of the largest publicly traded and reported firms in the world, based on revenues.
Wall street journal: largest firms as determined by their market capitalization.
Financial times: based on market capitalization in all the major stock markets globally
Harvard Business Review: Ranking of the best-performing CEO’s
United Nations Conference on Trade and Development (UNCTAD): tracks the world’s transnational
corporations (TNCs), analyzing how important these firms are to the global economy.
- Transnational Index (TNI): Based on the composite of a firm’s average percentage of its
foreign assets, sales, and foreign employment to its total assets, sales, and employment, which
identifies the relative importance of foreign business activity to the world’s largest firms.
- Largest firms by foreign assets not necessarily the largest by sales, number of employees, or
as percentage of total.
- The opening of markets and the appearance of competitive foreign firms and their products in
virtually every marketplace puts intense pressure on every enterprise to develop the capacity
to operate at lower costs and with greater speed, quality, customer service, and innovation.
Different settings of IHRM:
Headquarters of multinationals: working in the central or regional headquarters of the traditional
MNE.
- Most common situation for HR managers who confront international responsibilities.
- Focus is from the center out to the subsidiaries, developing and overseeing HRM practices in
all foreign operations and administering the movement of employees between hq and foreign
locations.
Home-country subsidiaries of foreign-owned firms: working in home country but being employed by
a local subsidiary or acquisition of a foreign MNE.
- HR manager likely to receive end of policy and practice coming from the foreign
headquarters.
- Integration of local culture plus the foreign organizational culture into local operations
- Different communication styles, worker motivation philosophies, and organizational
structures and frequent lack of understanding of the host country cultures, markets,
employment laws and practices can cause problems for the local HR manager. (Also for
domestic)
Domestic firms: hospital, farms, dry cleaners, resorts, contractors, restaurants, etc.
- Hiring of employees who come from another country, culture, and language
- Dealing with competition from foreign firms for customers and suppliers.
- Capital which may come from foreign-owned firms, or competition from these firms for
resources, including employees.
- Possibility of going global: establishing small offices in other countries
- Recruiting from overseas to meet need for specialized skills
Government agencies and NGO’s:
- HR managers have to be internationally savvy in order to effectively carry out their
responsibilities, and they often have much experience from which they teach their private
sector counterparts.
- Government agencies, their embassies, and the hundreds of non-governmental organizations
(NGOs) are also global in scope
- Send hundreds of people from parent countries to overseas operations
- Employ many local and third country people to staff their activities around the globe
,Development of IHRM:
- HRM managers are being called upon to contribute increasing expertise to
internationalization
- Complex arises from whether a local HR manager are from headquarters, the host-country, or
from a third-country, as they end up being sandwiched between their own national cultures,
traditions, and experiences and the ones of the firm.
- Integrate and coordinate policies and practices taking place in diverse environments and with
people of different backgrounds.
Differences between HRM and IHRM: Geographic dispersion, multiculturalism, different legal and
social systems, and the cross-border movement of capital goods, services and people that are faced
add complexity to an IHRM’s job.
• IHRM is responsible for more HR functions
• IHRM is responsible for a broader expertise and perspective
• IHRM is responsible for greater involvement in people’s lives
• IHRM is responsible for dealing with and managing wider mix of employees
• IHRM is responsible for more external factors and influences
• IHRM is responsible for a greater level of risk
Evolution of the IHRM professional:
- Establishment of Global Professional in Human Resources (GPHR) certification by the
Human Resource Certification Institute (HRCI) in 2003 was turning point in the
professionalization of IHRM -> six domains
o Strategic HRM
o Global Talent Acquisition and mobility
o Global compensation and benefits
o Organizational effectiveness and talent development
o Workforce relations and risk management
o Core knowledge of IHRM
- Field continues to grow as a business discipline and academic field of study
- As organizations have internationalized, so has IHRM
New challenges:
- Attracting, engaging, and retaining thousands of MNE employees in many different countries
to achieve strategic global business objectives
- Aligning core HRM policies and practices with the new requirements of competing
internationally, while simultaneously responding to local issues and requirements in each
country of operation.
- Enhancing global competencies and capabilities within the IHRM department, including the
developing global centers of excellence, shared service centers, global talent management,
and mastering the necessary HR due diligence in cross-border mergers and acquisitions.
Chapter 2
Strategic International Human Resource management (SIHRM): How international business strategies
support IHRM and enhances these same strategies. Part of IHRM that focusses on creating and
implementing IHRM policies and practices to help achieve an MNE’s international vision and
objective (international strategy).
- For IHRM managers to make an effective contribution to global success, they must contribute
to be a part of the global strategic management of the business.
- focuses on creating and implementing IHRM policies and practices that help achieve an
MNE’s international strategy
- In an ideal world, a firm conducting international business will be actively engaged in
strategic planning and management processes on a global basis. Including a regular
environmental analysis or scan to determine its strategy.
- Evaluation of success of implementation of chosen strategy is needed to make any changes
and re-evaluate the strategy
, Strategic management: approaches that managers employ in running a company and that are derived
from the firm’s vision and objectives.
- The opening of markets and the appearance of competitive foreign firms places pressure on
virtually every major industry in every country.
- IHRM managers must develop the capability to assist in international development and
various levels of global operations
- Increased intensity of competition places great pressure on firms to develop the capacity to
operate at lower cost and with greater speed, quality, customer service, and innovation.
Strategy: signals an organization’s commitment to specific markets, competitive approaches, and
ways of operating.
Company’s strategy: game plan management has for positioning the firm in its chosen market arena,
for investing money and people in the development of particular business capabilities, for developing
sustainable competitive advantage, for please customers, and thus, for achieving superior business
performance.
Senior executives devise specific strategies for their organizations because:
- The need to actively shape how their firm’s business will be conducted
- The need to mold the independent decisions and actions initiated by departments, managers,
and employees across the company into a coordinated, company-wide game plan
Evolution of the multinational enterprise: as a firm internationalizes, it moves through stages and in
each stage it must make a choice of methods for market entry.
- These market entry choices will partially be dictated by the firm’s own internationalization
approach, the options it has in particular countries, the timing of its entry into the market, and
the risks it wants to bear.
- As firms pass through the various stages, they increase their degree of international activity,
and therefore, their IHRM responsibilities become increasingly complex.
