IHRM: An Introduction
As companies expand across regions and countries, their human capital becomes diversified.
With that, the responsibilities of the international HRM (IHRM) have also increased manifold.
The primary responsibility of an IHRM is to ensure that employees can cooperate in the
workplace despite their cultural differences and work towards the common company goals.
Unlike domestic HRM that is mainly concerned with local/national compliance, IHRM largely
focuses on monitoring international taxation laws, employment protocols, language
proficiencies, work visas & permits, etc., for a global workforce. This is one of the crucial
differences between global vs. local HRM.
Understanding Domestic HRM
Domestic HRM or Domestic Human Resources Management focuses on managing employees
in one country. Essentially, the influence of external factors is relatively low here.
Domestic HRM’s primary role is to select the most eligible persons for different company
profiles. This ensures that employees are qualified and skilled enough to create value for the
company. Hence, domestic HRM must know how to leverage individual talents and skills in
which domain. They must also continually motivate employees to upskill and do better.
Domestic Vs. International Human Resource Management
While the recruiting operations of domestic HRM and international HRM are very similar, the
crucial difference lies in their scope of work concerning a particular region. IHRM has to manage
employees across countries, while DHRM only manages employees of a single country.
Since IHRM employs people from multiple countries, they have to deal with the complexities of
operating across diverse cultures. Naturally, their working style is considerably different from
that of a DHRM. IHRM cannot adopt the management norms of a DHRM as they must consider
numerous factors like cultural differences, time zones, country laws, industry regulations, etc.
Hence, its management style must be appropriately adjusted to suit the global setting. It must
adapt to the region-specific surroundings and maintain the balance of quality output from the
subsidiary countries while also coordinating them smoothly.
The operational network’s structure of an IHRM is based on the three-nation model. There is a
hierarchy of primarily three countries regarding the dispersal of management – parent, host, and
subsidiary countries. Hence, an IHRM has to manage three tiers of employees – Parent Country
Nationals or PCN, Host Country Nationals or HCN, and Third Country Nationals (TCN).
PCN: A parent country of a company is where the firm’s headquarters are based. An employee
working in the firm’s office in a country that is not their country of origin is a Parent Country
National. Also known as expatriates, these employees might have to stay in the foreign country
for projects or assignments for a long time, approximately 4-5 years. In such cases of prolonged
stay, the downside is that employees might be considered “de-facto” workers in that country,
meaning that its labor laws will apply to them.
As companies expand across regions and countries, their human capital becomes diversified.
With that, the responsibilities of the international HRM (IHRM) have also increased manifold.
The primary responsibility of an IHRM is to ensure that employees can cooperate in the
workplace despite their cultural differences and work towards the common company goals.
Unlike domestic HRM that is mainly concerned with local/national compliance, IHRM largely
focuses on monitoring international taxation laws, employment protocols, language
proficiencies, work visas & permits, etc., for a global workforce. This is one of the crucial
differences between global vs. local HRM.
Understanding Domestic HRM
Domestic HRM or Domestic Human Resources Management focuses on managing employees
in one country. Essentially, the influence of external factors is relatively low here.
Domestic HRM’s primary role is to select the most eligible persons for different company
profiles. This ensures that employees are qualified and skilled enough to create value for the
company. Hence, domestic HRM must know how to leverage individual talents and skills in
which domain. They must also continually motivate employees to upskill and do better.
Domestic Vs. International Human Resource Management
While the recruiting operations of domestic HRM and international HRM are very similar, the
crucial difference lies in their scope of work concerning a particular region. IHRM has to manage
employees across countries, while DHRM only manages employees of a single country.
Since IHRM employs people from multiple countries, they have to deal with the complexities of
operating across diverse cultures. Naturally, their working style is considerably different from
that of a DHRM. IHRM cannot adopt the management norms of a DHRM as they must consider
numerous factors like cultural differences, time zones, country laws, industry regulations, etc.
Hence, its management style must be appropriately adjusted to suit the global setting. It must
adapt to the region-specific surroundings and maintain the balance of quality output from the
subsidiary countries while also coordinating them smoothly.
The operational network’s structure of an IHRM is based on the three-nation model. There is a
hierarchy of primarily three countries regarding the dispersal of management – parent, host, and
subsidiary countries. Hence, an IHRM has to manage three tiers of employees – Parent Country
Nationals or PCN, Host Country Nationals or HCN, and Third Country Nationals (TCN).
PCN: A parent country of a company is where the firm’s headquarters are based. An employee
working in the firm’s office in a country that is not their country of origin is a Parent Country
National. Also known as expatriates, these employees might have to stay in the foreign country
for projects or assignments for a long time, approximately 4-5 years. In such cases of prolonged
stay, the downside is that employees might be considered “de-facto” workers in that country,
meaning that its labor laws will apply to them.
