International Human Resource Management (IHRM)
International Human Resource Management (IHRM) has for many years been established as
an important area in management studies which is also critical for organizations. Currently,
firms take part in a process of globalization or internationalization that obliges them to be
competitive in a world market. To maintain competitiveness, firms must innovate and
develop a greater capacity for reaction than that of their competitors. In this sense,
appropriate people management can endow firms with the indispensable capacities needed to
achieve survival and differentiate themselves from their competitors.
A company’s internationalization means having to adopt an international orientation in all the
functional activities of the company, such as finance, marketing, production or human
resource practices. As an example, in the Human Resource (HR) department, HR managers
will have to ask themselves questions such as:
• If the company goes international, what type of employees do they need to hire? Employees
from the home country (expatriates), or local employees? How will we choose whether to
send expatriates or use local employees?
• How can we know how HR practices are conducted in other countries? Is the recruitment
and selection process the same in the country or countries the company wants to operate in?
• How do we manage knowledge across geographical and cultural distances? etc.
Knowing how to manage and deal in an effective way with all the issues involved in IHRM is
critical to the success of the company. This chapter will cover key issues in IHRM, and after
reading this chapter, the reader should know about differences between domestic and
international HRM, the impact of culture in IHRM, alternatives for international staffing, and
issues related to expatriation and repatriation. The treatment of “international” in the
management of employees in an organization gives it a certain degree of complexity which
makes studying it very relevant.
Domestic human resource management vs. International human resource management:
HR management refers to those activities which organizations use to effectively and
efficiently manage their employees (Dolan et al., 2007). These activities include, for
example, HR planning, recruitment and selection, training, performance appraisal and
compensation, among others. Among the most important processes which HR departments
develop are:
HR Planning: Which, setting out from the aims and the strategy that the organization
has established for a specific time horizon, means determining what the need for and
availability of present and future staff are.
The Analysis of the Job Position: Where the aim is to know both what the job
involves and what is required to correctly carry it out.
Recruitment and Selection: Of staff for organizations, through which internal and
external pro-cesses are set up to find candidates for jobs.
, Training and Career Management: By which the organization increases the human
potential and develops the individual through training and the opportunity of
promotion and development within the organization.
Performance Appraisal and Remuneration: By which organizations measure the
performance of individuals and design the most appropriate systems of compensation
for motivating and retaining valuable employees.
The issue is that when we consider International Management, all of these activities become
more complex (Dolan et al., 2007) and others could also be added. For example:
•Recruitment and Selection: The HR departments must take into account that the
contracting needs of MNCs are different from those of firms which only act nationally. For
instance, questions arise such as whether to select people from the host country or expatriates,
or what should be the appropriate recruitment sources based on the location, among others.
•Performance Appraisal: An international firm’s performance appraisal system must take
into account the competency of the employees, but it also has to consider intercultural
personal skills, sensitivity toward foreign norms and values, and the capacity to adapt
to new environments. Therefore, when appraising the managers of MNCs, there must be a
simultaneous consideration of global performance and the results of the subsidiary. There
may be factors, such as work legislation and/or market conditions, among others, which
hinder the measuring and comparison of results.
•Training: The function of training for international HR departments also has a greater
complexity. Normally, the decisions about training and improvement are taken based on the
firm’s degree of internationalization. For example, a firm in an export phase tends to cover its
specific needs with external staff or professionals. In the regional activity phase, the firm
should consider the cultural and geographic differences to create training strategies. The
training of managers of global firms tends to be oriented to increasing their capacity to
process and exchange social, technological and market tendency information, among other
skills.
•Remuneration: The design of a globally appropriate remuneration policy is one of the
greatest challenges HR departments are faced with. To design and administer an appropriate
remuneration policy requires a thorough knowledge of the legislation, the customs and the
employment practices of many countries. The industrial systems and relations are very
relevant to this function. The economic climate changes quickly and firms must create
remuneration proposals for their employees that are competitive. The aim is not to design
global remuneration policies but rather for them to be equitable, fair and uniform for all the
contexts within the organization.
The impact of culture- convergence vs. Divergence:
International Human Resource Management (IHRM) has for many years been established as
an important area in management studies which is also critical for organizations. Currently,
firms take part in a process of globalization or internationalization that obliges them to be
competitive in a world market. To maintain competitiveness, firms must innovate and
develop a greater capacity for reaction than that of their competitors. In this sense,
appropriate people management can endow firms with the indispensable capacities needed to
achieve survival and differentiate themselves from their competitors.
A company’s internationalization means having to adopt an international orientation in all the
functional activities of the company, such as finance, marketing, production or human
resource practices. As an example, in the Human Resource (HR) department, HR managers
will have to ask themselves questions such as:
• If the company goes international, what type of employees do they need to hire? Employees
from the home country (expatriates), or local employees? How will we choose whether to
send expatriates or use local employees?
• How can we know how HR practices are conducted in other countries? Is the recruitment
and selection process the same in the country or countries the company wants to operate in?
• How do we manage knowledge across geographical and cultural distances? etc.
Knowing how to manage and deal in an effective way with all the issues involved in IHRM is
critical to the success of the company. This chapter will cover key issues in IHRM, and after
reading this chapter, the reader should know about differences between domestic and
international HRM, the impact of culture in IHRM, alternatives for international staffing, and
issues related to expatriation and repatriation. The treatment of “international” in the
management of employees in an organization gives it a certain degree of complexity which
makes studying it very relevant.
Domestic human resource management vs. International human resource management:
HR management refers to those activities which organizations use to effectively and
efficiently manage their employees (Dolan et al., 2007). These activities include, for
example, HR planning, recruitment and selection, training, performance appraisal and
compensation, among others. Among the most important processes which HR departments
develop are:
HR Planning: Which, setting out from the aims and the strategy that the organization
has established for a specific time horizon, means determining what the need for and
availability of present and future staff are.
The Analysis of the Job Position: Where the aim is to know both what the job
involves and what is required to correctly carry it out.
Recruitment and Selection: Of staff for organizations, through which internal and
external pro-cesses are set up to find candidates for jobs.
, Training and Career Management: By which the organization increases the human
potential and develops the individual through training and the opportunity of
promotion and development within the organization.
Performance Appraisal and Remuneration: By which organizations measure the
performance of individuals and design the most appropriate systems of compensation
for motivating and retaining valuable employees.
The issue is that when we consider International Management, all of these activities become
more complex (Dolan et al., 2007) and others could also be added. For example:
•Recruitment and Selection: The HR departments must take into account that the
contracting needs of MNCs are different from those of firms which only act nationally. For
instance, questions arise such as whether to select people from the host country or expatriates,
or what should be the appropriate recruitment sources based on the location, among others.
•Performance Appraisal: An international firm’s performance appraisal system must take
into account the competency of the employees, but it also has to consider intercultural
personal skills, sensitivity toward foreign norms and values, and the capacity to adapt
to new environments. Therefore, when appraising the managers of MNCs, there must be a
simultaneous consideration of global performance and the results of the subsidiary. There
may be factors, such as work legislation and/or market conditions, among others, which
hinder the measuring and comparison of results.
•Training: The function of training for international HR departments also has a greater
complexity. Normally, the decisions about training and improvement are taken based on the
firm’s degree of internationalization. For example, a firm in an export phase tends to cover its
specific needs with external staff or professionals. In the regional activity phase, the firm
should consider the cultural and geographic differences to create training strategies. The
training of managers of global firms tends to be oriented to increasing their capacity to
process and exchange social, technological and market tendency information, among other
skills.
•Remuneration: The design of a globally appropriate remuneration policy is one of the
greatest challenges HR departments are faced with. To design and administer an appropriate
remuneration policy requires a thorough knowledge of the legislation, the customs and the
employment practices of many countries. The industrial systems and relations are very
relevant to this function. The economic climate changes quickly and firms must create
remuneration proposals for their employees that are competitive. The aim is not to design
global remuneration policies but rather for them to be equitable, fair and uniform for all the
contexts within the organization.
The impact of culture- convergence vs. Divergence:
