Globalization : INTERNATIONALIZATION of HRM PRACTICES P resented by : Group-8 1 Indraveer singh 13 Kishanpal 16 Manoj dubey 18 Nadeem 24 Pal singh 27 Pavan kumar 29 R d gupta 38

Introduction / Scope of Presentation Stages of Globalization Stages of Globalization Types of international organization Types of international organization Role of HRM and IHRM Role of HRM and IHRM Comparison between Domestic HRM and IHRM Comparison between Domestic HRM and IHRM Model of IHRM Model of IHRM IHRM Practices IHRM Practices Staffing Policy Determinants Staffing Policy Determinants Factors affecting International HRM Factors affecting International HRM Conclusion Conclusion 2

Stages of Globalization Stage 1: Domestic Operations Stage 1: Domestic Operations Firms offer products or services that are designed to primarily serve consumers in the domestic market (e.g., law firms) Firms offer products or services that are designed to primarily serve consumers in the domestic market (e.g., law firms) Stage 2: Foreign Operations Stage 2: Foreign Operations Products and services are opened up to markets in other countries, but production facilities remain in home country Products and services are opened up to markets in other countries, but production facilities remain in home country Stage 3: Subsidiaries or Joint Ventures Stage 3: Subsidiaries or Joint Ventures -Some operational facilities are physically moved to other countries. - Corporate headquarters in home country has high control over foreign operations. 3

Types of international organization International corporation International corporation is a domestic firm that builds on its existing capabilities to penetrate overseas market e.g. honda is a domestic firm that builds on its existing capabilities to penetrate overseas market e.g. honda Multinational corporation Multinational corporation has operating units located in foreign countries. Each subsidiary functions as autonomous unit and provides its goods and services for the geographical region surrounding the country of operation of the subsidiary eg Xerox, phillips has operating units located in foreign countries. Each subsidiary functions as autonomous unit and provides its goods and services for the geographical region surrounding the country of operation of the subsidiary eg Xerox, phillips 4

Types of international organization Global corporation Global corporation a type of MNC that controls over its subsidiaries across the world through centralised home office. These firm treat entire world as one market e.g. matsushita a type of MNC that controls over its subsidiaries across the world through centralised home office. These firm treat entire world as one market e.g. matsushita Transnational corporation Transnational corporation provide autonomy to the independent country oprations but bring separate opration together into an integrated whole through network structure e.g. unilever provide autonomy to the independent country oprations but bring separate opration together into an integrated whole through network structure e.g. unilever 5

Role of HRM ascertaining the corporate strategy of the company and assessing the corresponding human resource needs; determining the recruitment, staffing and organizational strategy; recruiting, inducting, training and developing and motivating the personnel; putting in place the performance appraisal and compensation plans and industrial relations strategy and the effective management of all these. ascertaining the corporate strategy of the company and assessing the corresponding human resource needs; determining the recruitment, staffing and organizational strategy; recruiting, inducting, training and developing and motivating the personnel; putting in place the performance appraisal and compensation plans and industrial relations strategy and the effective management of all these. “ 6

7 Role of IHRM The strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in an international business, where staffing, management development, performance evaluation, and compensation activities are complicated by profound differences between Countries in labour markets, culture, legal systems, economic systems, and the like.” The strategic role of HRM is complex enough in a purely domestic firm, but it is more complex in an international business, where staffing, management development, performance evaluation, and compensation activities are complicated by profound differences between Countries in labour markets, culture, legal systems, economic systems, and the like.” It is not enough that the people recruited fit the skill requirement, but it is equally important that they fit in to the organizational culture and the demand of the diverse environments in which the organization functions It is not enough that the people recruited fit the skill requirement, but it is equally important that they fit in to the organizational culture and the demand of the diverse environments in which the organization functions

8 Comparison between Domestic HRM and IHRM More HR activities More HR activities Need for a broader perspective Need for a broader perspective Involvement in employee personal lives Involvement in employee personal lives Change of emphasis Change of emphasis Risk exposure Risk exposure External influences External influences

9 Model of IHRM IHRM Utilise Procure Allocate Third Country Nationals Host Country Nationals Home Country Nationals Third Country Home Country Host Country HR activities Types of employees Countries

10 More HR Activities Human Resource Planning Human Resource Planning Difficulty in implementing HR procedure in host countries. Difficulty in implementing HR procedure in host countries. Difficulty in aligning strategic business planning to HRP and vice-versa. Difficulty in aligning strategic business planning to HRP and vice-versa. Providing developmental opportunities for international managers. Providing developmental opportunities for international managers. Employee Hiring Employee Hiring Ability to mix with organisation’s culture. Ability to mix with organisation’s culture. Ethnocentric, polycentric or geocentric approach to staffing. Ethnocentric, polycentric or geocentric approach to staffing. Selection of expatriates. Selection of expatriates. Coping with expatriate failures. Coping with expatriate failures. Managing repatriation process. Managing repatriation process. Training and Development Training and Development Emphasis on cultural training Emphasis on cultural training Language training Language training Training in manners and mannerisms. Training in manners and mannerisms.

11 More HR Activities Compensation Compensation Devising an appropriate strategy to compensate expatriates. Devising an appropriate strategy to compensate expatriates. Minimising discrepancies in pay between parent, host and third country nationals. Minimising discrepancies in pay between parent, host and third country nationals. Issues relating to the re-entry of expatriates into the home country. Issues relating to the re-entry of expatriates into the home country. Performance Management Performance Management Constraints while operating in host countries need to be considered. Constraints while operating in host countries need to be considered. Physical distance, time difference and cost of reporting system add to the complexity. Physical distance, time difference and cost of reporting system add to the complexity. Identification of raters to evaluate subsidiary performances. Identification of raters to evaluate subsidiary performances. Industrial Relations Industrial Relations Who should handle industrial relations problem in a subsidiary? Who should handle industrial relations problem in a subsidiary? What should be the attitude of parent company towards unions in a subsidiary? What should be the attitude of parent company towards unions in a subsidiary? What should be union tactics in subsidiaries? What should be union tactics in subsidiaries?

IHRM PRACTICES International staffing International staffing Pre-departure training for international assignments Pre-departure training for international assignments Repartition Repartition Performance management in international assignments Performance management in international assignments Compensation issue in international assignments Compensation issue in international assignments 12

International staffing Home country or parent country national Home country or parent country national are citizens of the country in which headquarter of the MNC is located. They are not the citizens of the country in which they are working and where business is located are citizens of the country in which headquarter of the MNC is located. They are not the citizens of the country in which they are working and where business is located Host country national Host country national are those employees who are the citizens of the country in which the organization foreign subsidiary is located. are those employees who are the citizens of the country in which the organization foreign subsidiary is located. Third party national Third party national are the citizens of the country other than the organization is headquartered and the country hosting the subsidiary are the citizens of the country other than the organization is headquartered and the country hosting the subsidiary 13

Pre-departure training for international assignments Language training Language training Cultural training Cultural training Managing personal and family life Managing personal and family life 14

Repatriation Process of bringing back an expatriate home after he has completed his international assignment Process of bringing back an expatriate home after he has completed his international assignment Difficulties upon Return Home 20-40% of repatriates quit after returning home. Why? Lack of respect for acquired skills/knowledge Lack of respect for acquired skills/knowledge Loss of status Loss of status Poor planning for return position Poor planning for return position Reverse culture shock Reverse culture shock 15

16 The Repatriation Process Preparation Physical Relocation Transition Re-adjustment Repatriation Process

Performance management in international assignments Compensation package Compensation package Task assigned to the expatriate Task assigned to the expatriate Headquarter support Headquarter support Environment Environment Cultural adjustment Cultural adjustment 17

Compensation Issue The need to vary expatriate compensation, depending on the ‘stage of life cycle’ of the expatriate’s family (e.g. young children, children in college, etc). The need to vary expatriate compensation, depending on the ‘stage of life cycle’ of the expatriate’s family (e.g. young children, children in college, etc). Remuneration issues related to re-entry into the parent-country organisation. Remuneration issues related to re-entry into the parent-country organisation. Discrepancies in pay between parent, host and third-country nationals. Discrepancies in pay between parent, host and third-country nationals. Remuneration issues to deal adequately with new waves of change in the internationalbusiness environment Remuneration issues to deal adequately with new waves of change in the internationalbusiness environmentObjectives Attract employees who are qualified and interested in international assignments Attract employees who are qualified and interested in international assignments Facilitate the movement of expatriates from one subsidiary to another, from the home country to subsidiaries, and from subsidiaries back to the home country; Facilitate the movement of expatriates from one subsidiary to another, from the home country to subsidiaries, and from subsidiaries back to the home country; Provide a consistent and reasonable relationship between the pay levels of employees at the headquarters, domestic affiliates, and foreign subsidiaries; and Provide a consistent and reasonable relationship between the pay levels of employees at the headquarters, domestic affiliates, and foreign subsidiaries; and Be cost-effective by reducing unnecessary expenses Be cost-effective by reducing unnecessary expenses 16

Staffing Policy Determinants The Cultural Dimension The Cultural Dimension Subsidiary Characteristics Subsidiary Characteristics Parent Company Characteristics Parent Company Characteristics Host Country Characteristics Host Country Characteristics Costs Costs 19

Staffing Policy Ethnocentric Approach Ethnocentric Approach Polycentric Approach Polycentric Approach Geocentric Approach Geocentric Approach 20

Ethnocentric Approach Key management positions are filled by parent country nationals Key management positions are filled by parent country nationals Best suited for international bussiness Best suited for international bussinessAdvantages Overcomes lack of qualified managers in host nations Overcomes lack of qualified managers in host nations Unified culture Unified culture Help transfer of competencies Help transfer of competenciesDisadvantages Produces resentment in host country Produces resentment in host country Can lead to cultural myopia Can lead to cultural myopia 21

Polycentric Approach Host nationals manages subsidiary Host nationals manages subsidiary Parent company national hold key headquarter positions Parent company national hold key headquarter positions Best suited to multi domestic bussiness Best suited to multi domestic bussinessAdvantages Elevates cultural myopia Elevates cultural myopia Inexpensive to implement Inexpensive to implement Help transfer of core competencies Help transfer of core competenciesDisadvantages Limits opportunity to give experience of host country nationals outside their own country Limits opportunity to give experience of host country nationals outside their own country Can create gap between home and host country operations Can create gap between home and host country operations 22

Geocentric Approach Seeks best people regardless of nationality Seeks best people regardless of nationality Best suited to global and transnational bussiness Best suited to global and transnational bussinessAdvantages Enables the firm to make best use of its human resourse Enables the firm to make best use of its human resourse Equips executives to work in no of cultures Equips executives to work in no of cultures Helps to build strong unifies culture and informal management network Helps to build strong unifies culture and informal management networkDisadvantage: National immigration policies may limit implementation National immigration policies may limit implementation Expensive to implement due to training and relocation Expensive to implement due to training and relocation Compensation structure may be a problem Compensation structure may be a problem 23

Factors affecting International HRM Differences in Labor Market Characteristics Differences in Labor Market Characteristics Cultural Differences Cultural Differences Differences in Regulatory Environment Differences in Regulatory Environment Altitude Towards Employment Altitude Towards Employment Difference in Conditions of Employment Difference in Conditions of Employment 24

Summary and Conclusion Summary and Conclusion 25