1. World in the 21 st Century: The Need for IHRM Dr Preeti S. Rawat

2. Going Global Globalization Globalization The trend toward opening up foreign markets to international trade and investment. The trend toward opening up foreign markets to international trade and investment. Impact of Globalization Impact of Globalization Partnerships with foreign firms Partnerships with foreign firms Communication and connectivity have made the world smaller Communication and connectivity have made the world smaller There is a better understanding of foreign opportunities leading to increased trade and businesses operating across national borders There is a better understanding of foreign opportunities leading to increased trade and businesses operating across national borders Lower trade and tariff barriers (economies around the world are better integrated) Lower trade and tariff barriers (economies around the world are better integrated) NAFTA, EU, APEC trade agreements NAFTA, EU, APEC trade agreements WTO and GATT WTO and GATT “Anything, anywhere, anytime” markets “Anything, anywhere, anytime” markets

3. Going Global (cont’d) Embracing New Technology Knowledge Workers Knowledge Workers Workers whose responsibilities extend beyond the physical execution of work to include planning, decision making, and problem solving. Workers whose responsibilities extend beyond the physical execution of work to include planning, decision making, and problem solving. The Spread of E-commerce The Spread of E-commerce The Rise of Virtual Workers The Rise of Virtual Workers

4. Going Global (cont’d) Containing Costs Downsizing Downsizing The planned elimination of jobs (“head count”). The planned elimination of jobs (“head count”). Outsourcing Outsourcing Contracting outside the organization to have work done that formerly was done by internal employees. Contracting outside the organization to have work done that formerly was done by internal employees. Employee Leasing Employee Leasing The process of dismissing employees who are then hired by a leasing company (which handles all HR- related activities) and contracting with that company to lease back the employees. The process of dismissing employees who are then hired by a leasing company (which handles all HR- related activities) and contracting with that company to lease back the employees.

5. Going Global (cont’d) Managing Change Types of Change Types of Change Reactive change Reactive change Change that occurs after external forces have already affected performance Change that occurs after external forces have already affected performance Proactive change Proactive change Change initiated to take advantage of targeted opportunities Change initiated to take advantage of targeted opportunities Formal change management programs help to keep employees focused on the success of the business. Formal change management programs help to keep employees focused on the success of the business.

6. Going Global (cont’d) Impact of Globalization Realization that customer requirements and behavior vary from culture to culture Realization that customer requirements and behavior vary from culture to culture Cross National Convergence and Divergence Cross National Convergence and Divergence

7. Going Global (cont’d) Convergence Increased similarity in behavior around the world Increased similarity in behavior around the world Cross-national differences around the world not as different as was 50 yrs ago Cross-national differences around the world not as different as was 50 yrs ago Reason Reason 1. Media (common public opinion eg environment, pollution, global warming). 2. Fashion (jeans and T-shirt universal) 3. MNCs (convergence of attitudes, values and behaviors) 4. Regional economic integration (EU,NAFTA,)

8. Going Global (cont’d) Divergence Cross national difference continue and are important (eg cultural differences of customer preferences, cultural orientation, resurgence of national identity Cross national difference continue and are important (eg cultural differences of customer preferences, cultural orientation, resurgence of national identity Sensitivity to cultural differences also perpetuate differences Sensitivity to cultural differences also perpetuate differences

9. Going Global (cont’d) Impact on HRM Impact on HRM Different cultures, laws, and business practices Different cultures, laws, and business practices Issues: Issues: Identifying capable expatriate managers. Identifying capable expatriate managers. training programs suited for working in foreign culture and work practice. training programs suited for working in foreign culture and work practice. Adjusting compensation plans for overseas work. Adjusting compensation plans for overseas work.

10. Going Global (cont’d) Social Issues Attitudes Toward Work and Family Attitudes Toward Work and Family Day care Day care Flextime Flextime Job sharing Job sharing Alternative work schedules Alternative work schedules Elder care Elder care Job rotation Job rotation Parental leave Parental leave Telecommuting Telecommuting

11. Why Study IHRM? To understand how to make HR effective in the MNCs To understand how to make HR effective in the MNCs Effective management of HRM internationally is increasingly being recognized as a major determinant of success or failure in international business Effective management of HRM internationally is increasingly being recognized as a major determinant of success or failure in international business Shortage of good international HR managers Shortage of good international HR managers Business failure in the international arena may often be linked to poor management of HR (Expatriate failure) Business failure in the international arena may often be linked to poor management of HR (Expatriate failure) Work force multicultural and geographically dispersed Work force multicultural and geographically dispersed HR should support the rapid pace of internationalization of companies and enhance and maintain their competitiveness in the market place. HR should support the rapid pace of internationalization of companies and enhance and maintain their competitiveness in the market place.

12. Why Study IHRM? Need for HR Localization (NHRL) High/Low Need for HR Localization (NHRL) High/Low Need for Human Resource Consistency (NHRC) High/Low Need for Human Resource Consistency (NHRC) High/Low Umbrella HRM NHRL- H NHRC- H (Polycentric) Worldwide HRM NHRL-L NHRC-H (Geocentric, consultancy assignments ) Decentralised HRM NHRL- H NHRC- L (JV,Licence) Adhoc HRM NHRL- L NHRC- L

13. IHRM: Definition IHRM is HRM issues, functions, policies, and practices that result from the strategic activities of multinational enterprises and that impact on the international concerns and goals of those enterprises IHRM is HRM issues, functions, policies, and practices that result from the strategic activities of multinational enterprises and that impact on the international concerns and goals of those enterprises (Schuler et al.,1993)

14. Task/ Challenges of IHRM Coordinating various functions (planning, marketing, accounting, HR ) with the parent company and enabling the company’s overall strategy Coordinating various functions (planning, marketing, accounting, HR ) with the parent company and enabling the company’s overall strategy Building a global culture to encourage global mindsets and attitudes to cope with global customers and global transactions Building a global culture to encourage global mindsets and attitudes to cope with global customers and global transactions Developing the managerial leadership and structure to support global strategies and operations Developing the managerial leadership and structure to support global strategies and operations

15. Task/ Challenges of IHRM Gaining management interest and involvement in HRM processes Gaining management interest and involvement in HRM processes Ensuring quality professionals to serve global customers Ensuring quality professionals to serve global customers Developing technical and managerial skills (talent) to work effectively at the global level Developing technical and managerial skills (talent) to work effectively at the global level Ensuring global and local approaches to T&D, succession planning, and improved performance Ensuring global and local approaches to T&D, succession planning, and improved performance

16. Problems of International Research Pieper (1990) No universal model of IHRM is possible because Pieper (1990) No universal model of IHRM is possible because 1. HRM seems to be more theoretical construct than a applied reality. What companies practice is personnel management than HRM and so ignore cultural contextual differences in pursuing HRM 2. Practical and theoretical concepts in various nations vary widely (eg. Collectivism vs. individualism) 3. Culture has been exaggerated in its influence on HRM practices 4. Lack of data

17. Model of IHRM (Morgan ‘86) Three broad human activities: procurement,allocation, utilization Three broad human activities: procurement,allocation, utilization Three national or country category: Host,parent,third country Three national or country category: Host,parent,third country Three national or country employees: Host (HCN), parent (PCN), third country (TCN) nationals Three national or country employees: Host (HCN), parent (PCN), third country (TCN) nationals In domestic HRM all HR activities are in single country. The complexity of operating in different country with employees of different cultures is the key to difference between HRM & IHRM In domestic HRM all HR activities are in single country. The complexity of operating in different country with employees of different cultures is the key to difference between HRM & IHRM

18. Dowling ‘88 on difference between HRM and IHRM More HR activities: international taxation which often is both domestic & host country tax liabilities; care to be taken that no tax disincentives are associated with international assignment More HR activities: international taxation which often is both domestic & host country tax liabilities; care to be taken that no tax disincentives are associated with international assignment Need for a broader perspective: treatment to PCN and TCN to be similar (at times not there eg. Inpatriates) Need for a broader perspective: treatment to PCN and TCN to be similar (at times not there eg. Inpatriates) More involvement in employees personal lives: in handling their banking, investment, and loans while on assignment, compensation aspects like cost of living allowances (COLA), repatriation More involvement in employees personal lives: in handling their banking, investment, and loans while on assignment, compensation aspects like cost of living allowances (COLA), repatriation Changes in emphasis on workforce mix of expatriates and local : emphasis on high potential local staff to be trained in headquarters for smooth transition Changes in emphasis on workforce mix of expatriates and local : emphasis on high potential local staff to be trained in headquarters for smooth transition

19. Dowling ‘88 on difference between HRM and IHRM Risk exposure: expatriate failure ans issues attached with it Risk exposure: expatriate failure ans issues attached with it External influences: complying to foreign countries laws eg affirmative laws in Malaysia requiring employment to indigenous population, culture shock and psychological disorientation differences in values eg Indonesia nepotism vs. loyalty to the family External influences: complying to foreign countries laws eg affirmative laws in Malaysia requiring employment to indigenous population, culture shock and psychological disorientation differences in values eg Indonesia nepotism vs. loyalty to the family ‘index of trans nationality’ : ratio of foreign assets to total assets, foreign sales to total sales, foreign employment to total employment (the Economist ’97) Nestle highest ranking, others in top ten Seagram, ABB,Unilever, Roche ‘index of trans nationality’ : ratio of foreign assets to total assets, foreign sales to total sales, foreign employment to total employment (the Economist ’97) Nestle highest ranking, others in top ten Seagram, ABB,Unilever, Roche Coca Cola and McDonalds rank lower because of dbig domestic market Coca Cola and McDonalds rank lower because of dbig domestic market

20. Thank you Thank you