1_management World_21st Century_models and Definition

8/4/2019 1_management World_21st Century_models and Definition

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World in the 21st Century: The

Need for IHRM

Dr Preeti S. Rawat


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Going Global

Globalization The trend toward opening up foreign markets to international

trade and investment.

Impact of Globalization

Partnerships with foreign firms

Communication and connectivity have made the worldsmaller

There is a better understanding of foreign opportunitiesleading to increased trade and businesses operating acrossnational borders

Lower trade and tariff barriers (economies around the worldare better integrated)

NAFTA, EU, APEC trade agreements

WTO and GATT

Anything, anywhere, anytime markets


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Going Global (contd) Embracing

New TechnologyKnowledge Workers

Workers whose responsibilities extend beyond

the physical execution of work to includeplanning, decision making, and problemsolving.

The Spread of E-commerceThe Rise of Virtual Workers


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Going Global (contd) Containing

Costs Downsizing The planned elimination of jobs (head count).

Outsourcing

Contracting outside the organization to have workdone that formerly was done by internalemployees.

Employee Leasing

The process of dismissing employees who are thenhired by a leasing company (which handles all HR-related activities) and contracting with thatcompany to lease back the employees.


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Going Global (contd) Managing

Change Types of Change Reactive change

Change that occurs after external forces have

already affected performance Proactive change

Change initiated to take advantage of targetedopportunities

Formal change management programs help to keepemployees focused on the success of the business.


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Going Global (contd)

Impact of Globalization

Realization that customer requirements

and behavior vary from culture to culture

Cross National Convergence andDivergence


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Going Global (contd) Convergence

Increased similarity in behavior around the world

Cross-national differences around the world not asdifferent as was 50 yrs ago

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,)


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Going Global (contd) Divergence

Cross national difference continue and areimportant (eg cultural differences of

customer preferences, cultural orientation,resurgence of national identity

Sensitivity to cultural differences also

perpetuate differences


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Going Global (contd)

Impact on HRM

Different cultures, laws, andbusiness practices

Issues:

Identifying capable expatriatemanagers.

training programs suited forworking in foreign culture and workpractice.

Adjusting compensation plans for

overseas work.


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Going Global (contd) Social Issues

Attitudes Toward Work and Family

Day care

Flextime

Job sharing Alternative work schedules

Elder care

Job rotation

Parental leave

Telecommuting


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Why Study IHRM? To understand how to make HR effective in the MNCs

Effective management ofHRM internationally isincreasingly being recognized as a major determinant ofsuccess or failure in international business

Shortage ofgood international HRmanagers Business failure in the international arena may often be

linked to poor management of HR (Expatriate failure)

Work force multicultural and geographically dispersed

HR should support the rapid pace of internationalizationof companies and enhance and maintaintheircompetitiveness in the market place.


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Why Study IHRM?

Need for HR Localization (NHRL) High/Low

Need for Human Resource Consistency (NHRC)High/Low

Umbrella HRMNHRL- HNHRC- H

(Polycentric)

Worldwide HRM

NHRL-LNHRC-H(Geocentric,consultancyassignments

)

Decentralised

HRMNHRL- HNHRC- L

(JV,Licence)

Adhoc HRMNHRL- LNHRC- L


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IHRM: Definition

IHRM is HRM issues, functions, policies,and practices that result from the strategic

activities of multinational enterprises andthat impact on the international concernsand goals of those enterprises

(Schuler et al.,1993)


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Task/ Challenges of IHRM

Coordinating various functions (planning, marketing,accounting, HR ) with the parent company and enablingthe companys overall strategy

Building a global culture to encourage globalmindsets and attitudes to cope with global customersand global transactions

Developing the managerial leadership and structure

to support global strategies and operations


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Task/ Challenges of IHRM

Gaining management interest and involvement inHRM processes

Ensuring quality professionals to serve globalcustomers

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


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Problems of International Research

Pieper (1990) No universal model of IHRM is possiblebecause

1. HRM seems to be more theoretical construct than a

applied reality. What companies practice is personnelmanagement than HRM and so ignore culturalcontextual differences in pursuing HRM

2. Practical and theoretical concepts in various nationsvary widely (eg. Collectivism vs. individualism)

3. Culture has been exaggerated in its influence on HRMpractices

4. Lack of data


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Model of IHRM (Morgan 86)

Three broad human activities: procurement,allocation, utilization

Three national or country category: Host ,parent,third country

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 withemployees of different cultures is the key to differencebetween HRM & IHRM


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Dowling 88 on difference between HRM andIHRM

More HR activities: international taxation which often is both domestic &host country tax liabilities; care to be taken that no tax disincentives areassociated with international assignment

Need for a broader perspective: treatment to PCN and TCN to besimilar (at times not there eg. Inpatriates)

More involvement in employees personal lives: in handling theirbanking, investment, and loans while on assignment, compensation aspectslike 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 forsmooth transition


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Dowling 88 on difference between HRM andIHRM

Risk exposure: expatriate failure ans issues attached with it

External influences: complying to foreign countries laws egaffirmative laws in Malaysia requiring employment to indigenous

population, culture shock and psychological disorientationdifferences in values eg Indonesia nepotism vs. loyalty to the family

index of trans nationality: ratio of foreign assets to totalassets, foreign sales to total sales, foreign employment to totalemployment (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


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Thank you

1_management World_21st Century_models and Definition

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