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Managing Human Assets
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What is IHRM?
International HRM (IHRM) is theprocess of:
procuring,
allocating, and
effectively utilizing human resources
in a multinational corporation, while
balancing the integration and differentiationof HR activities in foreign locations.
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Domestic HRM vs. IHRM
Compared to Domestic HRM, IHRM
encompasses more functions
involves constantly changing perspectives
requires more involvement in employees lives
is influenced by more external sources
Cultural difference across countries, and
finally
involves a greater level of risk than typicaldomestic HRM
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Complications for IHRM compared to HRM
International HR managers face a more complextask than their domestic counterparts
Differing cultures
Levels of economic development
Legal systems among countries
So, may require companies to adapt their hiring,firing, training, and compensation programs toeach country.
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Complications for IHRM compared to HRM
Firms must decide whether managers will beselected from the home country, from thehost country or from third countries.
Training and development in an internationalfirm may be more complex than in a domesticfirm.
Compensation systems must be adapted tomeet the needs of each countrys labor
market.
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IHRM in MNC: Key Issues
Cultural differences across countriesDimensions of culture -
Individualism vs. Collectivism Power distance Uncertainty avoidance
Masculinity vs. Femininity
Structure of firms international operation
InflationLabor availability & quality
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Individualism / Collectivism
INDIVIDUALISM Self = Independent Personal goals have priority Attitudes, cost-benefit analysisdetermine social behaviours
COLLECTIVISM Self = Interdependent In-group goals have priority Norms, obligations, dutiesdetermine social behaviours
Determines how an individual see himself: as an individual entity or as a part of group
Help in designing the Reward System in an organization: integral part of MCS
If culture is highly individualistic use individual incentives for motivation
If culture is highly collectivist use group based incentives for motivation
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Power DistanceSMALL All should have equal rights Powerful people should try to lookless powerful Senior people are neitherrespected nor feared Inequalities in power and wealthminimized
LARGE Power holders are entitled to privileges Status symbols and hierarchies accepted Senior people are respected and feared
need for dependence Inequalities in power and wealthmaximized
Means the extend to which employees understand & accept unequal distribution of power
In context of MCS:
Employee with High on power distance prefer Centralization
Employee with Low on power distance prefer Decentralization
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Uncertainty Avoidance
WEAK High tolerance for ambiguity Less risk averse More comfortable inunstructured situationsless anxiety
STRONG Low tolerance for ambiguity More risk averse Structure seeking moreanxiety over the unknown
Who avoid taking risk
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Masculinity / Femininity
MASCULINITY Performance society More achievement/money OrientedDemand more autonomy & freedom at
work place
FEMININITY Welfare society More quality-of-life orientedCan perform well in Centralizedorganization
Structure of firms international operation
Strong drive for achievement
In context of MCS:
Employees demand more autonomy prefer Decentralization & performance based rewards
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Approaches to IHRM (contd)
Factors Affecting the Approach to IHRM
Political Policies and Legal Regulations
Managerial, Educational, and TechnologicalDevelopment in the Host Country
Home and Host Country Cultures
International Experience of the Firm
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Approaches to IHRM (contd)
Factors Affecting the Approach to IHRM (contd)
Method of Subsidiary Founding
Technology and the Nature of the Product Strategic Importance of Particular Employee
Groups
Organizational Culture
Organizational Life Cycle
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BPR at Mahindra & Mahindra Ltd. (Contd.)
Got rid of multi-layered structure and adopted a flatstructure.
Encouraged team work
Capitalized on its existing employee talent through
intensive retraining and redeployment strategies.
Began outsourcing non-core manufacturing activities.