GLOBAL HUMAN RESOURCE MANAGEMENT

IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

Module-1 Introduction

IHRM- Meaning and Definition, Objectives, The drivers of internationalization of business.

HR Challenges in a global workforce, Difference between IHRM and Domestic HRM,
Functions of global HRM, Emergence of Global HR Manager, Approaches to International
Human Resource Management, Culture and Cross-Cultural Management, Models of IHRM

IHRM-Meaning and definition

International Human Resource Management is the procurement, allocation, utilization, and
motivation of human resources in international business.

IHRM can be defined as set of activities aimed at managing HR at international level to achieve
organizational objectives and achieve competitive advantages over competitors at national and
international level.

Objectives of International Human Resource Management (IHRM):

1. Global Workforce Planning: Forecasting and managing human resource needs across
different countries to ensure organizational readiness and efficiency.
2. Cross-Cultural Training and Development: Equipping employees with skills and
knowledge to work effectively in diverse cultural settings, promoting understanding
and collaboration.
3. Compensation and Benefits Management: Designing fair and competitive
compensation packages that align with local and global standards, ensuring employee
satisfaction and retention.
4. Talent Acquisition and Retention: Recruiting and retaining skilled employees
globally, leveraging diverse talent pools and fostering a positive employer brand.
5. Compliance and Ethical Standards: Adhering to international labor laws, ethical
guidelines, and corporate social responsibility principles to maintain legal and ethical
integrity across borders.

The Drivers Of Internationalization of Business:

Globalization of Markets: It refers to the merging of national markets into one huge global
marketplace. Now selling internationally is easier due to globalization. It is important to offer a
standard product to the worldwide. But very significant differences still exist between national
markets like consumer tastes, preferences, legal regulations, cultural systems. These differences

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IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

require that marketing strategies in order to match the conditions in a country. To illustrate, Wal-
Mart may still need to vary their product from country depending on local tastes and preferences.

Globalization of Production: It refers to the sourcing of goods and services from locations around
the world to take advantage of national differences in the cost and quality of factors of production.
The idea is to compete more effectively offering a product with good quality and low cost. For
example, Nike is Considerate one of the leading marketers of athletic shoes and apparel on the
world. The company has some overseas factories where has achieved a super production with low
cost.

Falling Barriers to Trade and Investment: The falling of barriers to international trade enables
firms to view the world as their market. The Lowering of barrier to trade and investments also
allows firms to base production at the optimal location for that activity. Thus, a firm might design
a product in one country, produce a Component parts in two other countries, assemble the product
in another country and then export the finished product around the world.

Technological Innovation: Technological changes have achieved advances in communication,

information processing, and Transportation technology, including the Internet and the World Wide
Web (www). The most Important innovation has been development in the microprocessors after
that global Communications have been revolutionized by developments in satellite, optical fiber,
and wireless technologies, and the Internet and now through APPs.

HR Challenges in a global workforce

Managing human resources in a global workforce presents several challenges:

1. Cross-Cultural Differences: Addressing diverse values, behaviors, and

communication styles among employees from different cultures.
2. Legal and Regulatory Compliance: Navigating varying employment laws,
regulations, and labor standards across different countries.
3. Talent Acquisition and Retention: Attracting and retaining skilled employees in
competitive global markets while ensuring cultural fit and alignment with
organizational goals.
4. Remote Work and Virtual Teams: Managing dispersed teams and remote work
arrangements, maintaining collaboration and productivity across different time zones
and locations.
5. Compensation and Benefits: Designing equitable and competitive compensation
packages considering local cost of living, currency fluctuations, and tax implications.

Successfully navigating these challenges requires strategic HR planning, effective

communication, and a deep understanding of global labor markets and cultural dynamics.

Difference Between Domestic And International HRM:

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IV SEM MBA
Course code-22MBAHR404
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1. Scope and Complexity:

o Domestic HRM: Focuses on managing human resources within a single
country, dealing with laws, regulations, and cultural norms specific to that
country.
o IHRM: Involves managing HR across multiple countries, addressing
complexities like diverse legal frameworks, cultural differences, and global
market conditions.
2. Recruitment and Selection:
o Domestic HRM: Generally recruits within the local labor market, focusing on
local talent pools.
o IHRM: Involves recruiting globally, considering international assignments,
expatriate placements, and cultural adaptability in hiring decisions.
3. Training and Development:
o Domestic HRM: Provides training tailored to local workforce needs and
regulations.
o IHRM: Includes cross-cultural training, language proficiency development,
and global leadership programs to enhance international competencies.
4. Compensation and Benefits:
o Domestic HRM: Designs compensation packages based on local market
standards and regulations.
o IHRM: Adapts compensation structures to account for international variations
in cost of living, tax systems, and currency exchange rates.
5. Legal and Compliance Issues:
o Domestic HRM: Focuses on compliance with national labor laws and
regulations.
o IHRM: Manages compliance with diverse international labor laws,
immigration policies, and employment regulations across multiple jurisdictions.

In essence, while both Domestic HRM and IHRM share fundamental HR functions, IHRM
extends these practices to address the complexities and challenges inherent in managing human
resources across multiple countries and cultures in a global context.

Functions of global HRM

Global Human Resource Management (HRM) encompasses several key functions tailored for
managing human capital across international borders:

1. Global Workforce Planning: Forecasting and aligning workforce needs with

organizational goals across multiple countries.
2. International Recruitment and Selection: Attracting and selecting talent globally,
considering diverse cultural backgrounds and skill requirements.
3. Cross-Cultural Training and Development: Developing programs to enhance
cultural awareness, language proficiency, and global leadership skills.
4. Global Compensation and Benefits: Designing competitive and compliant
compensation packages that account for local market conditions, tax implications, and
currency fluctuations.

Faculty-Dr. Mahak Balani, Dept. of MBA, AIT 3

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IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

5. Expatriate Management: Supporting employees on international assignments with

logistical, cultural, and career development assistance.
6. Compliance with International Laws: Ensuring adherence to diverse labor laws,
immigration regulations, and ethical standards across different countries.
7. Global Talent Management: Strategically managing talent pools, succession
planning, and career development pathways on a global scale.

These functions enable organizations to effectively manage and leverage their human resources
to support global business operations, enhance organizational performance, and maintain
competitiveness in the global marketplace.

Emergence of Global HR Manager

In today's interconnected world, the role of the Human Resource (HR) manager has evolved
significantly, transitioning from a traditional, localized function to a more dynamic, globalized
role. The rapid pace of economic globalization, coupled with technological advancements, has
fundamentally changed the landscape in which businesses operate. Organizations are no longer
confined to their domestic markets; instead, they are expanding their operations across multiple
countries, necessitating the emergence of the Global HR Manager.

A Global HR Manager is tasked with navigating the complexities of managing a diverse

workforce spread across various geographical locations. This role requires a deep
understanding of different cultural nuances, legal frameworks, and regulatory compliances
unique to each country. Effective global HR management ensures that organizations can attract,
retain, and develop talent from a global pool, fostering a more inclusive and culturally rich
work environment.

Moreover, the advancements in technology have made it possible for teams to collaborate and
communicate seamlessly across borders. This has increased the need for HR managers to
implement strategies that enhance global mobility, manage international assignments, and
support employees in their relocation efforts. By aligning HR strategies with the overall
business goals, Global HR Managers play a pivotal role in driving organizational success on a
global scale.

In summary, the emergence of the Global HR Manager is a response to the demands of an

increasingly globalized economy. This role is essential in ensuring that organizations can
effectively manage their human resources in a way that supports their international growth and
strategic objectives.

Competencies of a Global HR Manager

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IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

• The ability to transact business in another country.

• The capacity to change leadership style based on the situation.
• An understanding of the company's worldwide business structure.
• Knowledge of professional contacts worldwide.
• Knowledge of international business issues.
• Openness- Being open to new ideas and different practices.
• Flexibility- Being able to quickly adapt to changing circumstances
• Change Management: The ability to deal with uncertainty and change.
• Maturity: The stability of performance under stress
• Flexibility/ adaptability:
• Contextual thinking: The ability to see the bigger picture and develop cognitive complexity
Note-Elaborate on above points-Refer link below
Read more on Global HR Competencies- https://workforce.com/news/must-have-global-
hr-competencies

Global managers are involved in the following-

Recruitment and Onboarding Process

Attracting, hiring and retaining a skilled workforce is perhaps the most basic of the human
resources functions. There are several elements to this task including developing a job
description, interviewing candidates, making offers and negotiating salaries and benefits.
Although a complex task for any business, it is made more complex in the international arena
due to differences in educational systems from one country to the next and, of course,
difference in languages.

Companies that recognize the value of their people place a significant amount of stock in the
recruitment function of HR, no matter where in the world hiring takes place. There is good
reason for this – having a solid team of employees can raise the company's profile, help it to
achieve profitability and keep it running effectively and efficiently.

On-the-Job Training

Even when an organization hires skilled employees, there is normally some level of on-the-
job training that the human resources department is responsible for providing. This is because
every organization performs tasks in a slightly different way. One company might use
computer software differently from another, or it may have a different timekeeping method.
Whatever the specific processes of the organization, human resources has a main function in
providing this training to the staff.

The training function is amplified when the organization is running global operations in a
number of different locations. Multiple sessions in numerous international locations may be
called for, although online webinars and training tools can sometimes effectively reach
anywhere on the globe. Having streamlined processes across all locations makes
communication and the sharing of resources a much more manageable task.
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 GLOBAL HUMAN RESOURCE MANAGEMENT
IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

Continuing Professional Development

Closely related to training is HR's function in professional development. But whereas training
needs are centered around the organization's processes and procedures, professional
development is about providing employees with opportunities for growth and education on
an individual basis. Development often entails moving an employee between departments so
that he or she gains skills in multiple areas. For an international operation, this may also mean
moving employees across boundaries.

Many human resource departments also offer professional development opportunities to their
employees by sponsoring them to visit conferences, external skills training days or trade
shows. The result is a win-win: it helps the employee feel like she is a vital and cared-for part
of the team and the organization benefits from the employee's added skill set and motivation.

Benefits and Compensation

While the management of benefits and compensation is a given for human resources, the
globalization of companies in the twenty-first century has meant that HR must now adapt to
new ways of providing benefits to an organization's employees. Non-traditional benefits such
as flexible working hours, paternity leave, extended vacation time and telecommuting are
ways to motivate existing employees and to attract and retain new skilled employees.
Balancing compensation and benefits for the organization's workforce is an important HR
function because it requires a sensitivity to the wants and needs of a diverse group of people.

Ensuring Legal Compliance

The final function of human resource management is perhaps the least glamorous but
arguably of utmost importance. Ensuring legal compliance with labor and tax law is a vital
part of ensuring the organization's continued existence. The federal government as well as
the state and local government where the business operates impose mandates on companies
regarding the working hours of employees, tax allowances, required break times and working
hours, minimum wage amounts and policies on discrimination.

This task becomes very much more complex when different laws in different countries need
to be taken into account as well. Being aware of these laws and policies and working to keep
the organization completely legal at all times is an essential role of human resources.

Approaches to International Human Resource Management

1. Ethnocentric Approach:
o Description: Key positions in the organization are filled by employees from the
headquarters (parent country nationals - PCNs).
o Advantages: Ensures consistency and alignment with the company's home-
country practices and culture.
o Challenges: May lead to cultural myopia and limit opportunities for local
employees.

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 GLOBAL HUMAN RESOURCE MANAGEMENT
IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

2. Polycentric Approach:
o Description: Local nationals (host country nationals - HCNs) are hired to
manage subsidiaries while the parent company nationals manage headquarters.
o Advantages: Leverages local knowledge and reduces cultural barriers.
o Challenges: May create a disconnect between the subsidiary and the
headquarters.
3. Geocentric Approach:
o Description: The best talent is recruited from anywhere in the world (third
country nationals - TCNs) to fill key positions.
o Advantages: Promotes a global perspective and utilizes the best talent
available, regardless of nationality.
o Challenges: Complex and costly due to differing immigration and employment
laws.
4. Regiocentric Approach:
o Description: Employees are selected from within the same region as the
subsidiary (regional country nationals).
o Advantages: Balances local responsiveness with regional cohesion and can be
a middle ground between ethnocentric and geocentric approaches.
o Challenges: May still face cultural and regulatory challenges, though less
pronounced than in geocentric or ethnocentric approaches.

Each approach to International Human Resource Management comes with its own set of
advantages and challenges. The choice of approach depends on the organization's strategy, the
nature of its international operations, and its overall goals in managing a global workforce.

Culture and Cross-Cultural Management-

Culture refers to the complex whole which includes knowledge, belief, art, morals, laws,
customs and other capabilities and habits acquired by an individual as a member of a society.

Cross-Cultural Management in IHRM refers to how leadership or management of

international organizations and companies utilizes or fails to utilize cultural diversity in an
organization or business to improve organizational performance and outcome.

• Cross-Cultural Management:

• The practice of managing cultural differences in a business setting to enhance

communication and productivity.
• Involves understanding and respecting cultural diversity, adapting management
practices, and promoting an inclusive work environment.

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IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

• Challenges:

• Miscommunication due to language barriers and cultural misunderstandings.

• Conflicting management styles and business practices.
• Resistance to change and adaptation.

• Strategies for Effective Cross-Cultural Management:

• Conducting cultural awareness training for employees.

• Encouraging open communication and feedback.
• Developing a culturally diverse leadership team.
• Implementing flexible management practices to accommodate different cultural
preferences.

IHRM Models–

MODELS OF IHRM

1. Matching model:
• Emphasizes efficient utilization of human resources to meet organizational objectives
• Focuses on right fit between organizational strategy, organizational structure and
HRM systems
• Analytical framework was developed namely ‘Matching Model’ with certain ‘hard’
variances
• It emphasizes a ‘tight fit’ between organizational strategy, organizational structure
and HRM system

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 GLOBAL HUMAN RESOURCE MANAGEMENT
IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

Matching Model

2. Harvard Model:
• Focuses on Human, Soft aspect of HRM
• It emphasizes in employee-employer relationship
• This model highlights the interests of different stakeholders (shareholders,
management, employee groups, government, community, unions) in the organization,
influenced by situational factors and links their interests with the objectives of
management.
• Belief that it is the organizations human resources that give competitive advantage
through treating them as assets and not costs.
• By identifying four HR policy areas, such as HR flows, reward systems, employee
influence and works systems, organization can achieve positive outcomes such as
commitment, competence, congruence and cost effectiveness
• The reward system was organized to attract and motivate so as to keep employees.
• Employee influence was tailored on controlled authority and decision making.

Ø While the Matching model focuses on the strategic resource aspect of human resources,
the Harvard model emphasizes the human element in the human resource formulations.

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IV SEM MBA
Course code-22MBAHR404
Content created by Dr. Mahak Balani

Harvard Model

3. Contextual Model:
• The ‘Contextual Model’ was based on the ‘Harvard Model’ by developing an
understanding of strategy-making in complex organizations and related this to the
ability to transform HRM practices
• Organizations may follow a number of different means to achieve same results.
• This is due to existence of linkage between external environment context-
Socioeconomic, technological, political-legal and competitive, and internal
organizational context-culture, structure, leadership, task, technology, and business
output.
• The linkage will determine content of organization’s HRM

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IV SEM MBA
Course code-22MBAHR404
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4. 5-P Model: Schuler (1992) developed the so-called ‘5-P’ model

• Links five human resource activities-philosophies, policies, programmes, practices,
and processes with strategic needs. These activities are Interrelated
• They are significant in achieving organization’s needs.
1. Philosophy – Statements of how organization values and treats employees; essentially
culture of the organization
2. Policies – Expressions of shared values and guidelines for action on employee-related
business issues
3. Programs – Coordinated and strategized approaches to initiate, disseminate, and sustain
strategic organizational change efforts necessitated by strategic business needs
4. Practices – HR practices motivate behaviors that allow individuals to assume roles
consistent with organization’s strategic objectives
– Three categories of roles:
• Leadership
• Managerial
• Operational
5. Processes – Continuum of participation by all employees in specific activities to facilitate
formulation and implementation of other activities

5. European Model:
Ø The ‘European Model’ highlights the influence of national cultures, ownership structures,
role of the State and trade unions on HRM in different national settings within the context
of increasing EU integration and the adoption of common EU labor legislation.
Ø It is based on the argument that European organizations are constrained at both
international (European Union) and national level by national culture and legislation.
Ø They are also constrained at the organizational level by patterns of ownership and at the
HRM level by trade union involvement and consultative arrangements.
Ø All the constraints need to be considered for forming a HR system.

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