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IHRM is the interplay among three dimensions HR

activities,types of employees,and countries of

operation.1. The three broad activities of IHRM,namely

procurement,allocation and utilising cover all the

six activities of domestic HRM.The six functions

of domestic HRM are HR planning,employeehiring,training and

development,remuneration,performance

management, and industrial relations.

2. The three national or country categories involved

in IHRM activities are the host country ,the

home country and other countries.

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3. The three types of employees of an international

business are host country nationals, parent

country nationals, and third country nationals.

For ex IBM which employs Australian citizen in its

Australian operations, often sends US citizen to

Asia- Pacific countries on assignment, and may

send some of its Singaporean employees to itsJapanese operations.

Host country where a subsidiary is located

Home country where the company has its

headquarters.

And Other countries that may be the source of

labour and finance.

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Domestic HRM and IHRM compared

The main characterstics of IHRM are

1. More HR activities

2. Need for a broader perspective

3. More involvement in employee personal

lives.

4. Changes in emphasis as the workforce mix

of expatriates and locals vary.

5. Risk exposure, and

6. More external influences

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International businesses adopt three approaches

to staffing

Ethnocentric Approach all key managementpositions are held by parent country nationals,

more appropriate during the early phases of

international business.

Polycentric Approach the polycentric staffingrequires host country nationals to be hired to

manage subsidiaries, while parent country

nationals occupy key positions at corporate

headquarters.

Geocentric Approach this staffing criteria seeks

the best people for key jobs throughout the

organization, regardless of nationality.

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The Expatriate Problem

Life cycle of an expatriate assignment

- Determining the need for an expatriateassignment

- Identifying and then selecting likely

candidates.- Pre assignment training

- Departure

- Post arrival orientation and training- Crisis and adjustment of crisis and failure

- Assignment aboard or repatriation and

adjustment.

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Reasons for Expatriot failure

US Firms

. Inability of spouse toadjust

Managers inability to

adjust Other family reasons

Personal or emotionalmaturity

Inability to cope withlarger internationalresponsibilites.

Japanese Firms

Inability to cope withlarger internationalresponsibilities

Difficulties with theenvironment

Personal or emotionalproblems

Lack of technicalcompetence

Inability of spouse toadjust

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Factors in Expatriate Selection

Individual

Technical Ability

Cross Cultural Suitability

Family Requirements

Situation

Country cultural requirements

LanguageMNC requirements

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Factors influencing international

compensation

MNC internal

environment

- Goal orientation

- Capacity to pay- Competetive strategy

- Organisational culture

- Internal workforce

composition

- Labour relations

- Subsidiary role

MNC external

environment

Parent nationality

Labour marketLocal culture

Competitors strategy

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Components of Expat Compensation

1.Base salary

2.Benefits

3.Allowances4.Incentives

5.Taxes

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Base salary - is the primary component of apackages of allowances many of which are

directly related to the base salary (e.g.foreign service premium,cost of livingindex,housing allowance ) as well as thebasis for in service benefits and pension

contributions.Benefits major element of remuneration.

Issues Include

1.Whether MNCs should maintainexpatriates in the home country benefitsprogrammes, particularly if these prog arenot tax deductible;

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2. Whether MNCs have the option of enrollingexpatriates in the host country benefits

3. Whether host country legislations regardingtermination of employment affects the employeebenefits entitlement.

4. Whether home country or the host country isresponsible for the social security benefits, whichcountry should pay the benefits;

Allowances one common allowance is thepayment for differences between the home countryand the overseas assignment. This allowance isdesigned to provide standard of living that he orshe enjoyed in the home country, and it mayinclude expenses such relocation, housing,education and hardship.

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TaxesMNCs generally select one of the

following approaches to handle

international taxation :1. Tax equalisation firms withhold an

amount equal to the home country tax

obligation of the expatriate, and pay all thetaxes in the host country.

2. Tax protection the employee pays up to

the amount of taxes he or she would payon remuneration in the home country.