1 CH1: Global VS local HRM
Part 1
1.1.1 Vocabulary
HR, HRM, IHRM, HR activities
PCN, HCN, TCN
MNE
global work
expatriate = international assignee, inpatriate
repatriation
tax equalization
FCPA
diversity, inclusion
equity issues
psychological contract
culture, culture shock
emic, etic
Porter’s value chain model
organizational culture
1.2 defining international HRM
1.2.1 Stahl-Björkman-Morris (Definition of IHRM)
The field of IHRM covers:
- All issues related to managing the global workforce and its contribution to firm outcomes
- A wide range of HR issues facing MNEs (*) in different parts of their organizations
This definition includes comparative analyses of HRM in different countries
1.2.2 Morgan’s “3-D” definition of IHRM
1. The broad HR activities of procurement, allocation and utilization
2. The countries where IHRM occurs:
- Host-country where subsidiary may be located
- Parent-country where firm is headquartered
- Other countries that may be source of labor, finance and other inputs
3. The employees of an international firm:
- HCNs (host country nationals)
- PCNs (parent country nationals)
- TCNs (third-country nationals)
1.2.3 HRM activities
1. HR planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Talent Management, incl. employee relations (ER) & industrial relations (IR)
6. Compensation and benefits
International assignment create expatriates
1
,International assignments create expatriates
1.2.4 There are 3 kind of expats
1. flexpatriates: < 3 months stay
2. short-term expatriates: max 1 year
3. long-term expatriates: > 1 year
( 4. Self-initiated expats)
1.3 Domestic vs international
1.3.1 IHRM is more complex than domestic HRM
IHRM has ...
1. more HR activities
2. a need for a broader perspective
3. more involvement in employees’ personal lives
4. changes of emphasis as the mix of expatriates and locals varies
5. risk exposure
6. broader external influences.
1.3.2 IHRM has international HR activities
- International taxation (avoiding tax incentive or disincentive with international assignments)
- Administrative services for expatriates (conflicting policies and procedures, eg. pandemic)
- Host-government relations (between government officials als MNE managers)
- Language translation services
- International relocation and orientation
1.3.3 International relocation involves:
- Arranging for pre-departure training
- Providing immigration and travel details
- Providing housing, shopping, medical care, recreation, and schooling information
- Finalizing compensation details such as:
delivery of salary overseas
determination of various overseas allowances
taxation treatment
1.3.4 Need for a broader perspective
- Design programs from an international perspective
e.g. compensation programs, travel policies, home work policies cfr. legal implications
- Focus on 'Equity'
2
,1.3.5 More involvement in personal lives
- housing arrangements, health care, compensation package
- But also:
marital status (acceptance same-sex marriages)
Children – boarding schools
1.3.6 Changes of emphasis
- When the mix of PCNs, HCNs and TCNs changes
Eg: more trained locals become available
Eg: Maturation of foreign operations
1.3.7 Risk exposure
- Main risk: terrorism (expat = target)
- Inability of the partner to adapt (e.g. no work permit, feeling useless, ...)
- Failure: bigger human & financial consequences
The direct costs of failure (salary, training costs, travel costs and relocation expenses) to the parent firm may
be as high as three times the domestic salary
Indirect costs such as loss of foreign market share and damage to key host-country relationships may also be
considerable.
Human implication (psychological impact)
1.3.8 External influences
- type of government
- state of the economy
- generally accepted practices
part 2
1.3.9 Objectives:
Outline the differences between domestic and international HRM
Present the complexity and increasing challenges to existing IHRM practices and current models
1.3.10 Vocabulary:
HR, HRM, IHRM, HR activities
PCN, HCN, TCN
MNE
global work
expatriate = international assignee, inpatriate
repatriation
tax equalization
FCPA
diversity, inclusion
equity issues
psychological contract
culture, culture shock
emic, etic
Porter’s value chain model
organizational culture
1.4 variables that moderate the differences
1.4.1 five variables that moderate the difference between domestic and international HRM:
1. the cultural environment
2. the industry(ies) in which the MNE is primarily involved
3. the extent to which the MNE relies on its home-country domestic market
4. the attitudes of senior management
5. Extent of reliance of the multinational on its home country domestic market
3
, 1.4.2 A model of the variables that moderate differences between domestic and international HRM
1.5 The cultural environment
1.5.1 Culture matters
- Culture shock
- Emic ≠ etic
Emic = culture-specific aspects of concepts /behavior
Etic = culture-common aspects of concepts /behavior
- Convergence hypothesis research tends to focus on macro level
- Divergence hypothesis research tends to focus on micro level
- The international HR manager must be aware of cultural differences
1.6 Industry type
1.6.1 The MNE industry type continuum
An MNE performs somewhere in this range:
Examples:
Retailing, distribution, insurance airlines, semiconductors, copiers
International strategy:
Collapses to a series of must integrate activities on a
Domestic strategies worldwide basis
Laurent’s steps for true IHRM:
1. Parent organization explicitly recognizes that its HRM reflects some assumptions and values of own home culture.
2. Parent organization explicitly recognizes that its own peculiar ways are neither universally better nor worse than
others just different and likely to exhibit strengths and weaknesses, particularly abroad.
3. Parent organization explicitly recognizes that its foreign subsidiaries may prefer other ways to manage people
ways that are neither intrinsically better nor worse, but possibly more effective locally.
4. Headquarters is willing to acknowledge cultural differences and take steps to make them discussable & therefore
usable.
4
Part 1
1.1.1 Vocabulary
HR, HRM, IHRM, HR activities
PCN, HCN, TCN
MNE
global work
expatriate = international assignee, inpatriate
repatriation
tax equalization
FCPA
diversity, inclusion
equity issues
psychological contract
culture, culture shock
emic, etic
Porter’s value chain model
organizational culture
1.2 defining international HRM
1.2.1 Stahl-Björkman-Morris (Definition of IHRM)
The field of IHRM covers:
- All issues related to managing the global workforce and its contribution to firm outcomes
- A wide range of HR issues facing MNEs (*) in different parts of their organizations
This definition includes comparative analyses of HRM in different countries
1.2.2 Morgan’s “3-D” definition of IHRM
1. The broad HR activities of procurement, allocation and utilization
2. The countries where IHRM occurs:
- Host-country where subsidiary may be located
- Parent-country where firm is headquartered
- Other countries that may be source of labor, finance and other inputs
3. The employees of an international firm:
- HCNs (host country nationals)
- PCNs (parent country nationals)
- TCNs (third-country nationals)
1.2.3 HRM activities
1. HR planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Talent Management, incl. employee relations (ER) & industrial relations (IR)
6. Compensation and benefits
International assignment create expatriates
1
,International assignments create expatriates
1.2.4 There are 3 kind of expats
1. flexpatriates: < 3 months stay
2. short-term expatriates: max 1 year
3. long-term expatriates: > 1 year
( 4. Self-initiated expats)
1.3 Domestic vs international
1.3.1 IHRM is more complex than domestic HRM
IHRM has ...
1. more HR activities
2. a need for a broader perspective
3. more involvement in employees’ personal lives
4. changes of emphasis as the mix of expatriates and locals varies
5. risk exposure
6. broader external influences.
1.3.2 IHRM has international HR activities
- International taxation (avoiding tax incentive or disincentive with international assignments)
- Administrative services for expatriates (conflicting policies and procedures, eg. pandemic)
- Host-government relations (between government officials als MNE managers)
- Language translation services
- International relocation and orientation
1.3.3 International relocation involves:
- Arranging for pre-departure training
- Providing immigration and travel details
- Providing housing, shopping, medical care, recreation, and schooling information
- Finalizing compensation details such as:
delivery of salary overseas
determination of various overseas allowances
taxation treatment
1.3.4 Need for a broader perspective
- Design programs from an international perspective
e.g. compensation programs, travel policies, home work policies cfr. legal implications
- Focus on 'Equity'
2
,1.3.5 More involvement in personal lives
- housing arrangements, health care, compensation package
- But also:
marital status (acceptance same-sex marriages)
Children – boarding schools
1.3.6 Changes of emphasis
- When the mix of PCNs, HCNs and TCNs changes
Eg: more trained locals become available
Eg: Maturation of foreign operations
1.3.7 Risk exposure
- Main risk: terrorism (expat = target)
- Inability of the partner to adapt (e.g. no work permit, feeling useless, ...)
- Failure: bigger human & financial consequences
The direct costs of failure (salary, training costs, travel costs and relocation expenses) to the parent firm may
be as high as three times the domestic salary
Indirect costs such as loss of foreign market share and damage to key host-country relationships may also be
considerable.
Human implication (psychological impact)
1.3.8 External influences
- type of government
- state of the economy
- generally accepted practices
part 2
1.3.9 Objectives:
Outline the differences between domestic and international HRM
Present the complexity and increasing challenges to existing IHRM practices and current models
1.3.10 Vocabulary:
HR, HRM, IHRM, HR activities
PCN, HCN, TCN
MNE
global work
expatriate = international assignee, inpatriate
repatriation
tax equalization
FCPA
diversity, inclusion
equity issues
psychological contract
culture, culture shock
emic, etic
Porter’s value chain model
organizational culture
1.4 variables that moderate the differences
1.4.1 five variables that moderate the difference between domestic and international HRM:
1. the cultural environment
2. the industry(ies) in which the MNE is primarily involved
3. the extent to which the MNE relies on its home-country domestic market
4. the attitudes of senior management
5. Extent of reliance of the multinational on its home country domestic market
3
, 1.4.2 A model of the variables that moderate differences between domestic and international HRM
1.5 The cultural environment
1.5.1 Culture matters
- Culture shock
- Emic ≠ etic
Emic = culture-specific aspects of concepts /behavior
Etic = culture-common aspects of concepts /behavior
- Convergence hypothesis research tends to focus on macro level
- Divergence hypothesis research tends to focus on micro level
- The international HR manager must be aware of cultural differences
1.6 Industry type
1.6.1 The MNE industry type continuum
An MNE performs somewhere in this range:
Examples:
Retailing, distribution, insurance airlines, semiconductors, copiers
International strategy:
Collapses to a series of must integrate activities on a
Domestic strategies worldwide basis
Laurent’s steps for true IHRM:
1. Parent organization explicitly recognizes that its HRM reflects some assumptions and values of own home culture.
2. Parent organization explicitly recognizes that its own peculiar ways are neither universally better nor worse than
others just different and likely to exhibit strengths and weaknesses, particularly abroad.
3. Parent organization explicitly recognizes that its foreign subsidiaries may prefer other ways to manage people
ways that are neither intrinsically better nor worse, but possibly more effective locally.
4. Headquarters is willing to acknowledge cultural differences and take steps to make them discussable & therefore
usable.
4
