UNIT I

INTRODUCTION:
The term International Human Resources Management creates an anxiety to
know what is it, how does it differ from HRM, is it a synonym to cross-cultural
management etc. These terms include: Multinational Corporation, transnational
company, home country, host country, home country nationals, host country nationals,
third country nationals, expatriates, work permit and visa.
Multinational Corporations (MNC): MNC is an organization which operates in
more than one country.
Transnational Corporations (TNC): TCN is an organization, that produces,
markets, invests and operates across the world.
Home Country/Parent Country: Home Country/Parent Country is the one
where the headquarters of an MNC or TNC is located.
Host Country: Host country is the one where the subsidiary/ branch of an
MNC/TNC is located.
Parent Country Nationals/Home Country Nationals (PCNs): Parent Country
Nationals/Home Country Nationals are employees of an MNC/TNC who are the citizens
of home country/parent country of that MNC/TCN.
Host Country Nationals (HCNs): Host country nationals are employees of an
MNC/TNCs subsidiary/ branch who are the citizens of the country where the subsidiary/
branch of MNC/TNC is located.
Third Country Nationals (TCNs): Third country nationals are employees of an
MNC/TNC or their Subsidiary/ branches, and are citizens of those countries other than
the MNC/TNCs home country and / or host country.

Parent
Countr
y HQ /
Operati
ons

HCNs

PCNs
Subsidi
ary
Operat
ions
Countr
yA

G. Raja Sekar

M.B.A,( Ph.D)

HCNs

PCNs
TCNs
National
Border

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National
Border

Subsidi
ary
Operat
ions
Countr
yB

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UNIT I

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
The Advantages and Disadvantages of PCN, HCN, & TCN
Parent Country National
Advantages
Familiarity with the goals, objectives, policies, systems, procedures and practices
of the HQ.
Effective liaison and communication with home-office personal.
Easier exercise of control over the subsidiarys operations.
Disadvantages
Difficulties in adapting to the foreign language, culture and environmental issues
like socio-economic, political, and legal environment.
Excessive cost of maintaining expatriate and their families abroad.
The host countries nationals lose jobs.
Family adjustments problems and thereby failures of PCNs.
Host-Country National
Advantages
Familiarity with the culture and environment factors like socio-economic, political
and legal environment and with business practices in the host country.
Lower cost of staff.
Provides opportunities for human resources development of HCNs leading to
increase in their commitment and motivation.
Responds effectively to the host countrys demands for localization of the
subsidiary operations.
Disadvantages
Difficulties in exercising effective control over the subsidiarys operations.
Communication difficulties in dealing with HQ.
Lack of opportunities for gaining international and cross-cultural experience.
Third-Country National
Advantages
Compromise between PCNs and HCNs.
TCN are usually career international business manager.
TCN are less expensive to maintain than PCN.
TCN may be better informed about the host environment than PCN.
Disadvantages
Host countries sensitivity with respect to nationals of specific countries.
Local nationals are impeded in their efforts to upgrade their own ranks and
assume responsible positions in the multinational subsidiaries.

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I

Significant IHRM Activities and

Issues
Human Resource Planning

Organization Structural Issues

Recruitment Selection

Performance Management

Managing Diverse Human Resource

Training and Developement

Cultural context

Industrial Relations

Knowledge Transfer

Leadeship

Strategic
Issues

Significant
International HRM
Activities and
Issues
Team Building

Women in
HRM

Trade Unions and

Negotiations

Salary and Benefits

Global Labour law Standards and

Ethics

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
Need for International Human Resource Management:
Increasing globalization, firms and employees in them moving all over the world.
Major problems in international operations because of human resource
management blunders
Hence need to understand human resource management in a global perspective
The role of HR in International Operations
Managing a Multicultural Workforce
Developing Managerial Talent in a Global Business Environment
HRM Vs IHRM

In t e r n a t io n a l
H u m a n R e s o u rc e
M anagem ent

D iff e r e n t
A p p ro a c h e
s fo r th e
F u n c t io n s
V a r ie t
y of
Fu n c ti
ons
E n d u r in g
C o m p le x it ie s
of HRM
A c t iv it ie s

G. Raja Sekar

M.B.A,( Ph.D)

w id e
r
N a t io
n a lit
es

in fl u e n c e
of
In t e r n a t io n
al
E n v iro n m e
nt
9700779756

B ro a d e r
R e la t io n s h ip
s and
C o m p le x it ic s

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UNIT I
Wider Nationalities: IHRM deals with the employees drawn from a number of nations
in contrast to domestic HRM, where employees are drawn from one nation. People from
different nations come with a variety of cultures, values, ethnical interpretations,
religion beliefs and the like. Culture and behaviour of people do also vary based on
geographical regions.
According to the study conducted by Hofstede employee attitudes towards:
Importance of work goals,
Need fulfillment and job satisfaction,
Managerial and organization variables,
Work role and interpersonal orientation.

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
Culture and international business
Culture is very important to the practice of international business.
Impacts the way strategic moves are presented.
Influences decisions.
The lens through which motivation occurs.
Management, decision making, and negotiations are all influenced through culture.
Culture influences nearly all business functions from accounting to finance to
production to service.
To understand the others
To develop better negotiation and business strategies
To gain business advantage
The desire to consume and enjoy foreign products and ideas
Adopt new technology and practices
Growth of cross-cultural contacts
The achievement of free circulation by people of all nations
Culture is what makes international business practice difficult or easy, depending on
how similar or different cutures are.
Culture is both divisive and unifying.
What is culture?
Norms + Values+ Beliefs= Culture
Culture = the pervasive and shared beliefs, norms, and values that guide the everyday
life of a group
Cultural norms = prescribed and proscribed behaviors, telling us what we can do and
what we cannot do
Cultural values = values that tell us such things as what is good, what is beautiful, what
is holy, and what are legitimate goals for life
Cultural beliefs = our understandings about what is true
Cultural symbols = these may be physical (national flags, holy artifacts/ office size,
cultural symbols)
Cultural rituals = ceremonies, such as baptism, graduation, or the tricks played on a
new worker, or the pledge to a sorority or fraternity
Cultural stories = these include such things as nursery thymes and traditional legends.

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G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
Levels of culture

National Culture

Business Culture

Organizational and
Occupational Culture
National culture is the dominant culture within the political boundaries of the nationstate. It usually represents the culture of the people with the greatest population or the
greatest political or economic power.
Business culture represents norms, values and beliefs that pertain to all aspects of
doing business in a culture. Business cultures tell people the correct, acceptable ways
to conduct business in a society.
Business cultures are not separate from the broader national culture. The national
culture constraints and guides the development of business culture in a society
Business culture affects all aspects of work and organizational life: how managers
select and promote employees, how they lead and motivate their subordinates,
structure their organizations, select and formulate their strategies, and negotiate.
Corporate Culture is the culture adopted, developed and disseminated in an
organization.
Corporate culture can deviate from national norms, but that depends upon the strength
of culture and the values and practices tied to it.
Occupational and organizational cultures are distinct cultures of occupational
groups such as physicians, lawyers, accountants and craftspeople.
They are the norms, values, beliefs and expected ways of behaving for people in the
same occupational group, regardless of what organization they work for.

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
Universal cultural variables

Kinship

Politics

Economy

Religion

Education

Recreation

Kinship system- a system adopted by a given society to guide family relationships

E.g. USA- the nuclear family- even a family with one parent, the other parts of
the world- extended family with many members, spanning several generations ( typical
for Eastern nations)
- influence on business: family loyalty is given primary consideration- when
contracts are awarded or when employees are hired
- in these family oriented societies, foreign managers often find themselves
locked out of important decisions when dealing with family businesses
Education - the formal or informal education of workers in a foreign firm, received
from whatever source, greatly affects the expectations placed on those workers in the
workplace
- Influences mngers about recruitment, staffing practices, training programs,
leadership styles
Economy whatever the economic system, the means of production and distribution
in a society has a powerful influence on such organizational processes as sourcing,
distribution, incentives, and repatriation of capital
- at this time of radically changing political systems, it appears that the drastic
differences between capitalist and socialist systems will have less effect on MNCs than
in the past
Politics the system of government in a society whether democratic, communist or
dictatorial, imposes various constraints on an org and its freedom to do business
- Ex. McD in Russia

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
Religion the spiritual beliefs of a society are often so powerful that they transcend
other cultural aspects
- religion underlines both moral and economic norms
- in the USA the effect of religion on the workplace is limited ( other than the
generalized belief in hard work , which stems from the Protestant work ethic)
- in other countries religion influences every-day life and business Ex: In the long
standing tradition based on the Quran and the saying of Muhammad, Arabs consult
with senior members of the ruling families or the community, regarding business
decisions , the charging of interest
Recreation- how pl spend their free time
Hofstedes Cultural Dimensions
Prof. Geert Hofstede
Conducted perhaps the most comprehensive study of how values in the
workplace are influenced by culture
Analyzed a large data base of employee values scores collected by IBM
(HERMES)
1967 1973
more than 50 countries
Developed a model that identifies four primary Dimensions to assist in
differentiating cultures:
Power distance
Uncertainty avoidance
Individualism
Masculinity
+ Long-term orientation (added later)

Power distance - The extent to which the less powerful members of institutions and
organizations within a country expect and accept that power is distributed unequally

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

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UNIT I

Low power distance

Low power distance

limited dependence of subordinated on bosses, and a preference for
consultation, that is, interdependence between boss and subordinated
Subordinated and superiors consider each other as existentially equal the
hierarchical system is just an inequality of roles, established for convenience.
Roles might be changed, so that someone who today is my subordinate may
tomorrow by my boss.
organizations are fairly decentralized, with flat hierarchical pyramids and limited
number of supervisory personnel.
salary range between top and bottom jobs are relatively small
Subordinated should be consulted before a decision is made that affects their
work but they accept that the boss is the one who finally decides.
superiors should be accessible for subordinated, and the ideal boss is a
resourceful democrat
status symbols are suspect, and subordinates will most probably comment
negatively if the boss spends company money on an excessive car.
High power distance
The concern for inequality and hierarchy is rooted in early socialization in the
family and school.
In high power distance cultures, children are expected to be obedient to parents
and elders. When children enter school, the teacher assumes the role of
dominance. Later in life, organizations assume the role of the parents and
teachers
Considerable dependence of subordinated on bosses. Subordinated respond by
either preferring such dependence (in the form of an autocratic or paternalistic

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I
boss) or rejecting it entirely, which is known as counter dependence or
dependence with a negative sign.
Subordinated and bosses consider each other existentially unequal. The
hierarchical system is based on this existential inequality.
Organizations centralize power as much as possible in a few hands.

Uncertainty avoidance The extent to which members of a society feel threaten by

uncertain or unknown situations.
As human beings, we all have to face the fact that we dont know what will happen
tomorrow: the future is uncertain. Extreme uncertainty creates anxiety. Different from
fear.
Feelings of uncertainty are not only personal, but may also be partly shared with other
members of ones society.
Feelings of uncertainty are also acquired and learned and are transferred and
reinforced through basic institutions such as family, school and state

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I

Weak uncertainty avoidance

Greece
Japan
France
Korea
Arab Countries
Germany
Australia
Canada
US
UK
India
Denmark
Singapore
Individualism The tendency of people to look after themselves and their immediate
family and neglect the needs of society

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I

Low individualism

Hig
h

Lo
w

G. Raja Sekar

M.B.A,( Ph.D)

Australia
US
UK
Canada
France
Germany
Spain
Japan
Mexico
Italy
Korea
Singapore

9700779756

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UNIT I
Masculinity The tendency within a society to emphasize traditional gender roles

Low masculinity

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com

UNIT I

High
Japan
Mexico
Germany
UK
US
Arabia
France
Korea
Portugal
Denmark
Sweden
Lo
w

G. Raja Sekar

M.B.A,( Ph.D)

9700779756

g.rajasekhar@live.com