Basic Terms and Concepts of

IHRM

HRM

Those activities undertaken by an

organization to effectively utilize its
human resources.
The policies and practices involved in
carrying out the people or human
resource aspects of a management
position, including recruiting, training,
appraising and rewarding employees.
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HR Professionals

Are people with substantial

specialized and technical
knowledge of HR issues, laws,
policies, and practices.

Human Capital/Intellectual
Capital

The collective value of the

capabilities, knowledge, skills, life
experiences, and motivation of an
organizational workforce.
Individuals with talents,
capabilities, experience,
professional expertise, and
creativity.
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IHRM

It covers all issues related to the

management of people in an
international context.
It covers a wide range of human
resource issues facing MNCs .
It also includes comparative
analyzes of HRM issues in different
countries.
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Strategic IHRM

Strategic IHRM is about understanding,

researching applying, and revising all
human resource activities in their internal
and external contexts as they impact the
process of managing human resources in
enterprises throughout the global
environment to enhance the experience
of multiple stakeholdersinvestors,
customers, employees, partners,
suppliers, government, and societyand
to achieve profitability and sustainability.
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Stakeholders

They are individuals or groups that

have interest, rights, or ownership
in an organization and its
activities.

Off-Shoring

The act of transferring some of a companys

recurring activities and decision rights to
outside provider, as set in the contract.
It is frequently used as a subcategory of
outsourcing.
Specifically, business in the home country
(e.g., Singapore) contracting out activities
to unaffiliated companies or their affiliates
in another country.
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In-Shoring

Foreign business shifting activities

to the home country (e.g.,
Singapore).

Outsourcing

Business contracting out activities

to unaffiliated companies either at
home or abroad.

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International Company

Any company that conducts

business outside its home country.

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International Corporation

A domestic firm that uses its

existing capabilities to move into
overseas markets.

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Multinational Corporation
(MNC)

A firm with independent business

units operating in multiple
countries.
Several subsidiaries operating as
stand-alone business units in
multiple countries.

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Global Corporation

A firm that has integrated

worldwide operations through a
centralized home office.
It views that the world as a single
market; operations are controlled
centrally from the corporate office.

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Transnational Corporation

A firm that attempts to balance

local responsiveness and global
scale via a network of specialized
operating units.
Specialized facilities permit local
responsiveness; complex
coordination mechanisms provide
global integration.
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Workforce

Refers to any firms employees.

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Labor Force

Refers to the pool of potential

employees, the labor market, from
which a firm hires its workforce.

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Parent Country

A country where the firm is

headquartered.
Example:
Germany where the headquarter
office is located at.
Volkswagen--A German MNC.

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Host Country

A country in which a subsidiary

operates.
Example:
The German MNC has a subsidiary
in China and in India.

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Third Country

A country where a subsidiary operates

other than the parent country and that
of the local subsidiary.
Example:
Using Volkswagens subsidiary in China
as the referent point (the local
subsidiary), India is the third country.
Using Volkswagens subsidiary in India
as the referent point (the local
subsidiary), China is the third country.
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Parent Country Nationals

(PCNs)

Nationality of employee is the

same as that of the headquarters
(HQs) of the multinational firm.
Example:
A German employee working at
the Chinese subsidiary of
Volkswagen.
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Host Country Nationals

(HCNs)

Nationality of employee is the same

as that of the local subsidiary.
Example:
A Chinese employee working at the
Chinese subsidiary of Volkswagen.
An Indian employee at the Indian
subsidiary of Volkswagen.
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Third Country Nationals

(TCNs)

Nationality of employee is neither

that of the HQs nor the local
subsidiary.
Example:
An Indian employee working at the
Chinese subsidiary of Volkswagen. Or,
A Chinese employee working at the
Indian subsidiary of Volkswagen.
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Expatriation

The process of international

transfer of managers.

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Expatriate

An employee who is working and

staying outside his or her home
country temporary.
Also called international
assignees.

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Non-Expatriates

People who travel internationally yet

are not considered expatriates, as they
do not relocate to another country.
They are popularly termed as:
--road warriors
--globetrotters
--frequent fliers
--flexpatriates
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Repatriation

The process of bringing the

expatriate back to the home
country.

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Repatriate

The returning person being

transferred back to the home
country.

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Inpatriation

The transfer of subsidiary staff to

the HQ for a specific period of
time.

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Inpatriate

An employee being transferred into

the parent country (HQ)
operations.

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Expatriate Failure

The premature return of an

expatriate.
That is, a return home before the
period of assignment is completed.

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Staffing

The recruitment, selection, and

placement of employees.
The process involves identifying
and selecting the people who will
fill the positions abroad, and then
placing them in those positions.

32

Recruitment

The process of searching for and

obtaining potential job candidates
in sufficient numbers and quality
so that the organization can select
the most appropriate people to fill
its job needs.

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Selection

The process of collecting and

analyzing information for the
purpose of evaluating and deciding
who should be employed in a
particular job.

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Ethnocentric Orientation

MNCs with an ethnocentric

orientation would appoint mostly
parent-country nationals (PCNs) to
top positions at their subsidiaries.

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Polycentric Orientation

MNCs with a polycentric

orientation would prefer to appoint
host-country nationals (HCNs).

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Geocentric Orientation

MNCs with a geocentric orientation

would simply appoint the best
person, regardless of his/her
nationality and that could include
third-country nationals (TCNs).

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Regiocentric Orientation

With this orientation, managers are

transferred on a regional basis,
such as Europe, North America,
and Asia.

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Employee Compensation

Employee compensation refers to all forms

of pay or rewards given to employees and
arising from their employment.
It has 2 main components:
1. direct financial paymentssalary or
wages, incentive, commission, bonus.
2. indirect paymentsfinancial benefits
such as company-paid insurance, vacation.

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Benefits

Indirect financial and non-financial

payments employees receive for
continuing to work in their
company.
Examples are health and life
insurance, pensions, time off with
pay, child care facilities, and
recreation activities.
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The Balance Sheet

Approach

An approach to international
compensation.
It is a system designed to equalize the
purchasing power of employees at
comparable position levels living
overseas and in the home-country, and
to provide incentives to offset
qualitative differences between
assignment locations.
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International Performance
Management

It is a process that enables the

MNC to evaluate and continuously
improve individual, subsidiary unit
and corporate performance,
against clearly defined, pre-set
goals and targets.

42

Performance Appraisals

It is a process, typically perform

annually by a supervisor for a
subordinate, used to evaluate
employees current and or past
performance relative to their
performance standards.
It is designed to help employees
understand their roles, objectives,
expectations, and performance success.
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Training

The process whereby people

acquire capabilities to perform
jobs.
Training provides employees with
specific, identifiable knowledge
and skills for use in their present
jobs.
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Cross-Cultural Training

The educative processes used to

improve intercultural learning via
the development of the cognitive,
affective, and behavioral
competencies needed for
successful interactions in diverse
culture.
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Management
Development

The aim of management development

is to improve performance of
managers by providing knowledge,
changing attitudes, or increasing skills,
thereby improving the performance of
the company as a whole.
It is also for succession planningto fill
specific managerial positions.
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Organizational Development
(OD)

OD is a comprehensive effort to
improve an organizations
effectiveness, employees wellbeing, adaptability to deal with its
environment, and its ability to
solve problems.

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Health, Safety, and

Security

Healthrefers to a general state of

physical, mental, and emotional
well-being.
Safetyrefers to a condition in
which the physical well-being of
people is protected.
Securityprotection of employees
and organizational facilities.
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Risk Management

It involves responsibilities to
consider physical, human, and
financial factors to protect
organizational and individual
interests.

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Internal Environment or
organizational
environment
It refers to conditions within the

organization itself.
Every aspect of the organization itself is
part of the internal environment.
Examples:
Functions, systems, work processes,
technology, employee morale,
organizational structure, communication,
organizational culture, etc.
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External Environment

It encompasses local, national, and

multinational conditions that confront
an organization.
Elements of the external environment
include: economic conditions, the legalpolitical landscape, industry dynamics,
labor markets (economic), country
culture and societal values, and
technology.
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National Culture

The values and attitudes shared by

individuals from a specific country
that shape their behavior and their
beliefs about what is important.

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Cultural Environment

The language, religion, values,

ideologies, education,
communication, and social
structure of a country.

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Human Resource Information System

(HRIS) or Human Resource
Information Management (HRIM)

A system using computer

technologies to gather, analyze,
and distribute information about
the people in an organization.

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Virtual Workforce

Member of virtual workforce

perform their jobs anywhere and
anytime, often on an as-needed
basis.
They may be located all over the
world.

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Social Responsibility

The responsibility of an organization for the

impacts of its decisions and activities on the
society and environment through transparent and
ethical behavior that:
1. contributes to sustainable development, health,
and the welfare of society.
2. takes into account the expectations of
stakeholders.
3. is in compliance with relevant laws and
regulations.
4. is in compliance with international norms and
standards of behavior.
5. is integrated and practiced throughout the
organization.

End

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