IHRM Chapter 1 PDF

Defining IHRM Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning...

Defining IHRM Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 1 of 32 Difference Between Domestic HRM and International HRM?  The key variable that differentiates domestic and international HRM is the complexity of operating across national boundaries, and employing different national categories of workers. Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 2 of 32  DOMESTIC HRM VS. IHRM International HRM vs. Domestic HRM 1. Responsible for more HR functions and activities -- foreign taxes, work visas, international relocations etc. 2. Broader expertise and perspective including overall knowledge of foreign countries, employment laws, cultural differences 3. Greater involvement in people’s lives as they are relocated 4. Dealing with and managing wider mix of employees in training, staffing, compensation, benefits etc. 5. More external factors and influences such as dealing with multiple governments, laws, cultures, currencies and languages 6. Greater level of risk, with a greater exposure to problems and Chapter 1 difficulties, as well as liabilities for making mistakes in HRM decisions such as political risk, legal compliance issues, etc. 3 of 32 For use with International Human Resource Management 7e By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. ISBN-10: 1473719026 © Cengage Learning Analyzing Your International Environment Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, MarionCopyright © 2020 Festing, and byEngle, Allen D. NelsonSr. Education Ltd. © Cengage Learning 4 of 32  Intercountry Differences Selecting, managing, compensating and training employees abroad is complicated by different:  Cultural factors  Economic systems  Legal systems  Labour cost factors Chapter 1  Industrial relations factors For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 5 of 32  Additional HR Activities in IHRM  Arrange for pre-departure training  Provide immigration & travel details  Provide housing, shopping, medical care, recreation & schooling information  Finalize compensation details such as: o Delivery of salary overseas o Determination of overseas allowances o Taxation treatment Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 6 of 32  THE DRIVERS OF THE INTERNATIONALIZATI ON OF BUSINESS Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 7 of 32  THE DRIVERS OF THE INTERNATIONALIZAT Many enterprises, large and small, from all countries (developed economies and emerging) are already global – or are in the process of becoming global.  Today’s innovations combined with digitalization and access to the Internet, have put being international within everyone’s reach Chapter 1  Together these drivers are creating new global realities for all organizations – large and small, publicly traded, For use with International Human Resource Management 7e 8 of 32 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. ISBN-10: 1473719026 © Cengage Learning THE GROWTH AND SPREAD OF INTERNATIO  According to Fortune : “The world’s 500 largest companies generated $33.3 trillion in revenues and $2.1 trillion in profits in 2019.  In 2020, Fortune Global 500 companies employ 69.9 million people worldwide and are represented by 32 countries  IHRM plays an important role in attaining global ranking o HR is called upon to recruit, select, develop, and retain work force talent that can achieve internationalization and global competitiveness Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 9 of 32  DRIVERS OF INTERNATIONALIZATION Decreased trade Search for new Rapid & extensive barriers markets global Trade Agreement & Treatise communication Rapid development Increase travel & & transfer of new migration; exposure technology DRIVERS OF To new cultures Competitiveness of INTERNATIONALIZATION emerging markets E-commerce MNEs & SMEs Homogenization of Global internet, culture & consumer Global pressure to social media, movies demands locate and hire the sports, publications. best human talent Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 10 of 32  DIFFERENT SETTINGS OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 11 of 32  DIFFERENT SETTINGS OF INTERNATIONAL HUMAN RESOURCE MANAGEMENT  Internationa lization of Headquarters of HRM occurs in Multinationals 4 specific Government settings Agencies and Home Country  HRM managers will non- Governmental Subsidiaries of foreign- confront at least some Organizations owned firms aspects of internationalization Domestic firms  HRM professionals must become competent in Chapter 1 IHRM issues in almost every job setting. For use with International Human Resource Management 7e 12 of 32 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. ISBN-10: 1473719026 © Cengage Learning 1. HEADQUARTERS OF MULTINATIONA HRM professional work in the central or regional headquarters of the traditional MNE  This setting is most common for HR managers  Headquarters use parent company HRM policies/practices in its foreign subsidiaries or use those that are common in host countries Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 13 of 32 2. HOME COUNTRY SUBSIDIARIES OF FOREIG HR managers works in their home country but are employed by a local subsidiary of a foreign MNE  HR manager will integrate local culture and organizational culture into the operations  Different communication styles, worker motivation philosophies, and organizational structures set in place by the parent company can cause major problems for the local HR manager Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 14 of 32  3. DOMESTIC FIRM  Confront many complexities of international business, particularly as they relate to IHRM. Referred to as “domestic multinationals” Hiring—or recruiting—of immigrants can lead to many of the same internationalization concerns as those faced by traditional MNEs  Can establish small offices in other countries or recruit talent “overseas” in order to meet needs for specialized skills Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 15 of 32 AGENCIES AND 4. NON-GOVERNMENTAL ORGANIZAT  Government agencies, their embassies, and the hundreds of non-governmental organizations (NGOs) are also global in scope  Send hundreds of people from parent countries to overseas operations  Employ many local and third country people to staff their activities around the globe Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 16 of 32 Defining IHRM – P. Morgan Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 17 of 32  Defining IHRM – P. Morgan  The interplay among 3 Dimensions: I. Human Resource Activities II. Location of Operation III. Types of Employees  Increasingly, domestic HRM takes on some of the flavor of IHRM as it deals more and more with a multicultural diverse workforce Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 18 of 32  Morgan’s “3-D” Definition of IHRM I.HR Activities: Procurement, Allocation & Utilization II.Location (countries) where IHRM occurs:  Host-Country where subsidiaries are located  Home-(Parent) Country where firm is headquartered  Other-Countries that are sources of labor, finance and other inputs III.Categories of employees of an international firm:  HCNs (host country nationals)  PCNs (parent country nationals)  TCNs (third country nationals) Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 19 of 32  An Expatriate?  An employee who is transferred out of home base country across national boundaries into a role within the international firm’s foreign operation or subsidiary  An employee working and temporarily residing in a foreign country.  An “International Assignee” Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 20 of 32  An Inpatriate?  An employee who is transferred from a foreign subsidiary into the parent country (central headquarter) operations Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 21 of 32 Figure 1.2 International Assignments Create Expatriates Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 22 of 32  Variables that Moderate the Differences between Domestic & International HRM. Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 23 of 32 Figure 1.3 A Model of 5 Variables that moderate the differences between Domestic and International HRM Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 24 of 32  Five Moderators 1. The cultural environment 2. The industry(ies) with 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. Complexity of operating in different countries and employing different national categories of workers Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 25 of 32  Definition of Culture (Franz Boas (father of American anthropology) – Cultural Relativism)  Culture:  The system of shared beliefs, values, customs, behaviours, and artifacts that the members of society use to cope with their world and with one another.  Are transmitted from generation to generation through learning Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 26 of 32  The Cultural Environment  Many international business failures have been linked to culturally insensitive attitude or ignorant, misguided beliefs – “my way is the best”, or “what works at home will work here”.  The international HR manager must be cognizance of cultural differences at corporate headquarters and at host locations.  Whether hiring, promoting, rewarding and dismissing employees, host location’s legal and values systems must be taken into account Recognizing how and when differences are relevant is a constant challenge!! Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 27 of 32  The MNE Industry Type Continuum MNEs perform somewhere between the range of: Multidomestic Industries Global Industries Examples Examples Retailing, Distribution, Insurance, Airlines, Semiconductors, Consumer electronics, Cars International Strategy International Strategy Collapses to a series of Integrate activities on a independent domestic worldwide basis. strategies. Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 28 of 32  Industry Type  In a Multi-Domestic industry, HR dept will likely be domestic in structure and orientation. It supports the primary activities of the firm in each domestic market to achieve competitive advantage through cost efficiency or product/service differentiation.  In a Global Industry, HR dept. tend to be structured to support the need for international coordination & control. They strive for global consistency in HRM practices while adapting to specific local requirements where Chapter 1 necessary. For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 29 of 32  Extent of MNE Reliance on Home Market  For many firms, a small home market is one key driver for seeking new international markets.  Firms with a large domestic market will likely have large number of managers with exclusively domestic business experience and tends to be ethnocentric in their management attitudes.  Managers with little international experience may wrongly assume that there is much transferability between domestic and International HRM practices. Chapter 1 For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 30 of 32 Table 1.1 The World’s Top 10 Non-Financial Transnational Corp. ranked by TNI - Chapter1 2 Chapter For use with International Human Resource Management 7e ISBN-10: 1473719026 By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning 31 of 32  Global Mindset Attitude of a particular intellectual orientation to business problems that is open and positive toward other cultures and people 1. Able to work effectively across organizational, functional and cross-cultural boundaries 2. Cognitive orientations of an individual with ability to cope with complexity embedded in the business 3. Cultural self awareness and openness to and understanding of other cultures Chapter 1 4. Accepts diversity and heterogeneity as a 32 source of 32 of For use with International Human Resource Management 7e By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. ISBN-10: 1473719026 © Cengage Learning