HRM IN MNC’s final

8/3/2019 HRM IN MNCs final

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Managing Human Assets


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What is IHRM?

International HRM (IHRM) is theprocess of:

procuring,

allocating, and

effectively utilizing human resources

in a multinational corporation, while

balancing the integration and differentiationof HR activities in foreign locations.


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Domestic HRM vs. IHRM

Compared to Domestic HRM, IHRM

encompasses more functions

involves constantly changing perspectives

requires more involvement in employees lives

is influenced by more external sources

Cultural difference across countries, and

finally

involves a greater level of risk than typicaldomestic HRM


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Complications for IHRM compared to HRM

International HR managers face a more complextask than their domestic counterparts

Differing cultures

Levels of economic development

Legal systems among countries

So, may require companies to adapt their hiring,firing, training, and compensation programs toeach country.


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Complications for IHRM compared to HRM

Firms must decide whether managers will beselected from the home country, from thehost country or from third countries.

Training and development in an internationalfirm may be more complex than in a domesticfirm.

Compensation systems must be adapted tomeet the needs of each countrys labor

market.


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IHRM in MNC: Key Issues

Cultural differences across countriesDimensions of culture -

Individualism vs. Collectivism Power distance Uncertainty avoidance

Masculinity vs. Femininity

Structure of firms international operation

InflationLabor availability & quality


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Individualism / Collectivism

INDIVIDUALISM Self = Independent Personal goals have priority Attitudes, cost-benefit analysisdetermine social behaviours

COLLECTIVISM Self = Interdependent In-group goals have priority Norms, obligations, dutiesdetermine social behaviours

Determines how an individual see himself: as an individual entity or as a part of group

Help in designing the Reward System in an organization: integral part of MCS

If culture is highly individualistic use individual incentives for motivation

If culture is highly collectivist use group based incentives for motivation


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Power DistanceSMALL All should have equal rights Powerful people should try to lookless powerful Senior people are neitherrespected nor feared Inequalities in power and wealthminimized

LARGE Power holders are entitled to privileges Status symbols and hierarchies accepted Senior people are respected and feared

need for dependence Inequalities in power and wealthmaximized

Means the extend to which employees understand & accept unequal distribution of power

In context of MCS:

Employee with High on power distance prefer Centralization

Employee with Low on power distance prefer Decentralization


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Uncertainty Avoidance

WEAK High tolerance for ambiguity Less risk averse More comfortable inunstructured situationsless anxiety

STRONG Low tolerance for ambiguity More risk averse Structure seeking moreanxiety over the unknown

Who avoid taking risk


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Masculinity / Femininity

MASCULINITY Performance society More achievement/money OrientedDemand more autonomy & freedom at

work place

FEMININITY Welfare society More quality-of-life orientedCan perform well in Centralizedorganization

Structure of firms international operation

Strong drive for achievement

In context of MCS:

Employees demand more autonomy prefer Decentralization & performance based rewards


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Approaches to IHRM (contd)

Factors Affecting the Approach to IHRM

Political Policies and Legal Regulations

Managerial, Educational, and TechnologicalDevelopment in the Host Country

Home and Host Country Cultures

International Experience of the Firm


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Approaches to IHRM (contd)

Factors Affecting the Approach to IHRM (contd)

Method of Subsidiary Founding

Technology and the Nature of the Product Strategic Importance of Particular Employee

Groups

Organizational Culture

Organizational Life Cycle


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BPR at Mahindra & Mahindra Ltd. (Contd.)

Got rid of multi-layered structure and adopted a flatstructure.

Encouraged team work

Capitalized on its existing employee talent through

intensive retraining and redeployment strategies.

Began outsourcing non-core manufacturing activities.

Documents

HRM IN MNC’s final