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Chapter 1

Chapter 1. Introduction: The enduring context of IHRM. Chapter objectives (cont.).

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Chapter 1

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  1. Chapter 1 Introduction:The enduring context of IHRM

  2. Chapter objectives (cont.) • discuss trends and challenges in the global work environment and the enduring context in which IHRM functions and activities are conducted – including the way in which forces for change affect the operations of the internationalizing firm and have consequences for the management of people in the multinational context.

  3. Chapter objectives In this introductory chapter, we establish the scope of the textbook. We: • define key terms in international human resource management (IHRM) • outline the differences between domestic and international human resource management and the variables that moderate these differences (cont.)

  4. Figure 1-1: Inter-relationships between approaches in the field

  5. Figure 2-1: A model of IHRM

  6. HR activities slide 1 • Human resource planning • Staffing • Recruitment • Selection • Placement • Training and development

  7. HR activities slide 2 • Compensation (remuneration) and benefits • Industrial relations Figure 2-2: Stages of internationalization

  8. What is an expatriate? • An employee who is working and temporarily residing in a foreign country • Some firms prefer to use the term ‘international assignees’ • Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

  9. Figure 1-3: International assignments create expatriates

  10. Differences between domestic and international HRM • More HR activities • The need for a broader perspective • More involvement in employees’ personal lives • Changes in emphasis as the workforce mix of expatriates and locals varies • Risk exposure • Broader external influences

  11. Figure 1-4: Variables that moderate differences between domestic and international HRM

  12. Rio Tinto (UK/Australia) Thomson Corporation (Canada) ABB (Switzerland) Nestlé (Switzerland) British American Tobacco (UK) 6. Electrolux (Sweden) 7. Interbrew (Belgium) 8. Anglo American (UK) 9. AstraZeneca (UK) 10. Philips Electronics (The Netherlands) The ‘top ten’ multinationals UNCTAD Index of Transnationality

  13. Figure 1-5: Factors influencing the global work environment

  14. Forces for change • Global competition • Growth in mergers, acquisitions and alliances • Organization restructuring • Advances in technology and telecommunication

  15. Impacts on multinational management • Need for flexibility • Local responsiveness • Knowledge sharing • Transfer of competence

  16. Managerial responses • Developing a global ‘mindset’ • More weighting on informal control mechanisms • Fostering horizontal communication • Using cross-border and virtual teams • Using international assignments

  17. Chapter summary This chapter has established the scope of this book. We have: • Defined international HRM and the term ‘expatriate’. • Discussed the differences between domestic and international HRM – looking at six factors: more HR activities, the need for a broader perspective, more involvement in employees’ personal lives, changes in emphasis as the workforce mix of expatriates and locals varies, risk exposure and more external influences. (cont.)

  18. Chapter summary (cont.) • Examined what we have called the enduring context of IHRM. The focus is on the current global work environment, looking at the forces for change that have prompted managerial responses that have implications for the way in which people are being managed in multinationals at the turn of the 21st century. However, we have made a brief comparison with the situation that confronted a 14th-century merchant as a way of drawing out some of the constants in international business. This treatment has enabled us to provide an overview of the field of IHRM and establish how the general environment affects IHRM. The next chapter examines the organizational context where we explore how IHRM activities are determined by, and influence, various internal changes as the firm internationalizes.

  19. Exporting • Typically the initial stage of international operations • Usually handled by an intermediary (foreign agent or distributor) • Role of the HR department is unclear at this stage

  20. Sales Subsidiary • Replacing foreign agents/distributors with own sales subsidiaries or branch offices in the market countries • May be prompted by: • Problems with foreign agents • More confidence in international activities • Desire for greater control • Give greater support to exporting activities • PCNs may be selected, leading to some HR involvement

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