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International Human Resource Management Book INTERNATIONAL HUMAN RESOURCE MANAGEMENT Developed by: P. Subba Rao Directorate of Distance and Continuing Education Utkal University, Bhubaneswar - 751 007 AUTHOR No part of this publication should be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical photocophing, recording and/or otherwise without the prior written permission of the author and the publisher. Printed and Published by: Mrs. Meena Pandey Himalaya Publishing House Pvt. Ltd., "Ramdoot", Dr. Bhalerao Marg, Girgaon, Mumbai-400 004. Phones: 23860170 & 23863863, Fax: 022-23877178 Email: [email protected] Website: www.himpub.com For: Directorate of Distance and Continuing Education Utkal University, Vani Vihar, Bhubaneswar - 751 007 Website: www.ddceutkal.org DIRECTORATE OF DISTANCE AND CONTINUING EDUCATION UTKAL UNIVERSITY, VANI VIHAR, DDCE BHUBANESWAR - 751 007. Education For All From the Director’s Desk The Directorate of Distance & Continuing Education, originally established as the University Evening College way back in 1962 has travelled a long way in the last 52 years. ‘EDUCATION FOR ALL’ is our motto. Increasingly the Open and Distance Learning institutions are aspiring to provide education for anyone, anytime and anywhere. DDCE, Utkal University has been constantly striving to rise up to the challenges of Open Distance Learning system. Nearly ninety thousand students have passed through the portals of this great temple of learning. We may not have numerous great tales of outstanding academic achievements but we have great tales of success in life, of recovering lost opportunities, tremendous satisfaction in life, turning points in career and those who feel that without us they would not be where they are today. There are also flashes when our students figure in best ten in their honours subjects. In 2014 we have as many as fifteen students within top ten of honours merit list of Education, Sanskrit, English and Public Administration, Accounting and Management Honours. Our students must be free from despair and negative attitude. They must be enthusiastic, full of energy and confident of their future. To meet the needs of quality enhancement and to address the quality concerns of our stake holders over the years, we are switching over to self instructional material printed courseware. Now we have entered into public private partnership to bring out quality SIM pattern courseware. Leading publishers have come forward to share their expertise with us. A number of reputed authors have now prepared the course ware. Self Instructional Material in printed book format continues to be the core learning material for distance learners. We are sure that students would go beyond the course ware provided by us. We are aware that most of you are working and have also family responsibility. Please remember that only a busy person has time for everything and a lazy person has none. We are sure you will be able to chalk out a well planned programme to study the courseware. By choosing to pursue a course in distance mode, you have made a commitment for self improvement and acquiring higher educational qualification. You should rise up to your commitment. Every student must go beyond the standard books and self instructional course material. You should read number of books and use ICT learning resources like the internet, television and radio programmes etc. As only limited number of classes will be held, a student should come to the personal contact programme well prepared. The PCP should be used for clarification of doubt and counseling. This can only happen if you read the course material before PCP. You can always mail your feedback on the course ware to us. It is very important that you discuss the contents of the course materials with other fellow learners. We wish you happy reading. (S.P. Pani) DIRECTOR SYLLABUS International Human Resource Management Unit-1 IHRM Difference between Domestic and International Manager, Issues in IHRM, Developing, International Strategy, Understanding Culture, Its Coverage, Determinants, Cross-cultural Theory (Halls & Lorange). Unit-2 Cross-cultural Negotiations, Planning and Preparation Parameter, Types and Strategy of Organisational Culture. Unit-3 International Business and IHRM: Approaches, Globalisation Approaches, Globalisation and the Strategy, The Competency Required for International Managers. Unit-4 International Labour Market, Sources, Recruitment and Selection, Training, Types of Cross-cultural Training. Multinational Performance Management, Developing International Staff and Multinational Team. Unit-5 International Compensation System, Objectives, Approaches and Practice, Expatriation and Repatriation Process, Managing People in International Firms. CONTENTS UNIT 1 INTERNATIONAL HUMAN RESOURCE MANAGEMENT: AN OVERVIEW ................................................................................1 – 39 1.1 Introduction 1.2 What is International Human Resource Management? 1.3 Difference Between Domestic and International Manager 1.4 Issues in HRM 1.5 International Business Strategies 1.6 Understanding Culture 1.7 Culture: Its Coverage and Determinants 1.8 Cross-cultural Theory 1.9 Summary 1.10 Key Terms 1.11 Review Questions UNIT 2 MANAGING CULTURE DIVERSITY ...........................................................................................................................................40 – 68 2.1 Introduction 2.2 Cross-cultural Differences in the Workplace 2.3 Cultural Sensitivity 2.4 Cross-cultural Communication Process and Negotiations: Planning and Preparation Parameter 2.5 Types and Strategies of Organisation Culture 2.6 Summary 2.7 Key Terms 2.8 Review Questions UNIT 3 INTERNATIONAL BUSINESS : AN OVERVIEW ........................................................................................................................69 – 91 3.1 Introduction 3.2 International Business and HRM 3.3 International Business Approaches 3.4 Globalization Approaches 3.5 Globalization and the Strategy 3.6 Competency Required for International Managers 3.7 Summary 3.8 Key Terms 3.9 Review Questions UNIT 4 RECRUITMENT, SELECTION, TRAINING AND DEVELOPMENT ............................................................................................ 92 – 194 4.1 Recruitment: Sources and Processes 4.2 Selection 4.3 Types of Cross-cultural Tranning 4.4 Multinationall Performance Management: Challenges 4.5 Areas to be Appraised 4.6 Who Should Appraise the Performance? 4.7 System of Performance Appraisal 4.8 Problems of Performance Appraisal 4.9 How to Make Performance Appraisal Effective? 4.10 Developing International Staff and Multinational Team 4.11 Summary 4.12 Key Terms 4.13 Review Questions UNIT 5 COMPENSATION AND BENEFITS ......................................................................................................................................... 195 – 236 5.1 Introduction 5.2 Complexities in International Compensation Management 5.3 Objectives of International Compensation Management 5.4 Factors that Affect International Compensation 5.5 Components/Structure of International Compensation Package 5.6 Approaches to International Compensation Management 5.7 Expatriation and Repatriation Process 5.8 Summary 5.9 Key Terms 5.10 Review Questions INTERNATIONAL HUMAN 1 RESOURCE MANAGEMENT: AN OVERVIEW Unit Objectives This unit focuses on: Understand various concepts often referred in international human resource management; Know the meaning of expatriate, understand the confusions over the term and analyse the clarity over the concept; Analyse the issues causing the hiccups in defining the term international human resource management; Defining and analyzing the term international human resource management; Discuss the differences between domestic human resource management from international human resource management. Structure: 1.1 Introduction 1.2 What is International Human Resource Management? 1.3 Differences Between Domestic Business and International Business 1.4 Issues in HRM 1.5 International Business Strategies 1.6 Understanding Culture 1.7 Culture: Its Coverage and Determinants 1.8 Cross-cultural Theory 1.9 Summary 1.10 Key Terms 1.11 Review Questions 2 International Human Resource Management Notes 1.1 INTRODUCTION The term 'International Human Resource Management', (IHRM) creates an anxiety to know what is it, how does it differ from HRM, is it a synonym to cross- cultural management etc. Hence, we should know what is IHRM at the beginning itself. One should know the meanings of various terms that are quite often used in this book, before attempting to know the meaning of international human resource management. 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 Corporation (MNC): MNC is an organization which operates in more than one country. Transnational Corporation (TNC): TNC 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 the country is the one where the subsidiary/branch of an MNC/TNC is located. Parent Country Nationals/ Home Country(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/TNC. Host Country Nationals (HCNs):
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