Features of IHRM
- IHRM involves employment of right people at right job at right time, irrespective of geographic locations.
- It requires the development of long-term HR plan to make sure of effective alignment of HR strategies with corporate objectives.
- It requires the development of a diversified range of skills for employees, especially for those who need to work beyond national boundaries.
- It necessitates the determination of compensation for parent, host & third country nationals on the basis of country specific factors.
- It creates the centralized reporting relationships around the world for faster information system.
Scope of IHRM
The three main dimensions of international human resources management are as follows:
- Human resource activities
- Countries of operation
- Origin of employees
Human resource activities
HR activities in an IHRM context involve procurement, allocation, and utilization of workforce. These functions in turn cover all the six activities of human resources management, that is, human resource planning, hiring, training and development, remuneration, performance management, and employee relations.
Countries of operation
The countries of operation in an IHRM perspective involves the host country in which the overseas operation is located, the home country that houses the headquarters of the company, and other countries that supply labor and finance.
Origin of employees
The origin of the workforce of an international business can be classified into three types – parent country nationals, host country nationals, and third country nationals.
Functions of IHRM
In International human resource management, there are five functional areas that include recruitment and selection, development and training, performance evaluation, remuneration and labor relations.
Recruitment and selection
Company employs new qualified candidates for international operations. Selection requires choosing from this pool the candidate whose qualifications most closely match the job requirements. Staffing is a complex function of international human resource management. In an global firms, the managing and staffing approach strongly affects the type of employee the company prefers. In a company with an ethnocentric approach, parent country nationals usually staff important positions at headquarters and subsidiaries. In recruitment and selection methods, firms consider both headquarters’ practices and those widespread in the countries of its subsidiaries. Local culture also have great impact on recruitment and selection practices, and in some countries, local laws require a specific approach. In choosing the suitable candidate, it is needed to make balance between internal corporate consistency and sensitivity to local labor practices.
Development and training
Another significant function of IHRM is Development and training which is aimed to offer sufficient training to personnel in a company and enable them to fulfill their goals, as well as show better performance and growth with their work. At global level, human resource development experts must have responsibility for training and development of employees located in subsidiaries around the world, specialized training to prepare expatriates for assignments abroad, and lastly development of a special group of worldwide minded managers. International human resource development programs may be done in two ways such as centralized and decentralized. In a centralized approach, training originates at the headquarters and corporate trainers travel to subsidiaries, often adapting to local situations. This fits the ethnocentric model. A geocentric approach is also centralized, and trainers could be sent from various positions in either the headquarters or subsidiaries to any other location in the company. In a decentralized approach, training is given locally, following a polycentric model. When training is decentralized, the cultural backgrounds of the trainers and trainees are usually similar. Local people develop training materials and techniques for use in their own area. It is important that trainer must be qualified.
Performance evaluation
Performance evaluation is the effective function of international human resource management. In companies, the performance evaluation is regularly performed for administration or development intentions. Usually, administration conduct evaluation when there is doubt of performance of candidate and there is a need of performance evaluation on work conditions of employees, promotions, rewards and/or layoffs. In multinational companies, performance appraisals are usually done annually and use a standardized evaluation form. Performance evaluation is complex task for International HR managers because the organization must evaluate employees from different countries working in different subsidiaries. Performance evaluation depends on the organization’s overall human resource management strategy.
Remuneration and benefits
Remuneration and benefits is other functional approach of IHRM. Remuneration of employees plays an important role in hiring new employees because pay is the major source of people to live in the world. To develop an international system of compensation and benefits, firms have two primary concerns. The first is comparability. A good compensation system disperses salaries to employees that are internally equivalent and competitive within the marketplace. The international organization must also consider the salaries of people who may transfer from other locations. The second major concern is cost. Organizations struggle to reduce all expenses, and payroll is one of the largest.
Labor relations
Lastly, the labor relations function of IHRM which describes the role of management and workers in the workplace. In many countries, the government regulates labor relations practices.
