Issues and problems of International Human Resource Mgt (IHRM)
- A challenge before Indian MNCs
P.Morgan defines international human resource management (IHRM) as the interplay among three dimensions- Human Resource attitude, types of employees and lastly the country of operation. Broadly defined IHRM is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation. If the MNC is simply exporting its products, with only a few small offices in foreign locations, then the task of the international HR manager is relatively simple. However, in global firms human resource managers must achieve two somewhat conflicting strategic objectives. First, they must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved. At the same time, the approach to HRM must be sufficiently flexible to allow for significant differences in the type of HR policies and practices that are most effective in different business and cultural settings.
Specifically compared with domestic HRM, IHRM is more important as it (I) encompasses more functions, (2) has more heterogeneous functions, 3) involves constantly changing perspectives, (4) requires more involvement in employees’ personal lives, (5) is influenced by more external sources (6) involves a greater level of risk than typical domestic HRM.
When compared with domestic human resource management, IHRM requires a much broader perspective on even the most common HR activities because manpower moves across the political borders and work globally. Generally global employees are known as expatiate employees. There are various complexities of operating in different countries and employing different national categories of employees. And such complexities can differentiate domestic HRM from IHRM. Dowling argues that the complexity of IHRM can be attributed to many of factors such as more HR attitude, the need for broader perspective, more involvement of employee’s personal lives, mixing of work force of various countries, risk exposure and broader external factor influences.
To operate in Global environment , HR Department must engage in number of activities that would not be necessary in domestic environ i.e. international taxation issues, international relocation and orientation, administrative services of expatriates , host government relations and language translation services etc. Host government relations represent a phenomenal activity for IHRM particularly in third world nations where work permits and other important certificates are easy to acquire with comparison to developed nations.
Training and development issues of IHRM are more complex than domestic HRM. It is difficult to plan a training programme and schedule for the workforce of multinationals. People carry various attitudes and values for training and development issues. In the present era, it is one of the major challenges before IHRM.
A greater degree of involvement in employee’s personal lives is also an important concern for IHRM. It needs to ensure that expatriate understand housing arrangements, schooling facilities , health care, cost of living , compensation package, local tax system etc. of the nation where they are going to take up an global assignment. Here the involvement and onus of IHRM becomes much broader than domestic HRM.
As the foreign operations mature, the emphasis put on various human resource activities also gets change. As the need for PCNs and TCNs declines, the more locally trained manpower appear on the scene. And resources previously allocated for global staffing are transferred to the activities of local staffing. Such change also poses challenge before IHRM to maintain balance between mixed workforces in a MNC.
The human and financial consequences of failure in international arena are more severe than domestic activities. The amount of risk involved in global ventures is much higher and complex than domestic employment. The direct and indirect cost of maintaining global workforce is very high. And the long presence of global terrorism also leaves impact over global staffing issues. After 11 Sep 2001, many MNCs started allocating 1-2 % of their budget for the safety and security of their global workforce. People are indisposed to work in disturbed areas even though many avenues are available.
Some major external factors such as the type of government, the state of economy, political stability, cultural and ethical issues, industrial relation and labour laws, unionism, working culture, food, taxation, health and safety issues, amusement etc. of a nation is also an important concern for IHRM. The workforce in developed nations is facilitated with more laurels and comforts than in developing and third world nations. It also poses challenge before IRHM. Global HR Manager must develop HR systems that are not only acceptable to the host country but also compatible with company-wide systems being developed by his or her HQ-based counterpart.
The competition is in cut throat phase all over the globe as the domestic business organs started operating at international fronts. On the other hand mergers and acquisitions are hot buns for the developing business houses. The acquisition of CORUS by TATA was a burning topic for Indian business houses operating globally. Due to MoUs, M & As and strategic alliances etc. business organs keep on changing their organizational structure. On the other hand advances in technology and telecommunications also helping to create a global business milieu. In such scenario, managing men at global front is definitely a significant issue.