{"id":68,"date":"2018-10-11T06:12:35","date_gmt":"2018-10-11T06:12:35","guid":{"rendered":"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/?post_type=chapter&#038;p=68"},"modified":"2019-01-03T09:46:17","modified_gmt":"2019-01-03T09:46:17","slug":"international-human-resource-management","status":"publish","type":"chapter","link":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/chapter\/international-human-resource-management\/","title":{"rendered":"International Human Resource Management"},"content":{"raw":"<div><span style=\"float: right\"><a href=\"https:\/\/youtu.be\/9YY4UYrflqg\" target=\"_blank\" rel=\"noopener\"><img src=\"http:\/\/epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/2018\/11\/download.png\" alt=\"epgp books\" width=\"75px\" height=\"75px;\" \/><\/a>\r\n<\/span><\/div>\r\n<div>\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Learning Outcomes: The aim is to familiarize the tools and methods of Human Resource Management in an International environment.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Understanding the relationship between (international) strategic objectives, organizational performance and human behaviour should enable students to better motivate and understand International Human Resource Management (IHRM) phenomena\u2019s and to diagnose and analyze complex behaviour in a different cultural setting.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Objectives are for:<\/p>\r\n\r\n<ul>\r\n \t<li style=\"text-align: justify\">Being able to understand HR challenges in international management.<\/li>\r\n \t<li style=\"text-align: justify\">Know how the HRM function can contribute to the firm\u2019s international strategy.<\/li>\r\n \t<li style=\"text-align: justify\">Have an understanding how to appraise and evaluate in an international environment.<\/li>\r\n \t<li style=\"text-align: justify\">Know how to prepare, train and develop employees for international posts.<\/li>\r\n \t<li style=\"text-align: justify\">Identify the main trends regarding international compensation for executives.<\/li>\r\n \t<li style=\"text-align: justify\">Understand major ethical and SCR in international business.<\/li>\r\n<\/ul>\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n<strong>\u00a0 \u00a0 38.1. Introduction:<\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">When human resource management assumes a global perspective, it becomes international human resource management. Several factors like new technologies and new markets are driving changes in the various spects of an organisation. But the advent of globalization in recent decades has provided a decisive momentum to international human resource management as an increasing number of companies are realizing that their future success and growth depend on their ability to internationalize their operations.<\/p>\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-72\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/30-300x120.png\" alt=\"\" width=\"300\" height=\"120\" \/>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">In the global village, organisations have crossed the boundary of the country in terms of their business operations. The liberalization process in India, has thrown enormous opportunities for foreign companies to come to India and Indian companies to expand the market beyond the country. Infact, many Indian multinationals are performing extraordinarily well outside the country.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Globalisation of business has probably touched the HR manager more severely than any other functional head. The HR executive needs to give international orientation to whatever he or she does employee hiring, training and development, performance review, remuneration, motivation, welfare or industrial relations. International orientation assumes greater relevance as businesses get increasingly interlinked across nations.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Just as the success of a domestic business depends on its human resource, so is the case with an international business. The type of people, the willingness with which they work and the commitment they exhibit towards the organisation determine the competitive edge of an MNC in the international market. The international firm may have the best of resources at its headquarters. The resources cannot be effectively utilized or transferred to foreign affiliates without using the human power.<\/p>\r\n&nbsp;\r\n\r\n&nbsp;\r\n\r\n<strong>38.2 Meaning and Definition:<\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">International Human Resource Management (IHRM) is defined as the interplay between the three important dimensions of human resource management \u2013 types of employees, human resource activities and the country of operation. It is the complexities of operating in different countries and employing different national categories of workers, which essentially differentiates domestic and international HRM.<\/p>\r\n<p style=\"text-align: justify\">An international business must procure, motivate, retain and effectively utilize services of people both at the corporate office and at the foreign plants. The process of procuring, allocation and effectively utilizing human resource in an international business is called international human resource management (IHRM).<\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img class=\"alignnone size-medium wp-image-74\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/31-300x224.png\" alt=\"\" width=\"300\" height=\"224\" \/>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">International Human Resource Management (IHRM) is the process of acquiring, developing, allocating and utilizing human resources in a global corporation to achieve organizational objectives irrespective of geographical boundaries. In global firms, human resource managers must achieve two somewhat conflicting strategic objectives i.e.,<\/span><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">i. They must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved.<\/span><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">ii. The approach to HRM must be sufficiently flexible to take care of significant differences in business conditions and culture.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.2.1. Definition:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">According to P.V. Morgan, \u201cInternational Human Resource Management (IHRM) is the interplay among three dimensions \u2013 human resource activities, types of employees and countries of operations.\u201d<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">According to Nancy Wong, \u201cInternational human resource management involves carrying out, on a worldwide basis, activities like candidate recruitment and selection, assignment terms and documentation, relocation processing and vendor management, immigration processing, cultural and language orientation and training, compensation administration and payroll processing, tax administration, career planning and development and handling of spouse and dependent matters.\u201d<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">According to Micheal Armstrong, \u201cInternational human resource management is the process of employing and developing people in international organisations which operate globally. It means working across national boundaries to formulate and implement resourcing, development, career management and remuneration strategies, policies and practices applicable to international workforce.\u201d<\/p>\r\n&nbsp;\r\n\r\n<strong>38.3. Features of International Human Resource Management (IHRM):<\/strong>\r\n<ol>\r\n \t<li style=\"text-align: justify\">IHRM involves employment of the right people at the right positions, irrespective of geographical locations.<\/li>\r\n<\/ol>\r\n<p style=\"text-align: justify\">\u00a0 \u00a02. It requires the development of a long \u2013 term HR plan to make sure of an effective alignment of the HR strategies with the corporate objectives.<\/p>\r\n<p style=\"text-align: justify\">3. It requires the development of a diversified range of skills for employees, especially for those who need to work beyond national boundaries.<\/p>\r\n<p style=\"text-align: justify\">4. It necessitates the determination of compensation for host -, home \u2013 and third \u2013 country nationals on the basis of country \u2013 specific factors.<\/p>\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<img class=\"alignnone size-medium wp-image-75\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/32-300x208.png\" alt=\"\" width=\"300\" height=\"208\" \/><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 5.\u00a0It\u00a0 requiresthecreationofcentralizedreportingrelationshipsaroundtheworldfor\u00a0 faster<\/p>\r\n<p style=\"text-align: justify\">information sharing. <a href=\"http:\/\/www.civilserviceindia.com\/subject\/Management\/notes\/international-human-resource-management.html\">www.civilserviceindia.com\/subject\/Management\/notes\/international-human-resource-management.html<\/a><\/p>\r\n<p style=\"text-align: justify\">6. It requires the introduction of formal and informal methods to integrate the different parts of the global business effectively.<\/p>\r\n<p style=\"text-align: justify\">7. It requires the development of a well \u2013 organized evaluation system to assess the performance of employees across different locations and nations<\/p>\r\n<p style=\"text-align: justify\">8. It is necessary to understand the cultural dimensions of host nations that influence the HR operations.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"font-size: 1em;text-align: initial\">9. It is essential to maintain good communication among all the parts and people of the <\/span>organisation<span style=\"font-size: 1em;text-align: initial\"> at the global level.<\/span><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">10. The perceived value of the HR activities generally varies across the different locations of international companies.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n<strong>38.4. Reasons for the growth of International Human Resource Management (IHRM):<\/strong>\r\n\r\n&nbsp;\r\n\r\nFactors that have contributed to the growth of International Human Resource Management (IHRM) are:\r\n\r\n&nbsp;\r\n<ol>\r\n \t<li>The advent of globalization has increased the growth of multinational companies and international business operations, which has contributed to the global mobility of human resources.<\/li>\r\n \t<li>A growing shortage of human resources with international exposure and experience affects the companies\u2019 global preparedness in human resource management. This has forced the international companies to assign a larger role for global human resource management activities in their organisation.<\/li>\r\n \t<li>In\u00a0 a\u00a0 significant\u00a0 number\u00a0 of\u00a0 cases,\u00a0 the\u00a0 successes\u00a0 of international operations of companies are determined by the performance of the expatriates and other employees working in a foreign country. This has made the organisations<span style=\"text-align: initial;font-size: 1em\"> attach a greater significance to IHRM activities.<\/span><\/li>\r\n \t<li>Since the failure of international operations often proves costly to the organisation, companies take additional precautionary measures in training and compensating human resources. This necessitates the establishment of a full \u2013 fledged international HR department.<\/li>\r\n \t<li>Differences in the people, process, tax computation, organizational structure and culture of different nations force the companies to undertake several complex HR activities like tax planning, orientation, training and compensation fixation.<\/li>\r\n<\/ol>\r\n<\/div>\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img class=\"alignnone size-medium wp-image-76\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/33-300x293.png\" alt=\"\" width=\"300\" height=\"293\" \/><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong>38.5. Need \/ Characteristics of International Human Resource Management (IHRM):<\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">These are the various factors which represents the need\/characteristics along with the factors which differentiate between domestic human resource management and international human resource management:<\/p>\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-77\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/34-300x278.png\" alt=\"\" width=\"300\" height=\"278\" \/>\r\n\r\n&nbsp;\r\n\r\n<strong style=\"text-align: initial;font-size: 1em\"><em>38.5.1. The need for a broader perspective:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">HR managers working in a domestic environment generally function in a single government scenario managing the employees of only the host country. In <\/span>multinational<span style=\"text-align: initial;font-size: 1em\"> platform, the HR managers have to take a broader view of different international issues, such as\u00a0<\/span><span style=\"text-align: initial;font-size: 1em\">expatriates\u2019 benefits and <\/span>cross \u2013 cultural<span style=\"text-align: initial;font-size: 1em\"> work dynamics in managing people.<\/span><\/p>\r\n&nbsp;\r\n\r\n<strong style=\"font-size: 1em;text-align: initial\"><em>38.5.2. More involvement in employee\u2019s personal lives:<\/em><\/strong>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: justify;font-size: 1em\">High degree of personal involvement in the employees\u2019 personal lives is necessary for the selection, training, placement and effective management of both Parent Country Nationals (PCNs) and Third Country Nationals (TCNs) employees. The role of the HR department is to make the expatriate employees understand their housing, <\/span>health care<span style=\"text-align: justify;font-size: 1em\">, work culture, compensation <\/span>and<span style=\"text-align: justify;font-size: 1em\"> all other matters so that they feel comfortable at the new places.<\/span>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.5.3. Emphasis changes as the workplace mix of expatriates and locals varies:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">As international operations of companies gain experience, the emphasis put on the various human resource activities changes.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.5.4. Risk Exposure:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The consequences of failure in international operations are more severe than the domestic business. The failure of an expatriate in terms of performance or his premature return from the assignment costs the company heavily and has tremendous impact over the market share and international customer relationship.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.5.5. More external influences:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The influence of the external factors, such as different types of governments, state of economy and business policies and practices of various host countries are quite high, and therefore, pose a great challenge for HR professionals to manage. Depending on the attitude of the government towards international firms in their country; the HR policies of the MNC changed.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><strong style=\"text-align: initial;font-size: 1em\">38.6.<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Complexities<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">\/\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">Challenges<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">of\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">International<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Human<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Resource\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">Management (IHRM):<\/strong><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><strong style=\"text-align: initial;font-size: 1em\"><em>38.6.1. Need for Broader Perspective:<\/em><\/strong><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">In the international business, the HR managers require a broader view of various international issues such as expatriated benefits, cross culture work dynamics in managing people, etc.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.6.2. Ethical and Corporate Social Responsibility:<\/em><\/strong>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">Ethics and corporate social\u00a0 responsibility in\u00a0<\/span><span style=\"text-align: initial;font-size: 1em\">the international business environment <\/span>are<span style=\"text-align: initial;font-size: 1em\"> always debatable. MNCs have been accused of being indifferent to the problems of host countries as they are more concerned about the profitability of their companies. MNCs have to balance the ethics and <\/span>moral<span style=\"text-align: initial;font-size: 1em\"> of their country and <\/span>host<span style=\"text-align: initial;font-size: 1em\"> country. It includes:<\/span>\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img class=\"alignnone size-medium wp-image-80\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/35-300x156.png\" alt=\"\" width=\"300\" height=\"156\" \/><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<em>38.6.2.1. Ethical Relativist:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">They believe that there is no right or wrong. What is right in a particular situation in one place may not be so in another. Relativism offers flexibility but may prove to be disastrous in the long run for an MNC.<\/p>\r\n&nbsp;\r\n\r\n<em>38.6.2.2. Ethical Absolutist:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">An MNC which believes in this approach is strongly influenced by the practices and policies of its home country. They do not give much importance to the culture and values of the host country. Ethical absolutists have been criticized for their arrogance and for showing little respect to the traditions and cultures of the host countries.<\/p>\r\n&nbsp;\r\n\r\n<em>38.6.2.3. Ethical Universalist:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">An Ethical Universalist believes that there are fundamental rules which help us differentiate between right and wrong. These rules need to be adhered to in any country and in any situation. An ethical universalist believes that cultural variations between countries should not lead to any wrongdoing on the part of the MNCs. There is a distinction between practices which are culturally different and ones which is morally wrong.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.6.3. Bribery:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">According to survey conducted by J. Macken, developed countries give around $85 billion to underdeveloped countries in form of bribes. MNCs from developed countires have been accused of bribing government officials. Hence, countries should frame laws to prevent corruption.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.6.4. Code of conduct for international business:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The first step in framing code of conduct for international business players came in the form of the \u201cCaux Roundtable Conference\u201d on \u201cPrinciples for Business Conduct\u201d held in 1994. It was a conference on international business ethics, held at Caux, Switzerland and was attended by the business leaders from all countries. The focus was to formulate a set of rules and ethical codes which would be used for benchmarking global business practices. The main aim of Caux conference as given in the charter is, \u201cto further the twin value of living and working together and human dignity by promoting free trade, environmental and cultural integrity and prevention by bribery and corruption.<\/p>\r\n&nbsp;\r\n\r\n<strong>38.7. Stages of International Human Resource Management (IHRM):<\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">From an organizational viewpoint, the international human resource development and usage process generally goes through four stages viz,<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.7.1 Transfer:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The 1st stage involves the transfer of an executive or executives from the home country to fill key positions in a foreign operations.<\/p>\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img class=\"alignnone size-medium wp-image-81\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/36-300x251.png\" alt=\"\" width=\"300\" height=\"251\" \/><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.7.2. Mixed Resources:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">In this 2nd Stage, sometimes due to pressures from foreign government (or because foreign nationals have been suitably trained for the work), most foreign operation jobs are held by local personnel.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.7.3. Unitary Resources:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">At this stage, in the evolution process, the entire operation is staffed by foreign nationals including the top management positions. In other situations, the organisations\u2019 operations may have matured to the point at which foreign nationals at all levels have been trained to handle all jobs effectively.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.7.4. Interchange:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">In this final stage, there is the recognition that a manager\u2019s skill and competence rather than his or her passport should be the basis of advancement, privileges <\/span>and<span style=\"text-align: initial;font-size: 1em\"> rewards. In other words, there is not only the opportunity for home country managers to obtain international assignments, but foreign managers within the <\/span>organisation<span style=\"text-align: initial;font-size: 1em\"> are given assignments at the home office.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong>38.8. Model of International Human Resource Management (IHRM):<\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Morgan has presented a model to highlighted the broad function of international human resource management. This model consists of the following 3 dimensions:<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.8.1. Human Resource Activity: <\/em><\/strong>procurement, allocation and utilization.\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><strong><em>38.8.2. Country of Operation: <\/em><\/strong>the host country where a subsidiary may be located, the home country in which the firm\u2019s headquarters are located and a third country which may be the source of labour, finance etc.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><strong><em>38.8.3. Types of employees of an international firm: <\/em><\/strong>host country nationals, parent country nationals and third country nationals.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Thus, international human resource management is the interplay between three dimensions namely human resource activities, the country of operation and the types of employees. International human resource management differs from domestic HRM due to the complexities of operating in different countries and employing workers belonging to different nations.<\/p>\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img class=\"alignnone size-medium wp-image-82\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/37-300x190.png\" alt=\"\" width=\"300\" height=\"190\" \/><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n<p style=\"text-align: center\">Sources: P.V. Morgan, 1986, \u201cInternational Human Resource Management: Fact or Fiction\u201d, Personnel Administrator, 31 (9), Page no. 44.<\/p>\r\n&nbsp;\r\n\r\n<strong>38.9. Functions of International Human Resource Management (IHRM)<\/strong>\r\n\r\n<\/div>\r\n<ul>\r\n \t<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Recruitment and Selection<\/span><\/li>\r\n \t<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\"> Performance<\/span><span style=\"text-align: initial;font-size: 1em\"> Management <\/span><\/li>\r\n \t<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Compensation<\/span><\/li>\r\n \t<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Repatriation<\/span><\/li>\r\n<\/ul>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.9.1. International Recruitment:<\/em><\/strong>\r\n\r\n&nbsp;\r\n\r\nThe response of an international firm to an international recruitment and selection depends on:\r\n\r\n&nbsp;\r\n\r\ni.\u00a0 \u00a0Its general staffing policy on key positions in headquarters and subsidiaries.\r\n\r\nii.\u00a0 Its ability to attract the right candidate, and\r\n\r\niii. The constraints placed by the host government on hiring policies.\r\n\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-83\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/38-300x213.png\" alt=\"\" width=\"300\" height=\"213\" \/>\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">Thus, there are 4 major approaches to multinational staffing decisions:<\/span>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<em>38.9.1.1. Ethnocentric Approach:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Under this parent nation employees fill all key positions in a multinational. While this approach may be common for firms at the early stages of internationalization, there are business reasons for pursuing such an approach:<\/p>\r\n&nbsp;\r\n\r\na.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A perceived lack of qualified host nation employees ,and\r\n\r\n&nbsp;\r\n\r\nb.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The need to maintain good communication, coordination and control links with corporate headquarters.\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">Normally, when a multinational company acquires a firm in any other country it wishes to replace local managers with the parent company nationals to ensure that the culture and values to be uniform in all the units of the MNC throughout the globe. But sometimes, based on the competency of the local people they may be inducted to the company to have the local understanding in terms of managing people and market dynamics.<\/span><\/p>\r\n\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-decoration: underline\">Disadvantages:<\/span>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It limits the promotion opportunities of host country nationals, which may lead to decline productivity and high labour turnover.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The parent company nationals being placed in the host country take lots of time in understanding the local dynamics leading to faculty decisions.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">c.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The salary structure of the parent company nationals, create a feeling which is much better its employees in other countries, discrimination and frustration among the employees from the host country.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><em>38.9.1.2. Polycentric Approach:<\/em><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">This approach is basically taken up while employing host country nationals in the subsidiary of the MNC operating in that country and its basic premise is that parent country nationals will only hold positions in the corporate headquarters. This policy resolves many disadvantages of ethnocentric approach and has the following advantages:<\/p>\r\n&nbsp;\r\n\r\na.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 There would be no language barrier.\r\n\r\nb.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Managing local politics and administration will be very easier.\r\n\r\nc.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This is less expensive than the ethnocentric approach.\r\n\r\n&nbsp;\r\n\r\nIt has few disadvantages:\r\n\r\n&nbsp;\r\n\r\na.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Maintaining understanding between the corporate and the subsidiary management becomes difficult.\r\n\r\nb.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It also becomes difficult to imbibe the original culture of the company.\r\n\r\nc.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This will not provide the opportunity to the host country employees to get exposure and experience outside their own country, which will minimize their growth and development in the organisation beyond their own country.\r\n\r\n&nbsp;\r\n\r\n<em>38.9.1.3 Geocentric Approach:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">This approach subscribes the view of employing the best people in key positions throughout the organisation without the consideration of any nationality. This addresses the disadvantages of both ethnocentric and polycentric approach. It is not necessary that the competent people are available only in the host or parent nations. They may be available in any part of the globe. Moreover, it helps the organisation to develop core competency taking the best talents in the core area.<\/p>\r\n&nbsp;\r\n\r\nDrawbacks:\r\n\r\n&nbsp;\r\n\r\na.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Constraints in terms of the employment policy of the particular country.\r\n\r\nb.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Paper work involved in hiring a foreign national instead of a local nationals.\r\n\r\nc.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Hassles of obtaining work permit for dependents of the employees.\r\n\r\nd.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Expensive in terms of the investment toward training and development of the individual.\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">e.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Benchmarking the salary with the international compensation package, which is definitely more than the salary to be given to the individual in <\/span>home<span style=\"text-align: initial;font-size: 1em\"> country.<\/span>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<em>38.9.1.4. Regiocentric Approach:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">This approach advocates the division of operations of the multinational company on the basis of some geographical regions &amp; allows the transfer of employees within a particular region.<\/p>\r\n&nbsp;\r\n\r\nIts main advantages:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">(a)\u00a0 A major motive for using such an approach is that it allows interaction between executives transferred to regional headquarters from subsidiaries &amp; parent country nationals posted to regional headquarters.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(b)\u00a0 It also reflects some senstivity to local conditions.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(c)\u00a0\u00a0 Another advantage is that such an approach can prove highly effective for a multinational to move from a purely ethnocentric to geocentric approach.<\/p>\r\n&nbsp;\r\n\r\nDisadvantages:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">(a)\u00a0 It can produce \u2018federalism\u2019 at a regional rather than a country basis.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(b)\u00a0\u00a0 While this approach does improve career prospects at the national level, it only moves the barrier to the regional level.<\/p>\r\n&nbsp;\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<img class=\"alignnone size-medium wp-image-85\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/39-300x191.png\" alt=\"\" width=\"300\" height=\"191\" \/>\r\n\r\n<img class=\"alignnone size-medium wp-image-86\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/40-300x86.png\" alt=\"\" width=\"300\" height=\"86\" \/>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Sources:-\u00a0 DA\u00a0 Heenan\u00a0 &amp;\u00a0 Howard\u00a0 v\u00a0 Perlmutter,\u00a0 \u201cMultinational\u00a0 Organisation\u00a0 Development\u201d,\u00a0 (Reading,\u00a0 Mass:\u00a0addision-wesley, 1979) pp.18-19. Ken Kamoche , \u201cThe Integration- differentiation Puzzle: A Resource \u2013capability perspective in international Human Resource Management\u201d, The International Journal of Human Resource Management, Vol.7(I), 1996, pp 230-244.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.9.2. International Selection:-<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">A very crucial function of IHRM, selection of people of the parent company nationals for their home country operations placements is normally a general function carried out by the HR department. The selection of expatriates is even more crucial since it has to follow international recruitment &amp; selection standards.<\/p>\r\n&nbsp;\r\n\r\n<em>38.9.2.1 Expatriate Selection:-<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">This area is extremely complex &amp; receives a lot of attention from the multinationals. Predicting future performance potential when hiring or promoting staff, especially in foreign environment is very difficult at the best of times. In this context, there\u2019s a concept called \u2018expatriate failure\u2019 .This refers to the premature return of an expatriate from an international assignment. This may be due to a selection error or absence of proper training on cultural issues and self-adjustment. There are two major categories of costs associated with expatriate failure-direct cost &amp; indirect cost. Direct cost include airfare &amp; associated relocation expenses, salary &amp; training costs. However, these cost precisely depends on<\/p>\r\n&nbsp;\r\n\r\n(a)\u00a0 Level of position concerned\r\n\r\n&nbsp;\r\n\r\n(b)\u00a0 Country of destination\r\n\r\n&nbsp;\r\n\r\n(c) Exchange rates\r\n\r\n&nbsp;\r\n\r\nIndirect costs are harder to quantify but are often more expensive for the company.\r\n\r\n&nbsp;\r\n\r\n<em>38.9.2.2 Criteria for Selection:-<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">A chance of failure &amp; the risk involved being high, the selection criteria for expatriate is a serious function of IHRM. Utmost care requires to be taken in selecting highly motivated people in terms of strong emotions &amp; high level of competence.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">The various factors that are widely accepted to have a major impact on the probability of success in international assignments are based on the model proposed by Dowling, Welch and Schuler(1999).<\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-87\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/41-300x161.png\" alt=\"\" width=\"300\" height=\"161\" \/>\r\n\r\n&nbsp;\r\n\r\n(i)Technical Ability:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The important parameter to judge any individual for a foreign assignment is the performance. Expatriate\u2019s technical skills&amp; managerial competency need to be judged during selection process meticulously to avoid incompetency at work after the posting. The competency demanded by the job need to be studied carefully, and based on the key competencies, proper matching has to be done.<\/p>\r\n&nbsp;\r\n\r\n(ii) Cross-cultural suitability:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Competency is not the sole criteria for success. An individual is able to perform well only when he gets acclimatized in the new environment, which might be in the opposite pole of the cultural continuum. Cross-culture ability is very important in determining effectiveness of the individual at work in foreign assignment.<\/p>\r\n&nbsp;\r\n\r\n(iii) Family requirements:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">It is an established fact that spouse acceptability &amp; comfortability toward foreign assignment is an important variable in determining the success of the expatriate manager. Worldwide dissatisfaction &amp; lack of adjustment by the spouse has caused failure of expatriate manager.<\/p>\r\n&nbsp;\r\n\r\n(iv) Language:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">It is an effective communication drives. It has been seen that people having competency over the host country language have drawn better mileage than their counterparts having no language knowledge. Especially, People being posted in senior cadre management position in MNC subsidiaries should have the knowledge of the host country language.<\/p>\r\n&nbsp;\r\n\r\n(v) Country\/Cultural requirement:-\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: justify;font-size: 1em\">The culture &amp; employment policies of multinational companies have an influence over the selection &amp; recruitment decisions. The company may have certain policies of recruiting <\/span>certain<span style=\"text-align: justify;font-size: 1em\"> percentage of people from the home country as expatriates according to their corporate philosophy.<\/span>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\nOther situational factors influencing selection criteria:\r\n\r\n&nbsp;\r\n\r\n1.\u00a0 Negotiated agreement by the local partner may create some constraints to depute expatriates.\r\n\r\n&nbsp;\r\n\r\n2.\u00a0 Duration of the assignment will determine the selection decision.\r\n\r\n&nbsp;\r\n\r\n3.\u00a0 Amount of knowledge transfer inherent in the expatriate\u2019s job in the foreign operation.\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.9.3 International Performance Management:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">One of the most challenging aspects for a firm operating is an international environment is managing the performance of its various international facilities. Monitoring performance &amp; ensuring conformance to agreed standards are important elements of IHRM.<\/p>\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-88\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/42-300x172.png\" alt=\"\" width=\"300\" height=\"172\" \/>\r\n\r\n&nbsp;\r\n\r\nVarious constraints that may affect goal attainment are:-\r\n\r\n&nbsp;\r\n\r\n<em>38.9.3.1 Whole as against part:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">A multinational company operates in different countries through its subsidiaries which function in a multicultural environment. As a result, the integration &amp; control imperatives often place it in a position where it may decide that good of the whole is more important than one subsidiary\u2019s short term profits.<\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n<em>38.9.3.2 Volatility of international environment:-<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Global market is mostly dynamic &amp; unpredictable in nature. Hence, the long term goal fixation &amp; persuasion need to be emphasized rather than having extra ordinary importance on short term ups &amp; down.<\/p>\r\n&nbsp;\r\n\r\n<em>38.9.3.3 Variable levels of maturity:<\/em>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Without the supporting infrastructure of the parent organisation, market development in foreign subsidiaries is generally slower &amp; more difficult to achieve than at home. This is because at home, there are established brands that support new products &amp; therefore, new businesses can be cross subsidized by other division.<\/p>\r\n&nbsp;\r\n\r\n<em>Factors associated with individual performance and appraisal in an international context:<\/em>\r\n\r\n&nbsp;\r\n\r\n1. Compensation package:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Perceived financial benefits along with career progression potential associated with international assignment are often important motivating factors which drive the employee to accept international assignments.<\/p>\r\n&nbsp;\r\n\r\n2. Task (assignment variables &amp; the role of the expatriate):\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Four main expatriate task roles have been identified in the literature on IHRM against the following positions:<\/p>\r\n&nbsp;\r\n\r\n(i)\u00a0 Chief executive officer (CEO) overseas the entire foreign subsidiary operation.\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">(ii)\u00a0\u00a0 Structure reproducer carried out the assignment of replicating the structure similar to the one in the parent country in the foreign subsidiary.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(iii)\u00a0\u00a0 Troubleshooter is normally sent by the parent company to a foreign subsidiary to analyse &amp; solve a particular operational problem.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(iv)\u00a0 operative performs functional job tasks in an existing operational structure &amp; usually at lower level of the organisational hierarchy.<\/p>\r\n&nbsp;\r\n\r\n3. Headquarter\u2019s support:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">International assignments are different from domestic ones in many respects. One of them is due to the fact that the former involves relocation of the employee along with his\/her family into a totally foreign environment.<\/p>\r\n&nbsp;\r\n\r\n4. The environment in which performance occurs:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The international context with its differing legal, economic, societal, technical &amp; political demands are a major determinant of expatriate performance.<\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n5. Cultural Adjustment:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">The process by which an expatriate adjusts to the culture of the foreign country is extremely important. The longer it takes for expatriate &amp; his\/her family to adjust to the new environment, the most costly it is to the organisation as it affects their performance.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Every individual goes through a cultural adjustment cycle as shown in figure 38.4 while on an international assignment.<\/p>\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-89\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/43-300x214.png\" alt=\"\" width=\"300\" height=\"214\" \/>\r\n\r\n&nbsp;\r\n<p style=\"text-align: center\">Source: H. De Cieri, P.J. Dowling and K.F.Taylor, 1991, The psychological Important of Expatriates Relocation on Partners, International Journal of Human Resource Management, 2(3), 380.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Phase 1: Just getting the offer throws stimulating emotions associated with pleasant excitements, anxiety, sense of adventure &amp; range of positive &amp; negative emotions.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Phase 2: The moment the initial excitement is over, the person encounters reality which gets translated to homesickness leading to possible negative appraisals of the situation &amp; a period of crisis.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Phase 3: Slowly, the present work demands help the expatriate to gain motivation, who gets adapted to the new environment &amp; begins to adjust.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Phase 4: As the person gets adjusted to the new environment, his performance improves &amp; he is in a state of healthy recovery.<\/p>\r\n&nbsp;\r\n\r\n<strong><em>38.9.4 International Compensation Management:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">When a firm develops international compensation policies, it tries to fulfill some broad objectives:<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(i)\u00a0 The compensation policy should be in line with the structure, business needs &amp; overall strategy of the organisation.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(ii)\u00a0 The policy should aim at attracting &amp; retaining the best talent.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">(iii)\u00a0 It should enhance employee satisfaction.<\/span><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">(iv)\u00a0 It should be clear in terms of understanding <\/span>of<span style=\"font-size: 1em\"> the employee &amp; also convenient to administer.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n<p style=\"text-align: justify\">The employee also has a number of objectives that he wishes to achieve from the compensation policy of the firm:<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(i)\u00a0 He expects proper compensation against his competency &amp; performance level.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(ii)\u00a0 He expects substantial financial gain for his own comfort &amp; for his family also.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(iii)\u00a0\u00a0 He expects his present &amp; future needs to be taken care of including children\u2019s education, medical protection &amp; housing facilities.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">(iv)\u00a0 The policy should be progressive in nature.<\/p>\r\n<p style=\"text-align: justify\">Major components of an international compensation package are:<\/p>\r\n<p style=\"text-align: justify\">(i) Base salary:<\/p>\r\n<p style=\"text-align: justify\">This term has a slightly different meaning in an international context than in a domestic one. In the latter case, it denotes the amount of cash compensation that serves as a benchmark for other compensation elements like bonus, social benefits.<\/p>\r\n<p style=\"text-align: justify\">(ii) Foreign service inducement premium:<\/p>\r\n<p style=\"text-align: justify\">This is a component of the total compensation package given to employees to encourage them to take up foreign assignments. This is with the aim to compensate them for the possible hardships they may face while being overseas.<\/p>\r\n<p style=\"text-align: justify\">(iii) Allowances:<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">One of the most common kinds of allowances internationally is the cost of living allowance (COLA). It is typically involves a payment to compensate for the difference in the cost of living between the two countries resulting in an eventual difference in the expenditure made.<\/p>\r\n&nbsp;\r\n\r\n<span style=\"text-decoration: underline\">Approaches to International Compensation:<\/span>\r\n\r\n&nbsp;\r\n\r\nThere are two main options in the area of international compensation:\r\n\r\n&nbsp;\r\n\r\n(i) Market rate approach:\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Under this, the base salary is linked to the structure in the host country. The multinational obtains information from local compensation surveys &amp; decides whether local employees, expatriates of different nationalities will be the points of reference for benchmarking of the compensation.<\/p>\r\n&nbsp;\r\n\r\nAdvantages:-\r\n\r\n&nbsp;\r\n\r\n(i) It is a simple approach to follow.\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">(ii)\u00a0 Identification with the host country is possible.<\/span>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">(iii)\u00a0 Equality with local nationals.<\/span>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">(iv)\u00a0 Equality amongst people of different countries. <\/span>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">Disadvantages:-<\/span>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">(i)\u00a0 There is a possibility of variation in the compensations offered to expatriates from the same country in different countries.<\/span><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">(ii)\u00a0 It can pose <\/span>problem<span style=\"text-align: initial;font-size: 1em\"> when the expatriate is repatriated back to his country where the salary structure is lower than that in the host nation.<\/span><\/p>\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">(iii)\u00a0 There is also a danger of variation between assignment for <\/span>same<span style=\"text-align: initial;font-size: 1em\"> employee.<\/span>\r\n\r\n&nbsp;\r\n\r\n<span style=\"text-align: initial;font-size: 1em\">(ii) Balance Sheet approach:<\/span>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">This approach tries to maintain relativity to parent country employee colleagues &amp; compensating for the costs of an international assignment. The key assumption of this is that employees going for foreign assignments should not suffer any kind of tangible loss due to working in a new environment.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\nUnder this approach, 4 main categories of expenditure incurred by expatriates are covered:\r\n\r\n&nbsp;\r\n\r\n(a)\u00a0 Goods &amp; Services \u2013 home country outlays for food, personal care, clothing, household furnishing etc.\r\n\r\n&nbsp;\r\n\r\n(b)\u00a0 Housing \u2013 cost associated with housing in the host country.\r\n\r\n&nbsp;\r\n\r\n(c)\u00a0 Income tax \u2013 host country &amp; parent country taxes.\r\n\r\n&nbsp;\r\n\r\n(d)\u00a0 Resources \u2013 contributions to savings, payments for benefits, pension contribution etc.\r\n\r\n&nbsp;\r\n\r\nAdvantages:\r\n\r\n&nbsp;\r\n\r\n1.\u00a0 Equity between foreign assignment &amp; expatriates of the same.\r\n\r\n&nbsp;\r\n\r\n2.\u00a0 Repatriation of expatriates.\r\n\r\n&nbsp;\r\n\r\nDisadvantages:\r\n\r\n&nbsp;\r\n\r\n1.\u00a0 Complicated to administer &amp; involves high cost.\r\n\r\n&nbsp;\r\n\r\n2.\u00a0 Result in huge disparities between expatriates of different nationalities.\r\n\r\n&nbsp;\r\n\r\n<strong><em>38.9.5 Repatriation:<\/em><\/strong>\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">Though the people face difficulty in acclimatizing &amp; developing adjustment with the new culture of the new country, still they do not feel comfortable in quitting job &amp; going back to the home country by\u00a0<span style=\"font-size: 1em\">accepting the failures. This happening creates more psychological frustration than continuing in the new environment. This phase in always treated as the final stage of <\/span>expatriation<span style=\"font-size: 1em\"> process.<\/span><\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n<p style=\"text-align: justify\">The repatriation process (figure 38.5) is divided into four related phase (Welch, Adans, Batchley &amp; Howard, 1992):<\/p>\r\n&nbsp;\r\n\r\n(i) Preparation:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">It involves developing plans for the future &amp; gathering information about the new position. The organisation may provide a checklist to the employee for all the steps to be followed before his return to his home country.<\/p>\r\n&nbsp;\r\n\r\n(ii) Physical relocation:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">This stage involves shifting the personal belongings, travelling to the next posting which usually is to the home country.<\/p>\r\n&nbsp;\r\n\r\n(iii) Transition:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">In this stage, the person starts the process of setting down in the new setting. This involves settlement of new house, education of the children, social adjustment with the new friends &amp; colleagues.<\/p>\r\n&nbsp;\r\n\r\n(iv) Readjustment:-\r\n\r\n&nbsp;\r\n<p style=\"text-align: justify\">It Involves coping with the reverse culture shock &amp; career depends. This phase is very critical for the repatriates in terms of adjusting to the new environment.<\/p>\r\n\r\n<\/div>\r\n<div style=\"text-align: justify\">\r\n\r\n&nbsp;\r\n\r\n<img class=\"alignnone size-medium wp-image-90\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/44-290x300.png\" alt=\"\" width=\"290\" height=\"300\" \/>\r\n\r\n&nbsp;\r\n\r\nFig 38.5 Repatriation Process\r\n\r\n<\/div>\r\n<p style=\"text-align: justify\">Source: D. Welch, T.Adams, B.Betchley &amp; M.Howard, 1992, \u201cThe view from the outer side: The handling of repatriation &amp; other expatriation activities by the Royal Australian Airforce, Proceeding of the Academy of International Business Southeast Asia Conference, June, Brisbane.<\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\"><strong>Summary:<\/strong><\/p>\r\n&nbsp;\r\n<p style=\"text-align: justify\">Globalisation is the process of extending business activities to foreign countries. It has significant implications for employment, HRD, compensation, labour relations etc. The model of international HRM comprises of three variables \u2013 HR activities, country of operation and type of employees. Thus, there are four approaches to international recruitment \u2013 ethnocentric, polycentric, geocentric and regiocentric.<\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td><strong>you can view video on International Human Resource Management<\/strong><\/td>\r\n<td><a href=\"https:\/\/youtu.be\/9YY4UYrflqg\" target=\"_blank\" rel=\"noopener\"><img class=\"alignnone wp-image-120\" src=\"http:\/\/epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/2018\/11\/download.png\" alt=\"\" width=\"36\" height=\"36\" \/><\/a><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>","rendered":"<div><span style=\"float: right\"><a href=\"https:\/\/youtu.be\/9YY4UYrflqg\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" src=\"http:\/\/epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/2018\/11\/download.png\" alt=\"epgp books\" width=\"75px\" height=\"75px;\" \/><\/a><br \/>\n<\/span><\/div>\n<div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Learning Outcomes: The aim is to familiarize the tools and methods of Human Resource Management in an International environment.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Understanding the relationship between (international) strategic objectives, organizational performance and human behaviour should enable students to better motivate and understand International Human Resource Management (IHRM) phenomena\u2019s and to diagnose and analyze complex behaviour in a different cultural setting.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Objectives are for:<\/p>\n<ul>\n<li style=\"text-align: justify\">Being able to understand HR challenges in international management.<\/li>\n<li style=\"text-align: justify\">Know how the HRM function can contribute to the firm\u2019s international strategy.<\/li>\n<li style=\"text-align: justify\">Have an understanding how to appraise and evaluate in an international environment.<\/li>\n<li style=\"text-align: justify\">Know how to prepare, train and develop employees for international posts.<\/li>\n<li style=\"text-align: justify\">Identify the main trends regarding international compensation for executives.<\/li>\n<li style=\"text-align: justify\">Understand major ethical and SCR in international business.<\/li>\n<\/ul>\n<\/div>\n<div style=\"text-align: justify\">\n<p><strong>\u00a0 \u00a0 38.1. Introduction:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">When human resource management assumes a global perspective, it becomes international human resource management. Several factors like new technologies and new markets are driving changes in the various spects of an organisation. But the advent of globalization in recent decades has provided a decisive momentum to international human resource management as an increasing number of companies are realizing that their future success and growth depend on their ability to internationalize their operations.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-72\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/30-300x120.png\" alt=\"\" width=\"300\" height=\"120\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30-300x120.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30-768x308.png 768w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30-65x26.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30-225x90.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30-350x140.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/30.png 992w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">In the global village, organisations have crossed the boundary of the country in terms of their business operations. The liberalization process in India, has thrown enormous opportunities for foreign companies to come to India and Indian companies to expand the market beyond the country. Infact, many Indian multinationals are performing extraordinarily well outside the country.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Globalisation of business has probably touched the HR manager more severely than any other functional head. The HR executive needs to give international orientation to whatever he or she does employee hiring, training and development, performance review, remuneration, motivation, welfare or industrial relations. International orientation assumes greater relevance as businesses get increasingly interlinked across nations.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Just as the success of a domestic business depends on its human resource, so is the case with an international business. The type of people, the willingness with which they work and the commitment they exhibit towards the organisation determine the competitive edge of an MNC in the international market. The international firm may have the best of resources at its headquarters. The resources cannot be effectively utilized or transferred to foreign affiliates without using the human power.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><strong>38.2 Meaning and Definition:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">International Human Resource Management (IHRM) is defined as the interplay between the three important dimensions of human resource management \u2013 types of employees, human resource activities and the country of operation. It is the complexities of operating in different countries and employing different national categories of workers, which essentially differentiates domestic and international HRM.<\/p>\n<p style=\"text-align: justify\">An international business must procure, motivate, retain and effectively utilize services of people both at the corporate office and at the foreign plants. The process of procuring, allocation and effectively utilizing human resource in an international business is called international human resource management (IHRM).<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-74\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/31-300x224.png\" alt=\"\" width=\"300\" height=\"224\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/31-300x224.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/31-65x49.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/31-225x168.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/31-350x261.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/31.png 656w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">International Human Resource Management (IHRM) is the process of acquiring, developing, allocating and utilizing human resources in a global corporation to achieve organizational objectives irrespective of geographical boundaries. In global firms, human resource managers must achieve two somewhat conflicting strategic objectives i.e.,<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">i. They must integrate human resource policies and practices across a number of subsidiaries in different countries so that overall corporate objectives can be achieved.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">ii. The approach to HRM must be sufficiently flexible to take care of significant differences in business conditions and culture.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong><em>38.2.1. Definition:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">According to P.V. Morgan, \u201cInternational Human Resource Management (IHRM) is the interplay among three dimensions \u2013 human resource activities, types of employees and countries of operations.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">According to Nancy Wong, \u201cInternational human resource management involves carrying out, on a worldwide basis, activities like candidate recruitment and selection, assignment terms and documentation, relocation processing and vendor management, immigration processing, cultural and language orientation and training, compensation administration and payroll processing, tax administration, career planning and development and handling of spouse and dependent matters.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">According to Micheal Armstrong, \u201cInternational human resource management is the process of employing and developing people in international organisations which operate globally. It means working across national boundaries to formulate and implement resourcing, development, career management and remuneration strategies, policies and practices applicable to international workforce.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p><strong>38.3. Features of International Human Resource Management (IHRM):<\/strong><\/p>\n<ol>\n<li style=\"text-align: justify\">IHRM involves employment of the right people at the right positions, irrespective of geographical locations.<\/li>\n<\/ol>\n<p style=\"text-align: justify\">\u00a0 \u00a02. It requires the development of a long \u2013 term HR plan to make sure of an effective alignment of the HR strategies with the corporate objectives.<\/p>\n<p style=\"text-align: justify\">3. It requires the development of a diversified range of skills for employees, especially for those who need to work beyond national boundaries.<\/p>\n<p style=\"text-align: justify\">4. It necessitates the determination of compensation for host -, home \u2013 and third \u2013 country nationals on the basis of country \u2013 specific factors.<\/p>\n<\/div>\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-75\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/32-300x208.png\" alt=\"\" width=\"300\" height=\"208\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/32-300x208.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/32-65x45.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/32-225x156.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/32-350x242.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/32.png 537w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<div style=\"text-align: justify\">\n<p style=\"text-align: justify\">\u00a0 \u00a0 5.\u00a0It\u00a0 requiresthecreationofcentralizedreportingrelationshipsaroundtheworldfor\u00a0 faster<\/p>\n<p style=\"text-align: justify\">information sharing. <a href=\"http:\/\/www.civilserviceindia.com\/subject\/Management\/notes\/international-human-resource-management.html\">www.civilserviceindia.com\/subject\/Management\/notes\/international-human-resource-management.html<\/a><\/p>\n<p style=\"text-align: justify\">6. It requires the introduction of formal and informal methods to integrate the different parts of the global business effectively.<\/p>\n<p style=\"text-align: justify\">7. It requires the development of a well \u2013 organized evaluation system to assess the performance of employees across different locations and nations<\/p>\n<p style=\"text-align: justify\">8. It is necessary to understand the cultural dimensions of host nations that influence the HR operations.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"font-size: 1em;text-align: initial\">9. It is essential to maintain good communication among all the parts and people of the <\/span>organisation<span style=\"font-size: 1em;text-align: initial\"> at the global level.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">10. The perceived value of the HR activities generally varies across the different locations of international companies.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p><strong>38.4. Reasons for the growth of International Human Resource Management (IHRM):<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>Factors that have contributed to the growth of International Human Resource Management (IHRM) are:<\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li>The advent of globalization has increased the growth of multinational companies and international business operations, which has contributed to the global mobility of human resources.<\/li>\n<li>A growing shortage of human resources with international exposure and experience affects the companies\u2019 global preparedness in human resource management. This has forced the international companies to assign a larger role for global human resource management activities in their organisation.<\/li>\n<li>In\u00a0 a\u00a0 significant\u00a0 number\u00a0 of\u00a0 cases,\u00a0 the\u00a0 successes\u00a0 of international operations of companies are determined by the performance of the expatriates and other employees working in a foreign country. This has made the organisations<span style=\"text-align: initial;font-size: 1em\"> attach a greater significance to IHRM activities.<\/span><\/li>\n<li>Since the failure of international operations often proves costly to the organisation, companies take additional precautionary measures in training and compensating human resources. This necessitates the establishment of a full \u2013 fledged international HR department.<\/li>\n<li>Differences in the people, process, tax computation, organizational structure and culture of different nations force the companies to undertake several complex HR activities like tax planning, orientation, training and compensation fixation.<\/li>\n<\/ol>\n<\/div>\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-76\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/33-300x293.png\" alt=\"\" width=\"300\" height=\"293\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/33-300x293.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/33-65x63.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/33-225x220.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/33-350x342.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/33.png 455w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong>38.5. Need \/ Characteristics of International Human Resource Management (IHRM):<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">These are the various factors which represents the need\/characteristics along with the factors which differentiate between domestic human resource management and international human resource management:<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-77\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/34-300x278.png\" alt=\"\" width=\"300\" height=\"278\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/34-300x278.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/34-65x60.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/34-225x209.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/34-350x325.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/34.png 431w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p><strong style=\"text-align: initial;font-size: 1em\"><em>38.5.1. The need for a broader perspective:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">HR managers working in a domestic environment generally function in a single government scenario managing the employees of only the host country. In <\/span>multinational<span style=\"text-align: initial;font-size: 1em\"> platform, the HR managers have to take a broader view of different international issues, such as\u00a0<\/span><span style=\"text-align: initial;font-size: 1em\">expatriates\u2019 benefits and <\/span>cross \u2013 cultural<span style=\"text-align: initial;font-size: 1em\"> work dynamics in managing people.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><strong style=\"font-size: 1em;text-align: initial\"><em>38.5.2. More involvement in employee\u2019s personal lives:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: justify;font-size: 1em\">High degree of personal involvement in the employees\u2019 personal lives is necessary for the selection, training, placement and effective management of both Parent Country Nationals (PCNs) and Third Country Nationals (TCNs) employees. The role of the HR department is to make the expatriate employees understand their housing, <\/span>health care<span style=\"text-align: justify;font-size: 1em\">, work culture, compensation <\/span>and<span style=\"text-align: justify;font-size: 1em\"> all other matters so that they feel comfortable at the new places.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong><em>38.5.3. Emphasis changes as the workplace mix of expatriates and locals varies:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">As international operations of companies gain experience, the emphasis put on the various human resource activities changes.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.5.4. Risk Exposure:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The consequences of failure in international operations are more severe than the domestic business. The failure of an expatriate in terms of performance or his premature return from the assignment costs the company heavily and has tremendous impact over the market share and international customer relationship.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.5.5. More external influences:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The influence of the external factors, such as different types of governments, state of economy and business policies and practices of various host countries are quite high, and therefore, pose a great challenge for HR professionals to manage. Depending on the attitude of the government towards international firms in their country; the HR policies of the MNC changed.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><strong style=\"text-align: initial;font-size: 1em\">38.6.<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Complexities<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">\/\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">Challenges<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">of\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">International<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Human<\/strong><span style=\"text-align: initial;font-size: 1em\">\u00a0<\/span><strong style=\"text-align: initial;font-size: 1em\">Resource\u00a0<\/strong><strong style=\"text-align: initial;font-size: 1em\">Management (IHRM):<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><strong style=\"text-align: initial;font-size: 1em\"><em>38.6.1. Need for Broader Perspective:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">In the international business, the HR managers require a broader view of various international issues such as expatriated benefits, cross culture work dynamics in managing people, etc.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong><em>38.6.2. Ethical and Corporate Social Responsibility:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">Ethics and corporate social\u00a0 responsibility in\u00a0<\/span><span style=\"text-align: initial;font-size: 1em\">the international business environment <\/span>are<span style=\"text-align: initial;font-size: 1em\"> always debatable. MNCs have been accused of being indifferent to the problems of host countries as they are more concerned about the profitability of their companies. MNCs have to balance the ethics and <\/span>moral<span style=\"text-align: initial;font-size: 1em\"> of their country and <\/span>host<span style=\"text-align: initial;font-size: 1em\"> country. It includes:<\/span><\/p>\n<\/div>\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-80\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/35-300x156.png\" alt=\"\" width=\"300\" height=\"156\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/35-300x156.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/35-65x34.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/35-225x117.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/35-350x182.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/35.png 644w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><em>38.6.2.1. Ethical Relativist:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">They believe that there is no right or wrong. What is right in a particular situation in one place may not be so in another. Relativism offers flexibility but may prove to be disastrous in the long run for an MNC.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.6.2.2. Ethical Absolutist:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">An MNC which believes in this approach is strongly influenced by the practices and policies of its home country. They do not give much importance to the culture and values of the host country. Ethical absolutists have been criticized for their arrogance and for showing little respect to the traditions and cultures of the host countries.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.6.2.3. Ethical Universalist:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">An Ethical Universalist believes that there are fundamental rules which help us differentiate between right and wrong. These rules need to be adhered to in any country and in any situation. An ethical universalist believes that cultural variations between countries should not lead to any wrongdoing on the part of the MNCs. There is a distinction between practices which are culturally different and ones which is morally wrong.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.6.3. Bribery:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">According to survey conducted by J. Macken, developed countries give around $85 billion to underdeveloped countries in form of bribes. MNCs from developed countires have been accused of bribing government officials. Hence, countries should frame laws to prevent corruption.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.6.4. Code of conduct for international business:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The first step in framing code of conduct for international business players came in the form of the \u201cCaux Roundtable Conference\u201d on \u201cPrinciples for Business Conduct\u201d held in 1994. It was a conference on international business ethics, held at Caux, Switzerland and was attended by the business leaders from all countries. The focus was to formulate a set of rules and ethical codes which would be used for benchmarking global business practices. The main aim of Caux conference as given in the charter is, \u201cto further the twin value of living and working together and human dignity by promoting free trade, environmental and cultural integrity and prevention by bribery and corruption.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>38.7. Stages of International Human Resource Management (IHRM):<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">From an organizational viewpoint, the international human resource development and usage process generally goes through four stages viz,<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.7.1 Transfer:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The 1st stage involves the transfer of an executive or executives from the home country to fill key positions in a foreign operations.<\/p>\n<\/div>\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-81\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/36-300x251.png\" alt=\"\" width=\"300\" height=\"251\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/36-300x251.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/36-65x54.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/36-225x188.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/36-350x293.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/36.png 549w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong><em>38.7.2. Mixed Resources:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">In this 2nd Stage, sometimes due to pressures from foreign government (or because foreign nationals have been suitably trained for the work), most foreign operation jobs are held by local personnel.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.7.3. Unitary Resources:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">At this stage, in the evolution process, the entire operation is staffed by foreign nationals including the top management positions. In other situations, the organisations\u2019 operations may have matured to the point at which foreign nationals at all levels have been trained to handle all jobs effectively.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.7.4. Interchange:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">In this final stage, there is the recognition that a manager\u2019s skill and competence rather than his or her passport should be the basis of advancement, privileges <\/span>and<span style=\"text-align: initial;font-size: 1em\"> rewards. In other words, there is not only the opportunity for home country managers to obtain international assignments, but foreign managers within the <\/span>organisation<span style=\"text-align: initial;font-size: 1em\"> are given assignments at the home office.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong>38.8. Model of International Human Resource Management (IHRM):<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Morgan has presented a model to highlighted the broad function of international human resource management. This model consists of the following 3 dimensions:<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.8.1. Human Resource Activity: <\/em><\/strong>procurement, allocation and utilization.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><strong><em>38.8.2. Country of Operation: <\/em><\/strong>the host country where a subsidiary may be located, the home country in which the firm\u2019s headquarters are located and a third country which may be the source of labour, finance etc.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><strong><em>38.8.3. Types of employees of an international firm: <\/em><\/strong>host country nationals, parent country nationals and third country nationals.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Thus, international human resource management is the interplay between three dimensions namely human resource activities, the country of operation and the types of employees. International human resource management differs from domestic HRM due to the complexities of operating in different countries and employing workers belonging to different nations.<\/p>\n<\/div>\n<p style=\"text-align: justify\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-82\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/37-300x190.png\" alt=\"\" width=\"300\" height=\"190\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/37-300x190.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/37-65x41.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/37-225x143.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/37-350x222.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/37.png 643w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<div style=\"text-align: justify\">\n<p style=\"text-align: center\">Sources: P.V. Morgan, 1986, \u201cInternational Human Resource Management: Fact or Fiction\u201d, Personnel Administrator, 31 (9), Page no. 44.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>38.9. Functions of International Human Resource Management (IHRM)<\/strong><\/p>\n<\/div>\n<ul>\n<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Recruitment and Selection<\/span><\/li>\n<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\"> Performance<\/span><span style=\"text-align: initial;font-size: 1em\"> Management <\/span><\/li>\n<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Compensation<\/span><\/li>\n<li style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">Repatriation<\/span><\/li>\n<\/ul>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><strong><em>38.9.1. International Recruitment:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p>The response of an international firm to an international recruitment and selection depends on:<\/p>\n<p>&nbsp;<\/p>\n<p>i.\u00a0 \u00a0Its general staffing policy on key positions in headquarters and subsidiaries.<\/p>\n<p>ii.\u00a0 Its ability to attract the right candidate, and<\/p>\n<p>iii. The constraints placed by the host government on hiring policies.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-83\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/38-300x213.png\" alt=\"\" width=\"300\" height=\"213\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/38-300x213.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/38-65x46.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/38-225x160.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/38-350x248.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/38.png 547w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">Thus, there are 4 major approaches to multinational staffing decisions:<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><em>38.9.1.1. Ethnocentric Approach:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Under this parent nation employees fill all key positions in a multinational. While this approach may be common for firms at the early stages of internationalization, there are business reasons for pursuing such an approach:<\/p>\n<p>&nbsp;<\/p>\n<p>a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 A perceived lack of qualified host nation employees ,and<\/p>\n<p>&nbsp;<\/p>\n<p>b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The need to maintain good communication, coordination and control links with corporate headquarters.<\/p>\n<\/div>\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">Normally, when a multinational company acquires a firm in any other country it wishes to replace local managers with the parent company nationals to ensure that the culture and values to be uniform in all the units of the MNC throughout the globe. But sometimes, based on the competency of the local people they may be inducted to the company to have the local understanding in terms of managing people and market dynamics.<\/span><\/p>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\">Disadvantages:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It limits the promotion opportunities of host country nationals, which may lead to decline productivity and high labour turnover.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The parent company nationals being placed in the host country take lots of time in understanding the local dynamics leading to faculty decisions.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">c.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The salary structure of the parent company nationals, create a feeling which is much better its employees in other countries, discrimination and frustration among the employees from the host country.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><em>38.9.1.2. Polycentric Approach:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">This approach is basically taken up while employing host country nationals in the subsidiary of the MNC operating in that country and its basic premise is that parent country nationals will only hold positions in the corporate headquarters. This policy resolves many disadvantages of ethnocentric approach and has the following advantages:<\/p>\n<p>&nbsp;<\/p>\n<p>a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 There would be no language barrier.<\/p>\n<p>b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Managing local politics and administration will be very easier.<\/p>\n<p>c.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This is less expensive than the ethnocentric approach.<\/p>\n<p>&nbsp;<\/p>\n<p>It has few disadvantages:<\/p>\n<p>&nbsp;<\/p>\n<p>a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Maintaining understanding between the corporate and the subsidiary management becomes difficult.<\/p>\n<p>b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 It also becomes difficult to imbibe the original culture of the company.<\/p>\n<p>c.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This will not provide the opportunity to the host country employees to get exposure and experience outside their own country, which will minimize their growth and development in the organisation beyond their own country.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.9.1.3 Geocentric Approach:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">This approach subscribes the view of employing the best people in key positions throughout the organisation without the consideration of any nationality. This addresses the disadvantages of both ethnocentric and polycentric approach. It is not necessary that the competent people are available only in the host or parent nations. They may be available in any part of the globe. Moreover, it helps the organisation to develop core competency taking the best talents in the core area.<\/p>\n<p>&nbsp;<\/p>\n<p>Drawbacks:<\/p>\n<p>&nbsp;<\/p>\n<p>a.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Constraints in terms of the employment policy of the particular country.<\/p>\n<p>b.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Paper work involved in hiring a foreign national instead of a local nationals.<\/p>\n<p>c.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Hassles of obtaining work permit for dependents of the employees.<\/p>\n<p>d.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Expensive in terms of the investment toward training and development of the individual.<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">e.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Benchmarking the salary with the international compensation package, which is definitely more than the salary to be given to the individual in <\/span>home<span style=\"text-align: initial;font-size: 1em\"> country.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><em>38.9.1.4. Regiocentric Approach:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">This approach advocates the division of operations of the multinational company on the basis of some geographical regions &amp; allows the transfer of employees within a particular region.<\/p>\n<p>&nbsp;<\/p>\n<p>Its main advantages:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(a)\u00a0 A major motive for using such an approach is that it allows interaction between executives transferred to regional headquarters from subsidiaries &amp; parent country nationals posted to regional headquarters.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(b)\u00a0 It also reflects some senstivity to local conditions.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(c)\u00a0\u00a0 Another advantage is that such an approach can prove highly effective for a multinational to move from a purely ethnocentric to geocentric approach.<\/p>\n<p>&nbsp;<\/p>\n<p>Disadvantages:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(a)\u00a0 It can produce \u2018federalism\u2019 at a regional rather than a country basis.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(b)\u00a0\u00a0 While this approach does improve career prospects at the national level, it only moves the barrier to the regional level.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-85\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/39-300x191.png\" alt=\"\" width=\"300\" height=\"191\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39-300x191.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39-768x489.png 768w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39-65x41.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39-225x143.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39-350x223.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/39.png 776w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-86\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/40-300x86.png\" alt=\"\" width=\"300\" height=\"86\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40-300x86.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40-768x220.png 768w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40-65x19.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40-225x64.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40-350x100.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/40.png 782w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Sources:-\u00a0 DA\u00a0 Heenan\u00a0 &amp;\u00a0 Howard\u00a0 v\u00a0 Perlmutter,\u00a0 \u201cMultinational\u00a0 Organisation\u00a0 Development\u201d,\u00a0 (Reading,\u00a0 Mass:\u00a0addision-wesley, 1979) pp.18-19. Ken Kamoche , \u201cThe Integration- differentiation Puzzle: A Resource \u2013capability perspective in international Human Resource Management\u201d, The International Journal of Human Resource Management, Vol.7(I), 1996, pp 230-244.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.9.2. International Selection:-<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">A very crucial function of IHRM, selection of people of the parent company nationals for their home country operations placements is normally a general function carried out by the HR department. The selection of expatriates is even more crucial since it has to follow international recruitment &amp; selection standards.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.9.2.1 Expatriate Selection:-<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">This area is extremely complex &amp; receives a lot of attention from the multinationals. Predicting future performance potential when hiring or promoting staff, especially in foreign environment is very difficult at the best of times. In this context, there\u2019s a concept called \u2018expatriate failure\u2019 .This refers to the premature return of an expatriate from an international assignment. This may be due to a selection error or absence of proper training on cultural issues and self-adjustment. There are two major categories of costs associated with expatriate failure-direct cost &amp; indirect cost. Direct cost include airfare &amp; associated relocation expenses, salary &amp; training costs. However, these cost precisely depends on<\/p>\n<p>&nbsp;<\/p>\n<p>(a)\u00a0 Level of position concerned<\/p>\n<p>&nbsp;<\/p>\n<p>(b)\u00a0 Country of destination<\/p>\n<p>&nbsp;<\/p>\n<p>(c) Exchange rates<\/p>\n<p>&nbsp;<\/p>\n<p>Indirect costs are harder to quantify but are often more expensive for the company.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.9.2.2 Criteria for Selection:-<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">A chance of failure &amp; the risk involved being high, the selection criteria for expatriate is a serious function of IHRM. Utmost care requires to be taken in selecting highly motivated people in terms of strong emotions &amp; high level of competence.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The various factors that are widely accepted to have a major impact on the probability of success in international assignments are based on the model proposed by Dowling, Welch and Schuler(1999).<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-87\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/41-300x161.png\" alt=\"\" width=\"300\" height=\"161\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/41-300x161.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/41-65x35.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/41-225x121.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/41-350x188.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/41.png 693w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>(i)Technical Ability:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The important parameter to judge any individual for a foreign assignment is the performance. Expatriate\u2019s technical skills&amp; managerial competency need to be judged during selection process meticulously to avoid incompetency at work after the posting. The competency demanded by the job need to be studied carefully, and based on the key competencies, proper matching has to be done.<\/p>\n<p>&nbsp;<\/p>\n<p>(ii) Cross-cultural suitability:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Competency is not the sole criteria for success. An individual is able to perform well only when he gets acclimatized in the new environment, which might be in the opposite pole of the cultural continuum. Cross-culture ability is very important in determining effectiveness of the individual at work in foreign assignment.<\/p>\n<p>&nbsp;<\/p>\n<p>(iii) Family requirements:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">It is an established fact that spouse acceptability &amp; comfortability toward foreign assignment is an important variable in determining the success of the expatriate manager. Worldwide dissatisfaction &amp; lack of adjustment by the spouse has caused failure of expatriate manager.<\/p>\n<p>&nbsp;<\/p>\n<p>(iv) Language:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">It is an effective communication drives. It has been seen that people having competency over the host country language have drawn better mileage than their counterparts having no language knowledge. Especially, People being posted in senior cadre management position in MNC subsidiaries should have the knowledge of the host country language.<\/p>\n<p>&nbsp;<\/p>\n<p>(v) Country\/Cultural requirement:-<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: justify;font-size: 1em\">The culture &amp; employment policies of multinational companies have an influence over the selection &amp; recruitment decisions. The company may have certain policies of recruiting <\/span>certain<span style=\"text-align: justify;font-size: 1em\"> percentage of people from the home country as expatriates according to their corporate philosophy.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p>Other situational factors influencing selection criteria:<\/p>\n<p>&nbsp;<\/p>\n<p>1.\u00a0 Negotiated agreement by the local partner may create some constraints to depute expatriates.<\/p>\n<p>&nbsp;<\/p>\n<p>2.\u00a0 Duration of the assignment will determine the selection decision.<\/p>\n<p>&nbsp;<\/p>\n<p>3.\u00a0 Amount of knowledge transfer inherent in the expatriate\u2019s job in the foreign operation.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.9.3 International Performance Management:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">One of the most challenging aspects for a firm operating is an international environment is managing the performance of its various international facilities. Monitoring performance &amp; ensuring conformance to agreed standards are important elements of IHRM.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-88\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/42-300x172.png\" alt=\"\" width=\"300\" height=\"172\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42-300x172.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42-768x440.png 768w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42-65x37.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42-225x129.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42-350x201.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/42.png 785w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>Various constraints that may affect goal attainment are:-<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.9.3.1 Whole as against part:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">A multinational company operates in different countries through its subsidiaries which function in a multicultural environment. As a result, the integration &amp; control imperatives often place it in a position where it may decide that good of the whole is more important than one subsidiary\u2019s short term profits.<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p><em>38.9.3.2 Volatility of international environment:-<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Global market is mostly dynamic &amp; unpredictable in nature. Hence, the long term goal fixation &amp; persuasion need to be emphasized rather than having extra ordinary importance on short term ups &amp; down.<\/p>\n<p>&nbsp;<\/p>\n<p><em>38.9.3.3 Variable levels of maturity:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Without the supporting infrastructure of the parent organisation, market development in foreign subsidiaries is generally slower &amp; more difficult to achieve than at home. This is because at home, there are established brands that support new products &amp; therefore, new businesses can be cross subsidized by other division.<\/p>\n<p>&nbsp;<\/p>\n<p><em>Factors associated with individual performance and appraisal in an international context:<\/em><\/p>\n<p>&nbsp;<\/p>\n<p>1. Compensation package:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Perceived financial benefits along with career progression potential associated with international assignment are often important motivating factors which drive the employee to accept international assignments.<\/p>\n<p>&nbsp;<\/p>\n<p>2. Task (assignment variables &amp; the role of the expatriate):<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Four main expatriate task roles have been identified in the literature on IHRM against the following positions:<\/p>\n<p>&nbsp;<\/p>\n<p>(i)\u00a0 Chief executive officer (CEO) overseas the entire foreign subsidiary operation.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(ii)\u00a0\u00a0 Structure reproducer carried out the assignment of replicating the structure similar to the one in the parent country in the foreign subsidiary.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(iii)\u00a0\u00a0 Troubleshooter is normally sent by the parent company to a foreign subsidiary to analyse &amp; solve a particular operational problem.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(iv)\u00a0 operative performs functional job tasks in an existing operational structure &amp; usually at lower level of the organisational hierarchy.<\/p>\n<p>&nbsp;<\/p>\n<p>3. Headquarter\u2019s support:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">International assignments are different from domestic ones in many respects. One of them is due to the fact that the former involves relocation of the employee along with his\/her family into a totally foreign environment.<\/p>\n<p>&nbsp;<\/p>\n<p>4. The environment in which performance occurs:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The international context with its differing legal, economic, societal, technical &amp; political demands are a major determinant of expatriate performance.<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>5. Cultural Adjustment:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">The process by which an expatriate adjusts to the culture of the foreign country is extremely important. The longer it takes for expatriate &amp; his\/her family to adjust to the new environment, the most costly it is to the organisation as it affects their performance.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Every individual goes through a cultural adjustment cycle as shown in figure 38.4 while on an international assignment.<\/p>\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-89\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/43-300x214.png\" alt=\"\" width=\"300\" height=\"214\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/43-300x214.png 300w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/43-65x46.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/43-225x161.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/43-350x250.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/43.png 496w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: center\">Source: H. De Cieri, P.J. Dowling and K.F.Taylor, 1991, The psychological Important of Expatriates Relocation on Partners, International Journal of Human Resource Management, 2(3), 380.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Phase 1: Just getting the offer throws stimulating emotions associated with pleasant excitements, anxiety, sense of adventure &amp; range of positive &amp; negative emotions.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Phase 2: The moment the initial excitement is over, the person encounters reality which gets translated to homesickness leading to possible negative appraisals of the situation &amp; a period of crisis.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Phase 3: Slowly, the present work demands help the expatriate to gain motivation, who gets adapted to the new environment &amp; begins to adjust.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Phase 4: As the person gets adjusted to the new environment, his performance improves &amp; he is in a state of healthy recovery.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.9.4 International Compensation Management:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">When a firm develops international compensation policies, it tries to fulfill some broad objectives:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(i)\u00a0 The compensation policy should be in line with the structure, business needs &amp; overall strategy of the organisation.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(ii)\u00a0 The policy should aim at attracting &amp; retaining the best talent.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">(iii)\u00a0 It should enhance employee satisfaction.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"font-size: 1em\">(iv)\u00a0 It should be clear in terms of understanding <\/span>of<span style=\"font-size: 1em\"> the employee &amp; also convenient to administer.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p style=\"text-align: justify\">The employee also has a number of objectives that he wishes to achieve from the compensation policy of the firm:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(i)\u00a0 He expects proper compensation against his competency &amp; performance level.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(ii)\u00a0 He expects substantial financial gain for his own comfort &amp; for his family also.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(iii)\u00a0\u00a0 He expects his present &amp; future needs to be taken care of including children\u2019s education, medical protection &amp; housing facilities.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">(iv)\u00a0 The policy should be progressive in nature.<\/p>\n<p style=\"text-align: justify\">Major components of an international compensation package are:<\/p>\n<p style=\"text-align: justify\">(i) Base salary:<\/p>\n<p style=\"text-align: justify\">This term has a slightly different meaning in an international context than in a domestic one. In the latter case, it denotes the amount of cash compensation that serves as a benchmark for other compensation elements like bonus, social benefits.<\/p>\n<p style=\"text-align: justify\">(ii) Foreign service inducement premium:<\/p>\n<p style=\"text-align: justify\">This is a component of the total compensation package given to employees to encourage them to take up foreign assignments. This is with the aim to compensate them for the possible hardships they may face while being overseas.<\/p>\n<p style=\"text-align: justify\">(iii) Allowances:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">One of the most common kinds of allowances internationally is the cost of living allowance (COLA). It is typically involves a payment to compensate for the difference in the cost of living between the two countries resulting in an eventual difference in the expenditure made.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-decoration: underline\">Approaches to International Compensation:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>There are two main options in the area of international compensation:<\/p>\n<p>&nbsp;<\/p>\n<p>(i) Market rate approach:<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Under this, the base salary is linked to the structure in the host country. The multinational obtains information from local compensation surveys &amp; decides whether local employees, expatriates of different nationalities will be the points of reference for benchmarking of the compensation.<\/p>\n<p>&nbsp;<\/p>\n<p>Advantages:-<\/p>\n<p>&nbsp;<\/p>\n<p>(i) It is a simple approach to follow.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">(ii)\u00a0 Identification with the host country is possible.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">(iii)\u00a0 Equality with local nationals.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">(iv)\u00a0 Equality amongst people of different countries. <\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">Disadvantages:-<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">(i)\u00a0 There is a possibility of variation in the compensations offered to expatriates from the same country in different countries.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">(ii)\u00a0 It can pose <\/span>problem<span style=\"text-align: initial;font-size: 1em\"> when the expatriate is repatriated back to his country where the salary structure is lower than that in the host nation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">(iii)\u00a0 There is also a danger of variation between assignment for <\/span>same<span style=\"text-align: initial;font-size: 1em\"> employee.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"text-align: initial;font-size: 1em\">(ii) Balance Sheet approach:<\/span><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><span style=\"text-align: initial;font-size: 1em\">This approach tries to maintain relativity to parent country employee colleagues &amp; compensating for the costs of an international assignment. The key assumption of this is that employees going for foreign assignments should not suffer any kind of tangible loss due to working in a new environment.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p>Under this approach, 4 main categories of expenditure incurred by expatriates are covered:<\/p>\n<p>&nbsp;<\/p>\n<p>(a)\u00a0 Goods &amp; Services \u2013 home country outlays for food, personal care, clothing, household furnishing etc.<\/p>\n<p>&nbsp;<\/p>\n<p>(b)\u00a0 Housing \u2013 cost associated with housing in the host country.<\/p>\n<p>&nbsp;<\/p>\n<p>(c)\u00a0 Income tax \u2013 host country &amp; parent country taxes.<\/p>\n<p>&nbsp;<\/p>\n<p>(d)\u00a0 Resources \u2013 contributions to savings, payments for benefits, pension contribution etc.<\/p>\n<p>&nbsp;<\/p>\n<p>Advantages:<\/p>\n<p>&nbsp;<\/p>\n<p>1.\u00a0 Equity between foreign assignment &amp; expatriates of the same.<\/p>\n<p>&nbsp;<\/p>\n<p>2.\u00a0 Repatriation of expatriates.<\/p>\n<p>&nbsp;<\/p>\n<p>Disadvantages:<\/p>\n<p>&nbsp;<\/p>\n<p>1.\u00a0 Complicated to administer &amp; involves high cost.<\/p>\n<p>&nbsp;<\/p>\n<p>2.\u00a0 Result in huge disparities between expatriates of different nationalities.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><em>38.9.5 Repatriation:<\/em><\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Though the people face difficulty in acclimatizing &amp; developing adjustment with the new culture of the new country, still they do not feel comfortable in quitting job &amp; going back to the home country by\u00a0<span style=\"font-size: 1em\">accepting the failures. This happening creates more psychological frustration than continuing in the new environment. This phase in always treated as the final stage of <\/span>expatriation<span style=\"font-size: 1em\"> process.<\/span><\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p style=\"text-align: justify\">The repatriation process (figure 38.5) is divided into four related phase (Welch, Adans, Batchley &amp; Howard, 1992):<\/p>\n<p>&nbsp;<\/p>\n<p>(i) Preparation:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">It involves developing plans for the future &amp; gathering information about the new position. The organisation may provide a checklist to the employee for all the steps to be followed before his return to his home country.<\/p>\n<p>&nbsp;<\/p>\n<p>(ii) Physical relocation:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">This stage involves shifting the personal belongings, travelling to the next posting which usually is to the home country.<\/p>\n<p>&nbsp;<\/p>\n<p>(iii) Transition:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">In this stage, the person starts the process of setting down in the new setting. This involves settlement of new house, education of the children, social adjustment with the new friends &amp; colleagues.<\/p>\n<p>&nbsp;<\/p>\n<p>(iv) Readjustment:-<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">It Involves coping with the reverse culture shock &amp; career depends. This phase is very critical for the repatriates in terms of adjusting to the new environment.<\/p>\n<\/div>\n<div style=\"text-align: justify\">\n<p>&nbsp;<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-90\" src=\"http:\/\/mgmtp01.epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/sites\/66\/2018\/10\/44-290x300.png\" alt=\"\" width=\"290\" height=\"300\" srcset=\"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/44-290x300.png 290w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/44-65x67.png 65w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/44-225x233.png 225w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/44-350x362.png 350w, https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-content\/uploads\/sites\/66\/2018\/10\/44.png 421w\" sizes=\"auto, (max-width: 290px) 100vw, 290px\" \/><\/p>\n<p>&nbsp;<\/p>\n<p>Fig 38.5 Repatriation Process<\/p>\n<\/div>\n<p style=\"text-align: justify\">Source: D. Welch, T.Adams, B.Betchley &amp; M.Howard, 1992, \u201cThe view from the outer side: The handling of repatriation &amp; other expatriation activities by the Royal Australian Airforce, Proceeding of the Academy of International Business Southeast Asia Conference, June, Brisbane.<\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\"><strong>Summary:<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p style=\"text-align: justify\">Globalisation is the process of extending business activities to foreign countries. It has significant implications for employment, HRD, compensation, labour relations etc. The model of international HRM comprises of three variables \u2013 HR activities, country of operation and type of employees. Thus, there are four approaches to international recruitment \u2013 ethnocentric, polycentric, geocentric and regiocentric.<\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>you can view video on International Human Resource Management<\/strong><\/td>\n<td><a href=\"https:\/\/youtu.be\/9YY4UYrflqg\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-120\" src=\"http:\/\/epgpbooks.inflibnet.ac.in\/wp-content\/uploads\/2018\/11\/download.png\" alt=\"\" width=\"36\" height=\"36\" \/><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"author":3,"menu_order":38,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":["dr-pragya-dheer"],"pb_section_license":""},"chapter-type":[],"contributor":[61],"license":[],"class_list":["post-68","chapter","type-chapter","status-publish","hentry","contributor-dr-pragya-dheer"],"part":3,"_links":{"self":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapters\/68","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":8,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapters\/68\/revisions"}],"predecessor-version":[{"id":854,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapters\/68\/revisions\/854"}],"part":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/parts\/3"}],"metadata":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapters\/68\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/wp\/v2\/media?parent=68"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/pressbooks\/v2\/chapter-type?post=68"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/wp\/v2\/contributor?post=68"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/ebooks.inflibnet.ac.in\/mgmtp01\/wp-json\/wp\/v2\/license?post=68"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}