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Unit 3 302 Ihrm

The document discusses international human resource management. It defines international HRM as managing employees across borders to ensure business success globally. International HRM involves recruiting, managing, and compensating three types of employees: parent country nationals in their home country, host country nationals where subsidiaries operate, and third country nationals from neither location. Large multinational companies succeed through strategic international staffing like deploying the right people in the right places and developing global talent. There are four common international staffing approaches: ethnocentric aligns with the parent country; polycentric prioritizes the host country; regiocentric serves whole regions; and geocentric hires based on skills regardless of nationality.

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Naman Kandpal
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100 views3 pages

Unit 3 302 Ihrm

The document discusses international human resource management. It defines international HRM as managing employees across borders to ensure business success globally. International HRM involves recruiting, managing, and compensating three types of employees: parent country nationals in their home country, host country nationals where subsidiaries operate, and third country nationals from neither location. Large multinational companies succeed through strategic international staffing like deploying the right people in the right places and developing global talent. There are four common international staffing approaches: ethnocentric aligns with the parent country; polycentric prioritizes the host country; regiocentric serves whole regions; and geocentric hires based on skills regardless of nationality.

Uploaded by

Naman Kandpal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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International Human Resource Management

International human resource management bears both functional and strategic


resemblance to human resource management. Functionally it performs almost the
same set of activities as human resource management – recruitment, selection,
performance management, compensation, training, industrial relations, career
management etc. Strategically international HRM is closely linked to the business
strategy of the organization.
Hence international human resource management can be defined as the set of
activities involved in hiring, managing performance, compensation, training and
relations with employees hired to manage internal operations of a company, with a
view to ensure the success of their international business and strategies.
International human resource management differs from domestic human resource
management primarily in terms of the complexity associated with managing people
across national boundaries.

International human resource management deals with at least three types of


employees based on their country of origin:
1. Parent-Country Nationals (PCNs) – Employees belonging to the country where
a company’s headquarters are located are called as parent-country nationals or
home country nationals.
2. Host-Country Nationals (HCNs) – Employees belonging to country where the
company has set up a subsidiary or a manufacturing facility are called host- country
nationals.
3. Third-Country Nationals (TCNs) – Employees who work in the home or host
country facility of the company but are not nationals of either are called third- country
nationals.
Organizations like Procter & Gamble, IBM, Pepsi and Coca Cola have had extensive
International experience and their success can only be attributed to their capability of
constantly deploying the right people at the right place, facilitating knowledge and
innovation dissemination and constantly identifying and developing talents on a
global basis.
International Staffing Approaches

There are usually four major hiring orientations that have been observed across the
International HR practices of major multinational companies such as Coke, Pepsi,
Nike, Sony, etc.:

1. Ethnocentric – With this strategy, a company’s HR policies are aligned to those


of the parent country. For instance, Coke’s U.S. headquarters may have established
policies related to labor, safety as well as compensation. Those are applied across
Coke’s affiliated country and regional operations, in the same manner. The
leadership positions in each subsidiary of Coke will usually have staff who are parent
country nationals (PCNs). Local nationals might be recruited for more junior positions
in order to maintain headquarters’ influence as the primary. In practice, however, this
approach is rather old-fashioned and is very rarely applied nowadays.
2. Polycentric – In today’s highly competitive business environment, a company
following an ethnocentric HR practice, may end up losing out on finding the best
talent. A better approach to international HR might be the Polycentric one. Here, HR
strategies are designed primarily according to the need in a particular region or a
country, which may not necessarily align with those at headquarters. As a critical
departure from the ethnocentric approach, in a polycentric environment, host country
nationals (HCNs) are employed in foreign subsidiaries while parent country nationals
(PCNs) govern the strategies at the headquarters. As a result, there are more
employment as well as career advancement opportunities for the local population. At
the same time, the employer is free to recruit from a more diverse pool of talent.
3. Regiocentric – This is perhaps the most common strategy followed by successful
companies across the globe. In a Regiocentric HR practice, people (especially those
in leadership positions) are recruited with a view towards having them serve
throughout a particular region, rather than just one specific country. For instance, the
Asia Pacific head of marketing for Coca Cola manages all marketing efforts for South
East Asia and the Pacific, including Australia, New Zealand and their neighboring
countries. Similarly, Coke may also hire a South Asia Marketing Lead, as well as a
Middle East representative. They all have the same responsibility as each other, but
catering to specifically to their region. The employer still retains the ability to transfer
these employees between regions, as business need dictates.
4. Geocentric– In theory the most profitable, Geocentric HR strategies are
employed when people are hired, both at the top as well as in the middle
management, based on their skills and capabilities, irrespective of nationalities.

Expatriation Management

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