Globalization of business enterprises and international human resource management

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Given the globalization of business enterprises the world has become a single market place, hence one may wonder what is the meaning of " International Human Resource Management", what is truly International about HRM. Complexity of operating in different countries and employing different national categories of workers is a key variable that differentiates domestic and international HRM. According to Perl mutter (1969), a business enterprises should be considered global by examining their "HR" policies in detail along with other aspects of organization's functions and activities.

A paper by Morgan (1986) on IHRM shows distinct approach's by IHRM & HRM in regard to people management. Morgan represents a model of IHRM that consists of three dimensions

a) The 3 broad human resource activities of " Procurement"," Allocation" and "Utilisation".

b)The three national or countries categories involved in IHRM activities are as follows:

* The host country where a subsidiary may be located.

* The home country where headquarters are located.

* Other countries that may be the source of labour of finance.

c) The three types of employees of an international firm are as follows:

* Host Country National (HCN)

* Parent Country National (PCN)

* Third Country National (TCN)

IHRM requires a much broader perspective on even the most common HR activities because manpower moves across political borders and work globally. These global employee's are known as "Expatriates". There are various complexities involved in operating in different countries and employing different national category of employee's. According to Dowling, the complexity of IHRM can be attributed to many factors such as HR attitude, need for broader perspective, workforce mix, risk exposure, external influences.

One of the reasons for the need of distinct approach required by IHRM is the international environment which is highly competitive and survival is very difficult as compared to the local environment. HR department must work towards number of activities that would not be necessary in the local environment such as international tax laws, relocation, orientation and administrative services for expatriate, host government relations and language translation services. Relation with host country governments presents an important activity for the IHRM department particularly in developing countries where work permits and other important documents are required to operate in the country.

Training and development issues of IHRM are more complex in nature than that of domestic HRM. It is difficult to plan a training programme and develop the worksheet for the workforce of multinationals. Employee's often carry different types of attitudes and values for training and development issues. In the current scenario, it is one of the biggest problems that IHRM faces.

IHRM seeks great level of involvement in employee's personal life, as it is important for the selection, training and effective management of employee's, the IHRM department needs to ensure that the expatriate employee understands all aspects of his/her compensation package provided for the oversea's assignment. In local setting the HR department's involvement in employee's life is very limited as compared to IHRM, where all info regarding the employee's is collected.

As the foreign operations mature, the emphasis is put on the various human resource activities also changes. As the need for PCN's and TCN's employee's declines, the more locally trained manpower is recruited. And resources previously meant for global employee are transferred to the activities of local employee. These changes requires different approach by IHRM as compared to HR department which deals with local environment only.

The human and financial consequences of failures in international market are more brutal than in the domestic market. The amount of risk involved in international market is much higher and complex. The direct and indirect cost of operations is very high, the presence of terrorists activity also impact's global staffing. After 9/11, leading MNC's have started allocating 2-3% of their budget for the safety of their global employee.

Some major external factors such as economic condition, political stability, cultural and ethical issues, industrial and labour laws, work & trade unions, working culture, food, taxation, health and safety issues, etc. of a nation is also an important concern for IHRM. The workforce in developed nations is facilitated with more luxuries and comforts than in developing and third world nations. Global HR Manager must develop HR systems that are not only acceptable to the host country but also compatible with company-wide systems.

The competition is in cut throat phase all over the globe as the domestic business organization's started operating at international levels.. Due strategic alliances business organs keep on changing their organizational structure. On the other hand technological advances and telecommunications also helps in creating a global business. In such a scenario, managing workforce/employee at global front is definitely a significant issue.

Over the last ten years or so, the IHRM research papers have covered a lot of area; however, the published reports till date raises far too many questions which should be in the limelight for future research. IHRM is increasingly becoming a source of competitive advantage globally as well as locally. Accordingly, there is a strong need to improve the understanding of the approaches that MNCs utilize to satisfy the competing needs for combination and differentiation in their operations (Brewster 2002)


· Peter J. Dowling, Denice E.Welch (4th Edition). "International Human Resource Management: Managing People in Multinational Context".

* Sehdev kumar Sharma . "Problems and Issues of International HR-Mgmt- Challenges Before Indian MNC's".

Available online on


· Patrick V.Morgan, Peter J.Bottrall. " Trends In International Human Resource Management"

* Mohd Reza, Steven K.Paulson. " International Business: Theory & Practice"

· Randall S.Schuler, Pawan S. Budhwar , Gary W.Florkwoski. " International Human Resource Management: Review & Critique.



· Cristian Marinas, Aurel Manolescu. "International Dimensions Of Human Resource Management"