IHRM is the interplay among three dimensions HR activities,types of employees,and countries of operation. 1.

. The three broad activities of IHRM,namely procurement,allocation and utilising cover all the six activities of domestic HRM.The six functions of domestic HRM are HR planning,employee hiring,training and development,remuneration,performance management, and industrial relations. 2. The three national or country categories involved in IHRM activities are the host country ,the home country and other countries.

3. The three types of employees of an international business are host country nationals, parent country nationals, and third country nationals. For ex IBM which employs Australian citizen in its Australian operations, often sends US citizen to Asia- Pacific countries on assignment, and may send some of its Singaporean employees to its Japanese operations. Host country where a subsidiary is located Home country where the company has its headquarters. And Other countries that may be the source of labour and finance.

Domestic HRM and IHRM compared The main characterstics of IHRM are 1. More HR activities 2. Need for a broader perspective 3. More involvement in employee personal lives. 4. Changes in emphasis as the workforce mix of expatriates and locals vary. 5. Risk exposure, and 6. More external influences

International businesses adopt three approaches to staffing Ethnocentric Approach all key management positions are held by parent country nationals, more appropriate during the early phases of international business. Polycentric Approach the polycentric staffing requires host country nationals to be hired to manage subsidiaries, while parent country nationals occupy key positions at corporate headquarters. Geocentric Approach this staffing criteria seeks the best people for key jobs throughout the organization, regardless of nationality.

The Expatriate Problem

Life cycle of an expatriate assignment - Determining the need for an expatriate assignment - Identifying and then selecting likely candidates. - Pre assignment training - Departure - Post arrival orientation and training - Crisis and adjustment of crisis and failure - Assignment aboard or repatriation and adjustment.

Reasons for Expatriot failure

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US Firms Inability of spouse to adjust Managers inability to adjust Other family reasons Personal or emotional maturity Inability to cope with larger international responsibilites.

Japanese Firms Inability to cope with larger international responsibilities Difficulties with the environment Personal or emotional problems Lack of technical competence Inability of spouse to adjust

Factors in Expatriate Selection Individual Technical Ability Cross Cultural Suitability Family Requirements Situation Country cultural requirements Language MNC requirements

Factors influencing international compensation

MNC internal environment
Goal orientation Capacity to pay Competetive strategy Organisational culture Internal workforce composition - Labour relations - Subsidiary role

MNC external environment

Parent nationality Labour market Local culture Competitors strategy

Components of Expat Compensation 1.Base salary 2.Benefits 3.Allowances 4.Incentives 5.Taxes

Base salary - is the primary component of a packages of allowances many of which are directly related to the base salary (e.g. foreign service premium,cost of living index,housing allowance ) as well as the basis for in service benefits and pension contributions. Benefits major element of remuneration. Issues Include 1.Whether MNCs should maintain expatriates in the home country benefits programmes, particularly if these prog are not tax deductible;

2. Whether MNCs have the option of enrolling expatriates in the host country benefits 3. Whether host country legislations regarding termination of employment affects the employee benefits entitlement. 4. Whether home country or the host country is responsible for the social security benefits, which country should pay the benefits; Allowances one common allowance is the payment for differences between the home country and the overseas assignment. This allowance is designed to provide standard of living that he or she enjoyed in the home country, and it may include expenses such relocation, housing, education and hardship.

Taxes MNCs generally select one of the following approaches to handle international taxation : 1. Tax equalisation firms withhold an amount equal to the home country tax obligation of the expatriate, and pay all the taxes in the host country. 2. Tax protection the employee pays up to the amount of taxes he or she would pay on remuneration in the home country.