Comparison and Contrast between Domestic and International Human Resource Management

13/03/2020 1 By indiafreenotes

It emerges that international HRM practices have to be different from those of domestic HRM. It is characterized by more and varied HR activities, need for broader perspective, more involvement in employees’ personal lives, high emphasis on change in employee mix, high risk exposure, and more external influences. Let us go through the discussion of these characteristics and identify how international HRM differs from domestic HRM.

  1. More and Varied HR Activities

As compared to domestic HRM, in international HRM, there are more and varied HR activities. In international HRM, the volume of the same HR activities which are relevant for domestic HRM too increases because these activities have to be performed in a different context.

For example, when employee is chosen for an international assignment, he needs additional training which would enable him to adjust in the new environment. This training will be in addition to training meant for skill development for performing the job effectively. There are many HR activities in which this type of situation emerges.

This will be taken up while going through the discussion of international HR activities. Variety in HR activities exists in international HRM because many activities are undertaken which are performed in international HRM only, for example, managing visa and completing various formalities which are necessary for an employee to perform job in an overseas location. There are several such activities.

  1. Need for Broader Perspective

As compared to domestic HRM, international HRM requires much wider perspective in respect of almost all HR activities. It implies that HR managers have to consider a variety of factors in making decisions on any issue of international HRM. Many of these factors are not relevant in the case of domestic HRM.

For example, while fixing international compensation packages, HR managers have to take into account the cost of living of different international locations to bring some kind of parity among employees working at different locations. Similarly, fringe benefits have to be provided to suit conditions of different locations. There are many such activities which require much broader perspective.

  1. More Involvement in Employees’ Personal Lives

As compared to domestic HRM, HR managers are required to have more involvement in employees’ personal lives in the case international HRM. This higher level of involvement is required to ensure that the employees are suitably placed in an international location with which they are not well familiar. This lack of familiarity may be on a number of factors like housing, health care practices, meeting of legal requirements of host country, etc.

In many cases, the number of such factors may be quite large. In order to take care of such factors, many organizations prefer to have a special unit in their HR department, known as ‘International Human Resource Service’. The basic logic behind creation of such a unit is to provide specialized service which is relevant only in the case of international HRM.

  1. High Emphasis on Change in Employee Mix

In international HRM, high emphasis is placed on change in employee mix particularly in terms of nationality of employees. Very often, it happens that when an organization establishes a business in a foreign country, it recruits more number of employees from the country of its origin.

However, in order to have a favourable image in the country of its operations, it recruits and develops local (host country) personnel. As a result, over the period of time, the proportion of local employees becomes sizeable. This strategy is adopted by most of the multinationals. This process is taken on gradual basis.

  1. High Risk Exposure

There is high risk exposure in international HRM as compared to domestic HRM. The risk involved may be of different types (political, regulatory, etc.) in an international business. However, HR-related risk may be in the form of lack of suitable HR practices meeting local requirements, social-cultural risk in the form of non-acceptance of parent country nationals as employees, etc.

Such risk may have serious consequences in many cases like social boycott of parent country nationals, kidnapping of employees or harassing them in other forms, and in extreme case, takeover of the business by the local government on the plea of not meeting local HR-related conditions. Therefore, HR managers have to be careful in making decisions on issues of international HRM.

  1. More External Influences

A maxim of managing a business is- farther away a business goes, more influences it has to face. This is true for international HRM too. As compared to domestic HRM, international HRM activities are influenced by a variety of external factors. HR managers are required to deal with a new set of socio-cultural milieu, political and legal system, etc.

Not only they have to change their mind set to work in this new set but they have to train the employees to adjust with the new set. In fact, effectiveness of HR depends to a very great extent on the degree of such an adjustment.

Similarities between Domestic and International HRM

HRM plays a key role in virtually any organization. It is the core of commercial strategy as HRM may help company improve their performance, form ecological competitive advantages, and have a guiding role in the organization management.

‘General HRM refers to those activities undertaken by a business to effectively utilize its human resources’.

This concludes the first similarities between your two. As basic functions such as procurement, allocation, usage and motivation will be the same whether they are specific in one country or several countries. Both domestic and international HRM have same major functions and activities in HR planning, recruitment, performance management, training and development, compensation, and industrial relationships.

Another similarity relates to the environmental pushes that influence the function of HRM. These exterior constraints include political, economical, legal, and ethnic have significant impact how the HR functions are taken both in local as well as global environment.

Finally, both of them have similar basic individuals resource management objectives. Firstly of all, is to ensure corporation having maximum satisfaction in the real human resource requirements. Another objective is to ensure performance in the organization through interventions. And then is to market sustainable development of organizations by maximizing the introduction of internal and external human source of information management. The ultimate similar target is to keep up and encourage recruiting within the company to upgrade the actual individual capital.