Objectives, Evolution of IHRM
Last updated on 26/11/2021 1 By indiafreenotesAn organization gains competitive edge when it has an efficient pool of employees. In addition, we know that a large number of organizations conduct their businesses across national boundaries. Therefore, there is an increasing need of managing global employees. The effective management of global employees is a major determinant for the success or failure in international ventures. It has become a challenge to procure, train, and retain employees for global organizations. IHRM plays a very crucial role in terms of managing employees belonging to different geographical locations and countries.
Objectives of International Human Resource Management
Within present business scenario, there are larger number of organisations conduct business beyond national boundaries. The differences in organisational environment across nations have encouraged to determine and develop international HR staffing and practices. At global scenario, it is needful to study about HR hiring, staffing developing, compensating and appraising HR for better utilisation of people.
International Human Resource Management is the process of managing people in international ventures and involves activities in at least two nations.
It is fact that the success of business and trades are depends on the skills and quality of human resources and how effectively these resources are managed and utilised at international level.
- It enhances to develop managerial skills, organisational knowledge and technical abilities of HR managers and employees.
- To develop more and better handle of global business operations.
- To manage and secure the performance, compensation and career path of employees.
- To manage and organise cross cultural counselling and language training programme.
- To develop more feasible understanding of work practices at global levels.
- To raise and develop better and new performance management of human resources.
- To get more and more opportunities within global HR scenario.
- To develop better and competitive HR strategies in global competitive scenario.
- To reduce the cultural differences as amicable for cultural environment.
Activities and Cultural Dimensions of International Human Resource Management
Managing human capital is undoubtedly the most challenging task for any manager and for the human resource department. The knowledge-based economy and knowledge workers have meant that a lot is at stake when it comes to managing people. The internationalization puts additional challenges and issues in managing employees.
The complexity is far greater and issues are many times delicate since expatriation often means relocation of the employee’s family as well. The focal areas of priority of HR also changes with the stage of internationalization.
There are three majors international HRM activities; Procure, Allocate and Utilize. In effect these three major activities of IHRM covet all the six activities of domestics HRM i.e., HR planning, Employees Hiring, Training and Development, Remuneration, Performance Management and Industrial Relations.
International HRM involves employees of three countries; Parent country or the home country (where a company’s headquarters might be located), host country (where company’s subsidiary may be located) and third country (Other countries that may be sources of labour or finance).
International Staffing:
Staffing is a challenging function. Finding the right set of people has never been easy. However, when it comes to international operations, the complexity of staffing increases many folds. Deciding on the mix of local employees to expats is not an easy decision to make. Several factors may impact the same.
Then cost is another major consideration. Cost of finding an international employee and hiring that person if often very high. Such cost aspects demand even more careful consideration and selection. Errors in selection could be tremendously costly for the firm. Expat compensation and tax laws are huge consideration in international staffing. Tax treaties between certain countries ease income tax obligations of an expat.
Such treaties may make it easier to hire from certain countries, while it may difficult to hire from others since the compensation may not work out in the favour of the expat. Environmental factors may also affect international staffing. Political environment may change with government regimes and may favour or disfavour expat movement.
Cultural Challenge:
Difference in national cultures of expats poses a challenge in hiring and assimilating international staff. A lot of pre-departure training for the expats is focused on cross cultural training. Cultural fitment of the expats plays a important role in the success of the projects and international assignments. Multi-national companies often develop hiring strategy and training interventions to cope up with this cultural challenge.
Geert Hofstede work on cultural dimensions is an authoritative repository on national cultures and how cultures differ across countries. Hofstede defines six cultural dimensions to qualify a national culture (Hofstede, Cultural Dimensions). A comparison across these dimensions also helps distinguish one national culture from the other.
Evolution of Global Human Resources Management
Domestic HRM is typically defined as a broad typology that covers three areas: Work relations: the way work is organized, the division of labor and the deployment of workers around technologies and production processes; Employment relations: the arrangements governing such aspects of employment as recruitment, training, promotion, job tenure and the reward of employees; Industrial relations: the representational aspirations of employees and the ‘Voice systems’ that may exist. This encompasses issues such as work consultation, employee involvement practices, work councils and Collective Bargaining.
Domestic HRM has not developed in isolation, but rather in the context of industrial change and economic development. As such, HRM represents a set of responses to the dramatic and continued effect that industrialization has had on society and the world of work.
Evolution of International Human Resources Management
The next step in the evolution of Human Resource Management is the International Human Resources Management (IHRM). According to Morgan, IHRM is becoming increasingly complex as new types of employees and their unique attributes are considered as part of the IHRM activities. Numerous new issues have arisen given the diversity of employees in an international context i.e., the expatriates, host-country nationals (HCN), third-country nationals, and, most recently, the in-patriates.
The complexity of operating in different countries and employing different national categories of workers is a key variable that differentiates domestic and international human resource management, rather than any major differences between the HRM activities performed. According to Napier there are critical issues that IHRM needs to traditionally focus on which include: Issues facing employees in terms of transferring expatriates overseas; IHRM function and its attendant activities; and, the types of factors (firm level and otherwise) that may influence IHRM.
Evolution of Strategic Global Human Resources Management
The present level in the evolutionary process of human resource management, which complicates the human resource functions and systems much more, is strategic Global Human Resource Management (SGHRM). Viewing the human resource functions in a SGHRM context exacerbates the international human resource issues due to the co-ordination efforts required to implement the strategy of the corporation. In today’s global business environment, global organizations must utilize all possible sources of competitive advantage, of which human assets are one of these sources. The success or failure of an organization in a global context will be determined by its managerial capabilities, and the development of globally sophisticated managers is a major challenge in order to obtain global competitiveness.
Virtually any type of international problem, in the final analysis, is either created by people or must be solved by people. Hence, having the right people in the right place at the right time emerges as the key to a company’s international growth. If we are successful in solving that problem.
An example of one of the issues in SGHRM is where to focus the location of the workforce. The location of the workforce is an important strategic consideration, but one that is all too often given only limited attention. Frequently, decisions are based purely on quantitative attributes of the decisions, such as trade-off transportation costs, economies of scale and other explicit cost-based variables. This quantitative practice, however, can lead to sub-optimal results, as decisionmakers tend to focus only on factors that are easily quantifiable. Important qualitative issues are frequently neglected and are often central to supporting or creating a global competitive advantage. For example, location dictates the level of knowledge embedded in the workforce; as such, it can affect the ability of firms to implement skill-based process technologies or it can limit the effectiveness of quality programs. SGHRM practices.
Evolution of Human Resource Management
Managing Slaves:
Slaves comprised an important source of manpower in almost all ancient civilisations. They could be sold and purchased like commodities. Their main purchasers were the wealthy rulers, landlords, tribal chiefs and effluent businessmen. The purchasers of slaves had a rather complete control over their slaves.
The masters of the slaves took a variety of arduous work from them such as carrying heavy loads, rowing ships and boats, construction of buildings and forts, digging canals, cattle-rearing and tillage of soil. The remuneration or compensation for their efforts comprised mainly food, shelter and clothing. The slaves were dealt with iron hands. They were subjected to strict supervision, and non-compliance of the orders of their masters or supervisors was generally punishable with physical tortures, and occasionally with mutilation of their limbs and even death sentence for grave offences.
Managing Serfs:
Serfdom was widely prevalent in the feudal societies of the pre-and early medieval era. Serfs were engaged by landlords mainly in agricultural operations and allied activities. The landlords would usually give them a piece of land for their habitat and often, some land for their own cultivation. In many cases, a paltry sum of money was advanced to them in order that they could remain attached to their masters.
In lieu of these facilities, the serfs and their family members were required to serve their masters. The work assigned to serfs mainly comprised – tillage of soil, cattle-rearing, domestic work and similar other activities. Many landlords would also give them a meagre amount as wages, whether in cash or in kind. Usually, serfs could become free after returning to their masters the habitat, the piece of land and advances with interest. They could also be transferred to some other landlord on payment.
Under serfdom, some measure of personal relationship existed between the landlords and the serfs. Many landlords often tried to solve their genuine grievances and extended some help to those who were in distress. The feudal lords also occasionally gave some economic inducements to their serfs in the form of additional supply of food-grains and some money for their increased productivity and good behaviour.
Although the management of serfs was based on the principle of authoritarianism, the element of human treatment was often found in their relationship. With the abolition of the feudal system, serfdom also came to an end. However, some remnants of the past can still be found even today, especially in rural areas. The bonded labour system in India is comparable to the system of serfdom prevalent in European countries during the medieval period.
Managing Indentured Labour:
The system of indentured labour emerged primarily with the flourishing of mercantilism and advent of industrial revolution. The discovery of new lands through sea and land routes led to a substantial increase in the demand of European goods abroad, and at the same time, gave a fillip to the establishment of industries in the continent.
As a consequence, trade flourished leaps and bounds, and the mercantilists, taking advantage of the expanding markets, tried to accumulate as much wealth as possible. In their quest for maximising wealth, the mercantilists would offer attractive inducements to the artisans and skilled craftsmen for accelerating production of goods in demand. The artisans and craftsmen responded and they started engaging an increasing number of apprentices and hired labourers to cope with the demand of the products.
From industrial revolution era to the present era, various stages to development of management of human resource practices may be classified as follows:
- Industrial revolution era; 19th century
- Trade union movement era; close to the 19th century
- Social responsibility era; beginning of the 20th century
- Scientific management era; 1900-1920s
- Human relations era; 1930s-1950s
- Behavioural science era; 1950s-1960s
- Systems and contingency approach era; 1960 onwards
- Human resource management era; 1980 onwards
Human Relations Era:
Around 1920s, management researchers gave a close look at the human factor at work and the variables that affected people’s behaviour. Before that, Hugo Munsterberg wrote a book on ‘Psychology and Industrial Efficiency’ which suggested the use of psychology in the field of personnel testing, interviewing, attitude measurement, learning, etc.
This brief period was termed as ‘Industrial Psychology Era’. In 1924, a group of professors from Harvard Business School, USA, began an enquiry into the human aspects of work and working conditions at Hawthorne plant of Western Electric Company, Chicago.
They conducted researches from 1924 to 1932 and arrived at the conclusions that productivity of workers depended on:
(i) Social factors at the workplace
(ii) Group formation and group influence.
(iii) Nature of leadership and supervision
(iv) Communication
They concluded that in order to have better productivity, management should take care of human relations besides the physical conditions at the workplace. Consequently, the concepts of social system, informal organization, group influence, and non-logical behaviour entered the field of management of personnel.
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