Human resource direction has become an of import issue as more and more houses runing internationally are in demand to develop an apprehension on how to run competitively in an international concern environment ( Dowling & A ; Welch, 2005 ) .
As the planetary playing field has become more competitory, international companies are forced to
follow efficient HRM and give more focal point to their international than their domestic operations. Due
to the sensitiveness of the issue, the concerned HR must turn to the cardinal issues such as the impact of
globalisation, environmental influences, cultural differences, the domestic HRM policies in different
states and the planetary work force involved in the action ( Armstrong, 2009 ) .
The purpose of this essay is to supply a clear overview of the chief similarities and differences between
domestic and international Human resource direction. The essay will to some extent discuss the
pattern of Human resource direction at domestic degree and the factors that increase its
complexness at international degree. Finally, a decision will be drawn with an analysis of the research
2. DEFINATIONS OF DOMESTIC AND INTERNATIONAL HUMAN RESOURCE MANAGMENT
The gradual development of direction activity from disposal of forces to strategic
planning of human resource, has given a competitory advantage to international companies.
Personnel direction focused more on administrative maps and how to command the
employee instead than perpetrate the employee to the organisation strategic planning procedure. But
the present Human resource direction system is structured more on the committedness of the
staff and involves the employee in the strategic planning and development procedure of the
organisation. It besides stress that organisations should see their employees as assets than
variable costs ( Armstrong, 2009, Torrington et Al, 2005 ) .
It is non rather easy to supply a precise and exact definition of Human resource
direction due to the varying and different activities it refers to. One effort made by Storey
( 1995 ) is “ HRM is a typical attack to employment and direction which seeks to
achieve competitory advantage through the strategic development of a extremely committed and
capable work force utilizing an array of cultural, structural and personal techniques. ” On the other
manus, Human resource direction is besides defined as stand foring two activities. One is the
generic term concerned with the cardinal aims of human activity, which are the staffing,
public presentation, alteration direction and administrative aims, and the other activity is the
Human resource attack to transport out the activities stated above under the generic term one
( Torrington et al, 2005 ) .
In order to clearly see the commonalties and differences shared by Domestic and International
human resource direction, placing the activities which change or evolve when HR goes
International is a critical point. To this consequence, a faculty developed by Morgan ( 1986 ) is helpful. The
faculty nowadayss three dimensions of International Human resource direction with assorted
classs of HR activities, states involved and employees in International activities. The first
dimension trades with the undertakings of Human resource direction ; the procurance, allotment and
use of HR which goes farther down to elaborate activities mentioned before in this paper under
the ‘generic term ‘ account for HRM. The 2nd dimension trades with three state classs ;
the host state where the subordinate is located, place state of the company ‘s headquarter, other
states which are beginning of work force, finance and other inputs. The 3rd dimension is
concerned with three class of employees ; Host-country subjects, Parent-country subjects and
Third-country subjects. Thence, harmonizing to Morgan ( 1986 ) , the ” … interplay between these three
dimensions is what define international Human resource direction ” ( p.5 ) .
At this point, it shows that the elements or issues related to International HRM pattern are complex,
higher in figure and have broader range than those found in Domestic HRM pattern. One sensitive
issue is the staffing policy at international degree. There are three types of international directors,
depending on their nationalities, local ( parent state subjects, PCN ) , Host state subjects ( HCN ) ,
3rd state subjects ( TCN ) and international companies would engage managers/employees taking
from one or blending from the groups depending on the company ‘s concern program, proficient
competency required for the place, handiness of campaigners or the company ‘s staffing policy.
Largely international companies have three staffing policies/strategies.
– Ethnocentric strategy- This attack is when companies use parent company subjects in high
direction countries. Nowadays this attack is non much in pattern as it is seen to restrict the
chance of other nationalities.
– Polycentric strategy- This attack demands the usage of host state subjects at the subordinates,
while at headquarter degree parent company subjects hold the high stations. Companies with
Ethnocentric scheme may alter to Polycentric scheme when faced with defects of qualified
– Geocentric strategy- This attack has an unfastened door policy, ask foring competent directors
irrespective of their nationality. Companies utilizing this scheme have the advantage of broad choice
and at the same clip make a sense of diverseness and integrity among employees ( David & A ; Hugh, 2007,
Beardwell & A ; Claydon, 2010 ) .
In the following subdivision, the paper will discourse if the HR patterns at the domestic degree can be
implemented at international degree and would seek to place the factors that may ease or
shackle this procedure in general.
3. THE PRACTICE OF HUMAN RESOURCE MANAGMENT AT INTERNATIONAL AND
The increasing concern activity at international degree has shown the importance of understanding
how Multinational companies can run expeditiously and efficaciously in the planetary dimension. In
general, International Human resource direction involves the internationalising company in
different patterns such as diverse HR activities than found in the place state, greater engagement
in employees ‘ private lives, greater hazard of exposure to the human and finance involved, more
external influence from the host state and greater complexness than found at Domestic HRM degree
( Dowling & A ; Welch, 2005 ) . An International HR director besides needs to turn to the challenges due to
transverse cultural differences, planetary competition, linguistic communication and political differences when posted at
international degree. Apart from the different strength degree of HR activities and strategic coordination
of different concern units, both Domestic and International HRM portion same major activities of
HRM. In add-on, an International Human resource director besides needs to understand the grade of
‘soft or difficult ‘ HRM nowadays in the place base and foreign subordinates. Companies with Hard HRM
policy are more concern focused and use cost minimisation systems while companies that engage
the employee in engagement have Soft HRM policy ( Storey, 2007 ) .
In a more item and supported by a diagram Cavusgil et Al. ( 2008, ) explain the challenges an
international trough is “ … to guarantee that the right individual is in the right place at the right location
with the right wage. “ ( p.549 ) The factors that makes this activity more challenging is its complexness in
covering with assorted facets at international degree. The diagram below inside informations the different factors to
Fig 1. Adapted from: Cavusgil et Al. ( 2008 ) . International concern, Strategy, Management and the new world. P.550 5
The above mentioned six factors will be explained briefly below ;
New human resource responsibility- Broader and diverse activities like International revenue enhancement
ordinance, international resettlement and orientation services for exiles and linguistic communication
interlingual rendition services are some of the activities at international degree.
Need for broader international position in compensation policy- with a different mix of
international staff exerting a just compensation policy is one of the challenges to be
Greater engagement in the employees personal lives- The company would hold to cover with
the personal well-being of the exile or inpatriate functioning out of their place state.
Their lodging agreement, kids instruction, security, compensation, diversion and so
other demands needed to be followed up and arranged.
Pull offing the mix of exiles versus locals- Harmonizing to company ‘s policy, subordinates
may be staffed with a mix of different nationalities and pull offing the balance based on the
required accomplishment and handiness of work force is another large undertaking in the international
Greater hazard exposure- International staffs are exposed to political turbulences, snatch,
terrorist act at foreign station and may demand compensation bundles and security
agreement. This would dispute companies financially and besides in disposal degree.
External influence of the authorities and national culture- Local employment regulations,
spiritual and cultural fortunes of the host state are besides some factors needed to be
considered. ( Cavusgil et al. , 2008 ) 6
In another dimension, Dowling & A ; Welch ( 2005 ) identified some factors that moderate the difference
between International and domestic Human resource direction. Harmonizing to Dowling, these
variables are cultural environment, the industry with which the Multinational is chiefly involved,
the extent of trust of the multinationals on its place state or domestic market and the
attitudes of senior direction in international operation. Let us discourse to what extent these
variables would move as moderators between Domestic and International HRM patterns.
3.1 INDUSTRY TYPE
One of import variable that moderates International and Domestic Human resource direction is
the type of industry an MNC is involved in and the international competition it faces.
Puting the concern playing field in one consecutive line, allow us state we have at one terminal of the
continuum a multi-domestic industry and the other terminal a planetary industry. The multi-domestic terminal
designates an industry operating in assorted states but the completion in that industry type is
specific to the state. While at the other terminal, the planetary industry group is about an industry that
operates in different states but interlinked with other industries in the same group ( Dowling & A ;
Welch, 2005 ) .
Industries that fall under the multi-domestic construction have a free reign and are non purely
controlled by the Headquarter of the MNC. They exhibit a extremely decentralized HR construction and drama
a inactive function in the transportation of HR patterns outside their lodger. Examples for this class can be
distribution agents and insurance companies. The planetary industry represents a theoretical account whereby HR
direction transportations direction patterns abroad and these patterns are replicated and put in
usage by the subordinates. Example for this group includes commercial aircraft companies and
computing machine fabrication companies ( Dowling & A ; Welch, 2004, Beardwell & A ; Claydon, 2010 ) .
The other influential factor in the moderating International and domestic Human resource
direction is civilization. ( Dowling & A ; Welch, 2004 )
Armstrong ( 2009 ) define organisation civilization as “ the forms of values, norms, beliefs, attitudes
and premise that may non hold been articulated but shape the manner in which the people in the
organisation behave and acquire things done. “ ( Armstrong, 2009, p384 ) . Hofstede in his portion put civilization
as “ the corporate scheduling of the head which distinguishes the members of one group or
class of people from another ” ( Hofstede, 2001, p9 ) .
Other writers besides have tried to specify civilization in different ways but in general it is expressed as a
procedure nowadays in a societal environment which holds the regulations and ordinances and the recognized
norms on how people are expected to act. Harmonizing to Hofstede ( 2001 ) there are five
independent dimensions of civilization that explain the major difference between national groups. The
foremost is power distance. It is the grade to which members of an organisation below the leading
rank accept and anticipate the unequal distribution of power. High power distance shows an bossy
leading while low power distance denotes a democratic pattern. Uncertainty turning away refers to
the grade in which the people in a society feel uncomfortable for deficiency of construction and avoid
ambiguity. High uncertainness turning away exist in states holding a strong regulations and occupation examination as
they try to avoid uncertainnesss and low uncertainness turning away is registered in states advancing
more slack and flexible societal regulations and ordinances. Hofstede 3rd dimension is the individuality
versus Bolshevism point. This dimension is concerned with the inclination of people ‘s response to
placing themselves either in larger groups or more to themselves. High individuality is scored in
states like the USA where people largely identify themselves in little household groups while in low
individualistic states people prefer to co-habit together and organize big societal groups. Maleness
or muliebrity is the 4th dimension which refers to emotional functions attributed to both genders. It
balances the ‘tough ‘ masculine virtuousness of averment and aggressiveness with the softer ‘feminine ‘
virtuousness of emotion and lovingness. Japan scores high on this respect while Norway is the lowest. The fifth
dimension is the long term versus short term orientation. This dimension deals with the acknowledgment
of position in a society and doggedness. In general understanding the cultural norms of a foreign
state and accommodating to the environment would profit a company in an international degree and
more significantly the HR policies of an organisation are largely influenced by the cultural pattern
environing the organisation. Human resource activities like hiring of staff, promoting, honoring
and dismissal of employees are determined and affected by the cultural pattern of the host state
( Dowling & A ; Welch, 2005 ) .
There is a school of idea that stresses the construct of Etics and Emics as an of import facet to
understanding civilization in different scenes. The Etic construct refers to the culture-common facet
while the Emic attack trades with culture-specific constructs of behavior. Understanding the
difference between the two constructs is helpful in cross-cultural concern communicating. To this
consequence placing which Human resource activity falls under Etic and which falls under Emic is besides
important as it have an consequence on the public presentation of companies outside their place state ( Dowling & A ;
Welch, 2005 ) .
As noted earlier Emic refers to patterns specific to one civilization and are non movable across
civilizations and Etic refers to the common patterns found in different civilizations and are movable
across civilizations. Other dimensions of civilization that may impact Human resource patterns are the
political status of the state where MNC operate, its economic rank and development and its
legal place. The Multinational companies need to be careful in states with strong spiritual
positions as they may hold both civil and spiritual Torahs in usage ( Dowling & A ; Welch, 2005 ) .
3.3 RELIANCE OF THE MNC ON ITS HOME COUNTRY DOMESTIC MARKET
The position of the organisation ‘s place domestic market is another moderator distinguishing
International Human resource direction and Domestic Human resource direction.
One major factor forcing companies to travel outside their place market is the little market demand in
their place state but besides the international market may non be their mark market for large
companies as they have high demand in their place state. Hence, when analyzing company
public presentation, concentrating merely on the international market activity may non give the true base or rank
of an international company. Some international companies originate from little states with
little domestic demand or saturated domestic market and play a large function in the international
concern activity. As an illustration ABB Company from Switzerland, INTERBREW from Belgium and we
can besides advert PHILIPS Electronics arising from The Netherlands. United Nations Conference
on Trade and Development ( UNCTAD ) made an one-year study on foreign direct investing and with
some elaborate analysis made, it published a list and it reveals that Coca Cola and McDonalds are
ranked 27th and 39th severally. As stated earlier the chief ground for this state of affairs is, these large
Multinational companies have high domestic demand in their place state ; the USA. This may
influence to some extent on their international concern pattern every bit good as deprive their directors
an international direction experience ( Dowling & A ; Welch, 2004 ) .
3.4 MANAGMENT ORIENTATION
The last moderator presented by Dowling & A ; Welch, ( 2004 ) is the degree of orientation of senior
direction. Directors from different civilizations have different perceptual experiences towards the overall
direction system of a company. Lack of cognition of competitory direction accomplishment on an
international degree would take to failure as it may neglect to place and turn to the issue otherwise
from the domestic direction issue. 10
Beardwell and Claydon ( 2000 ) besides observe the significance function Multinational companies play in the
universe economic system and with respect to the interrelatedness and restructuring of direction issue at
international versus the national degree wrote ‘ Management manner, Strategies and policies are
shaped by place concern system -the fiscal, institutional, legal and political model – in
which they developed as domestic houses. Therefore there is a relentless ‘country of beginning ‘ consequence in the
behavior of MNCs whereby the state the MNC originates from, exerts a typical consequence on the
direction manner, peculiarly the direction of Human resource. ‘ ( Beardwell and Claydon,
2010, p19 )
On the other manus Taylor et Al ( 1996 ) presents the exportive, adaptative and integrative theoretical accounts and
explicate why the international companies adopt different signifier of Strategic International Human
resource direction. The adoptive theoretical accounts reflect that Human resource policies are designed to
fit the local environment of the subordinate. There would be less transportation of Human resource
patterns from the parent company and usage distinction as a precedence point. In the exportive
orientation the subordinate transcripts Human resource direction policies from the parent company.
This upholds the integrating of planetary direction system and is ethnocentric in nature. The
integrative orientation theoretical account is the choice of ‘best HR pattern ‘ across the universe and is more
broad and flexible in leting the subordinate adopts local HR patterns ( Beardwell and Claydon,
2010 ) . But each orientation requires different consideration in line with the HR policies practiced by
the parent organisation.
One of import point in International Human resource direction is the motion of
employees across national boundaries to foreign state assignments. These employees are
termed as Exiles while Employees transferred from subordinate subdivision into Headquarterss
are referred as Inpatriates ( Dowling & A ; Welch, 2005 ) . As the planetary concern activity of
International companies increased, it demanded high commanding system and follow up of the
subordinates concern public presentation. To this consequence, MNC have chosen the usage of Exiles,
Parent company subjects, as a commanding mechanism by delegating them in cardinal direction
places in the subordinate subdivisions of the parent company ( Bartlett & A ; Ghoshal, 1989 ) .
The efficiency of the deployed exile may besides depend on the adaptability the exile on
his/her foreign assignment. A survey conducted by Mark Mendenhall and Gary Oddor in 1985
suggests that expatriate success and adjustment depend on several dimensions. The first is self-
oriented dimension, which deals with the expat personal competency and adaptability to the
foreign environment. The 2nd dimension is the others-oriented dimension, which consist of
relationship development and willingness to pass on in mention to the reluctance to
assimilate and larn the linguistic communication of the foreign land. The Third dimension is the perceptual
dimension, which is concerned with the ability of exiles to grok the behavior of
foreign subjects and the 4th dimension is cultural stamina and this is to estimate how rapidly
an exile adapts to a rough environment ( Brewster & A ; Harris1999 ) . Apart from parent
state subjects, Nationals from host state and 3rd state are besides considered as
exiles. But this paper will concentrate merely on exiles from parent state subjects to
discourse the chief grounds as to why an MNC send an employee on a foreign assignment.
Exiles are assigned in a foreign state as,
An agent of direct control- The assigned exile is used to command the activities of the
subordinate and guarantee its conformity through supervising ( Dowling & A ; Welch, 2005, Bartlett
& A ; Ghoshal, 1989 )
An agent of socialization- The exile in inquiry understands the companies values and
beliefs and Acts of the Apostless as a medium to reassign these qualities of the parent company to the
subordinates ( Dowling & A ; Welch, 2005 )
As web builder- An exile holding a cognition pertinent to his/her occupation making
will in due class bond with people in different cardinal places and together construct a web
of mutuality ( Dowling & A ; Welch, 2005 )
As boundary spanner- This refers to activities performed by the exile, such as assemblage
information that span internal and external organisational context. It would be the
exiles ‘ responsibility to advance the company profile every bit good as gather information that may be
of usage to the improvement of the company ( Dowling & A ; Welch, 2005 )
As linguistic communication nodes- Exiles with foreign linguistic communication background would finally go
an plus particularly when they repatriate to their place state ( Dowling & A ; Welch, 2005 ) .
The advantages of utilizing exiles are chiefly to keep organisational control, international
work experience and follow up the fulfillment of the company ‘s ‘ nonsubjective by the subordinate.
Whereas the disadvantage points are the job with the adaptability of exiles to the
foreign environment and the high cost incurred by the parent company to the choice and
preparation of exiles ( Dowling & A ; Welch, 2005 ) . The procedure of choosing the right individual to the
right place is important to the success of the oversees mission and it is to observe that an
exiles success in one environment does non connote that the same exile will make full spreads in
all fortunes ( Brewster & A ; Harris, 1999 ) .
To this terminal, In order to choose an exile for an international assignment, Dowling & A ; Welch
( 2005 ) have set six basic factors which may help directors in the procedure. As an person
Factors they have set Technical ability, transverse cultural suitableness and household demands are
listed indispensable piece in as situational factors state or cultural demands, linguistic communication and
MNE demands need to be analysed and considered in the choice procedure. In another
perspective Schneider and Barsoux ( 1997 ) list nine point they believe are of import for the
choice procedure. They are interpersonal accomplishment, lingual ability, ability to tolerance and get by up
with uncertainness, motive to work and populate abroad, flexibleness, forbearance and regard, cultural
empathy, strong sense of ego and sense of temper. ( Dowling & A ; Welch, 2005 )
In general the extent of the choice standard is broad and companies need to place and
see the most of import and points pertinent to the place to be filled.
Assorted factors are discussed that differentiate International Human resource direction from
Domestic human resource direction. The complexness of international Human resource
direction lies in the extra cognition and duties needed for operating at
international degree, and this is reflected in all the activities such as staffing, preparation and
development, Human resource planning and compensation and benefits. As the planetary market
competition increases International companies are expected to be antiphonal, flexible and
creative of a suited company scheme and Human resource direction system in order to
last the competition. The Globalization of universe economic systems has forced international
companies to set and continuously change their company scheme and Human
direction systems in order to last the competition. To this, the map of Human
resource direction has become an of import topic as it has proved to be a critical point to
the success of International every bit good as Domestic companies. In this paper assorted positions
towards International Human resource direction are discussed briefly. Writers in the field
are besides quoted on how the present and future form of Human resource direction is and
would be. In drumhead, the paper has tried to place the chief differences and similarities
between domestic and international Human resource direction. From the literature reappraisal
presented, different internal and external factors are discussed to the complexness of
International human resource direction, presented the assorted reading of HRM and
hold tried to demo how direction and the market would order the form of Human
resource direction in general.