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Lecture Outline
Chapter 13: Human Resource Information Systems and International
Human Resource Management
CHAPTER OBJECTIVES
After completing this chapter, you should be able to do the following:
❖ Understand the differences between domestic-only and international HRM
❖ Identify the types of organizational forms used for competing internationally
INTRODUCTION: INCREASTING IMPORTANCE OF INTERNATIONAL HUMAN
RESOURCE MANAGEMENT (IHRM)
● Perhaps one of the major changes in the world’s business economy has been the
formation of regional free-trade zones.
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● Other trade agreements, such as the Association of Southeast Asian Nations (ASEAN),
the East Asia Economic Group, the Asia-Pacific Economic Cooperation (APEC), and the
South Asia Association for Regional Cooperation (SAARC), have improved trading
relationships in Asia.
● There are a variety of factors that have led to the increased globalization of business and
increased the importance of the IHRM function. These factors include the following:
o Imported products have increased competition in every nation. Global
competition has increased dramatically.
TYPES OF INTERNATIONAL BUSINESS OPERATIONS
International Corporation
● An international corporation uses its existing core competencies to expand operations
into foreign markets. These organizations compete in the global marketplace by exporting
existing products and eventually opening facilities in other countries. While their
corporate headquarters reside in the parent country, international corporations have
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Multinational Corporation
● A multinational corporation is a more complex international business operation.
Multinational corporations operate as fully autonomous units in multiple countries in an
Global Corporation
● Global corporations are similar to multinational corporations; however, the global
customization to meet the needs of differing customer groups worldwide.
● Due to the integrative international focus, global corporations must manage their human
capital through a transnational HRM system. This type of system is characterized by
three attributes:
(1) It is essential that HR decisions are made from a global rather than a national
perspective.
Transnational Corporation
● A transnational corporation uses an HR approach that is locally responsible to its
country location and is focused on being highly efficient, plus emphasizing learning and
sharing.
Although these distinctions among MULTINATIONAL ENTITIES (MNEs) are important, the
Going Global
● There are a number of challenges that organizations face when going global. The top
four—cultural differences (47%), lack of resources (40%), technology/systems issues
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(39%), and time zone differences (35%)—are among the top IHRM-related challenges
Differences in HRM in MNEs
● There are the three different types of employees in a typical MNE, as opposed to one type
in a domestic firm.
● MNE employees include parent-country nationals (PCNs), host-country nationals
(HCNs), and third-country nationals (TCNs). Parent country refers to the country in
Managing Different Types of Employees in MNEs
● MNEs are shifting from an expatriate-focused workforce to a global workforce. Thus, it
is important to understand a number of cultural differences between expatriates and the
host- and third-country workforce.
● Global Diversity and Inclusion: MNEs, in their search for human talent, are focused on
a worldwide labor market. This search for new employees as businesses recruits must
position of the MNE. The EIU researched the diversity readiness of 47 countries to create
the Global Diversity Readiness Index (DRI), an online spreadsheet tool that is available
on the SHRM website (www.shrm.org/diversity).
● Cultural factors include education, politics and law, and economics.
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HR PROGRAMS IN GLOBAL ORGANIZATIONS
International Staffing
● The complexities inherent in managing a global organization make staffing an especially
Selecting Global Managers: Managing Expatriates
● One of the most difficult but important responsibilities of the IHRM function is the
selection of managers from the parent country, commonly referred to as expatriates, for
assignments in the host countries.
● It is very difficult to be successful in selecting expatriates due to the following factors:
(1) the cultural environment of countries, (2) expatriate failure and its causes, and (3)
selection criteria and procedures for expatriates.
o The Cultural Environment of Countries. One of the most important aspects of an
expatriate’s job that will significantly affect performance is his or her interaction
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Expatriate Failure and Causes
● Expatriate failure is defined as the return of an expatriate to the home country before the
period of the assignment has been completed. Expatriate failure represents an error in a
selection decision. The reason there is such an emphasis on expatriate failure is because
of its costs to the MNE.
● The two categories of costs are direct and indirect. Direct costs include the actual money
Selection Criteria and Procedures for Expatriates
● The factors involved in the selection of expatriates can be divided into two general
categories: individual and situational.
o In the individual category are technical ability, cross-cultural suitability, and
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and children has been well documented as one of the major causes of
expatriate failure.
o The situational factors that affect the assignment situation are
country/cultural, language, and MNE requirements. Country/cultural
requirements could include work permits and visas. The opportunity for the
spouse/partner and the children to learn another language is sometimes seen as a
work.
TRAINING AND DEVELOPMENT OF EXPATRIATES
● Training and development activities and programs in MNEs also include expatriates and
nonmanagerial employees of all types: PCNs, HCNs, and TCNs. Since traditional
Purpose of Expatriate Training
● The dual purpose of any training program is to inform and motivate employees. In
addition to these two purposes of training, the first specific purpose of expatriate
investment.
Predeparture Training
● Since one of the major causes of expatriate failure is the dissatisfaction or lack of
adjustment by the spouse, partner, or family, the inclusion of these people in predeparture
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Transfer of Training
● Predeparture training should not be viewed as a “one size fits all” but rather that the
training design and program should be contingent on other factors in the expatriate
Performance Appraisals in MNEs
● Performance appraisal is an important process for documenting the performance of
employees, determining areas for development, deciding on pay increases and
Appraising Expatriate Performance
● Important considerations in the appraisal of expatriate performance are who should
conduct the appraisal and what performance criteria are specific to the expatriate’s
situation. The performance of employees is appraised by their supervisor. Managers of
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What Performance Criteria Should Be Appraised?
● It is important to evaluate the specific job-related competencies of the expatriate
manager. However, assessing the competence of an expatriate is somewhat more
complex in that there are qualities they need to possess to perform their role effectively.
uncertain and unpredictable circumstances.
Appraising Host- and Third-Country Nationals’ Performance
● Appraising the performance of HCNs and TCNs is somewhat different from appraising
the performance of domestic employees in the United States. It is important for PCNs to
training.
Managing International Compensation
● The management of compensation in an MNE is one of the most complex but critically
important functions of the IHRM department. Its complexity comes from having a mix of
The Objectives of International Compensation Policy
● The first objective for an MNE is to align its compensation administration with the
strategy of the firm. Compared with the domestic firm, this alignment is much more
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HRIS would be much more complex in an MNE since multiple countries would
be involved, but compensation administration can serve several motivational
purposes. It must motivate employees to (1) join the firm, (2) be productive while
members of the firm, and (3) stay with the firm.
● The MNE’s second objective is identical but more complicated since multiple
cultures are involved. There are clear differences across world cultures in terms of
the other factors that motivate employee behaviors. For example, the meaningfulness
The Components of International Compensation Policy
● Are similar to those in a domestic company in that compensation administration has a
very close relationship with the strategy of the firm.
The Components of International Compensation
● The major components are a base salary and a set of benefits. However, extra pay
premiums would be much more complex for an MNE. For example, there may be a
Two Approaches to International Compensation
● Going rate approach. In the going rate or host-country approach, the base salary for
international employees is tied to the salary levels in the host country. For example, an
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HRIS APPLICATIONS IN IHRM
Introduction
It should be apparent from the previous sections of this chapter that management—and
HRM, in particular—in an MNE is exceedingly more complex than in a domestic firm.
International companies in the past were hampered by the lack of sources for and the slowness of
Organizational Structure for Effectiveness
● The issue of the most effective structure for the operation of an HRIS in an MNE
has been a “moving target.” The most common advice regarding the management
IHRM-HRIS Administrative Issues
● Service-oriented architecture (SOA). One of the most important approaches for
handling administrative issues in an MNE is the use of a service-oriented
architecture (SOA). An SOA is a paradigm for organizing and utilizing distributed
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● Outsourcing, Offshoring, and Insourcing. MNEs were the first organizations to
outsource many of their jobs that required low levels of skills (e.g., call centers).
Later many traditional IHRM functions like recruiting and selecting were
outsourced.
● There are tremendous financial benefits associated with outsourcing or offshoring;
HRIS Applications in MNEs
● Two issues arise when data are shared across wide geographic locations. These are (1)
managing the day/time of a transaction and (2) determining where to store the
various components of the business application, DBMS, and database.
● As part of a global information system design, organizations have chosen to break
their business application and DBMS into components, often called tiers.
Traditional client–server architectures broke an application into two tiers, typically
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CHAPTER SUMMARY
Globalization is a reality. Twenty-five years ago, it was the reality primarily for major
corporations such as GE and IBM. Now, it has become increasingly important for midsized
firms—the fastest-growing group in all countries. This chapter has examined the implications of
this globalization on the HRM function in MNEs and has documented the explosion of the HRM