International Human Resource Management

Introduction

International human resource management (IHRM) focuses on management of employees in organisations that are in different countries. Due to the fast growth of the global marketplace, the roles of employees are vital in the capacity building of a company. The primary aim of IHRM is to discriminate the varying roles and functions of the various activities within the management of human resources. IHRM considers several challenges that are in managing expatriates in their country and other foreign countries within the multinational, transnational corporations and other types of international organisations (Merlot, Fenwick & Cieri, 2006). Through this, there is a well understanding of the human resource management, comparative management and organisational behaviour. The objective of the IHRM is to maintain competition throughout the world, efficiency, local, responsive, and flexibility and adaptively of the company (Lee Jungah & Chunsu Lee, 2013). This paper attempts to address the key issues involved in the international human resource management (IHRM).

There are three main issues in IHRM. The first issue is the expatriate management and development that involves selection, compensation and repatriation of the failures of the expatriate. For example, the case study of Drill Bits an Australian company, Jason Goldthorpe, a manager in the company Andrew Sculzinski is a principal mining engineer. Goldthorpe discussed briefly with Sculzinski on the operational matter in the USA. After the discussion, Sculzinski was offered an expatriate assignment to Chile. He was selected to take the international assignment due to his vast technical knowledge and was willing to learn.  Goldthorpe asked Caroline the company’s human resource manager to prepare a compensation package for Sculzinksi.

The second issue is the internalisation of management throughout the organisation, i.e., the host country, parent country and other third countries. The case study for Drill Bits Company has subsequently secured contracts with almost all major mining ventures in Australia for the past 20 years. The company has earned an extensive reputation in the mining industry due to its commitment to manufacturing quality products and offering timely site services. Drill Bits had been persuaded severally by high profile local companies to start exporting the products to the offshore mining sites in USA as well offer site services. The company started exporting while under enormous management pressure that resulted in Marcus Goldthorpe appointing his son Jason Goldthorpe to oversee the company’s internalisation.   

            The third issue in the IHRM is the need to internalize the whole organization. It is due to the increasing interactions of cross-cultural in doing business at home and abroad that are mainly cultural communication, as well as language and communication (Lee Jungah & Chunsu Lee, 2013). As the business of the Drill Bits Company with international market continued to strengthen, Jason Goldthorpe travelled to USA. While in the USA, he contracted with two local agents to manage the USA drill bits importation. The arrangements that he had with the clients began to fail as the customers were complaining of the availability of agents at critical times. Jason Goldthorpe was appointed to the managerial position when he had no skills in management. These skills are vital in internalizing organizations in the international context.

Another issue is communication between the members of an organization. The local knowledge is meant precisely to a host country in its economy, socio-cultural factors or language. In the case study, there were five members of Scultizising’s team that was feeling uncomfortable with their quality controller Gavin. It could result in a lack of cohesion between all members. On one occasion, the lack of cohesion within Sculzinksi’s team resulted in an unfortunate communication situation. It led to delayed deliveries to a client that saw Drill Bits accepting the contract penalty costs.  In order for corporations to operate strategically, they need to link foreign assignments more closely according to the requirements of the strategic operations (Dickmann, 2015). A careful assessment is conducted to determine whether an expatriate is the best choice in the global sourcing decisions. It implies a need to assess the expatriate in terms of cost effectiveness.

For effective management of expatriates, organisations need to focus on issues that are essential to ensure effective expatriate management. A strategic approach is required to account for the whole process of the expatriate cycle. The planning stage is the start of the period. , expatriates are sent abroad due to the following reasons: controlling and coordinating operations, transfer of skills and knowledge as well as managerial development (Harris, 2015). As in the case study of Andrew Sculzinksi’s assignment to Chile, Sculzinksi is a principal mining engineer with Goldthorpe Drill Bits Pty Ltd (Drill Bits), and Jason Goldthorpe is the manager of the organisation. Goldthorpe and Sculzinksi discussed the operational matter in the USA briefly. The discussion resulted in Goldthorpe offering Sculzinski a 3-4 year expatriate assignment to Chile. Goldthorpe failed to employ a strategic approach that is a requirement in the expatriate cycle. A strategic plan is a vital aspect in managing expatriates.

Analysis

The studies of the IHRM theory focused on the western expatriates assigned offshore duties to their respective multinational corporations (MNCs). According to the earlier studies, expatriates were usually constituted with technicians and managers. Their MNCs assigned them to overseas that were culturally different locations for an extended period. Some of the studies implied that the expatriate process was inherently involving hardship for the expatriates as well as their families. The earlier perspective of the theory of IHRM and expatriate consisted of several assumptions that seem to be out of hand in the current situation businesses experience at the international level. (Harzing & Ruysseveldt, 2004).

The first assumption of the theory was IHRM concerned the management of long term expatriates employed by multinational companies. The assumption focused on expatriates who spent up to a decade carrying out their duties in various designated host countries. The expatriates were usually characterising professionals like senior managers who played a significant role in the field (Merlot, Fenwick & Cieri, 2006). These expatriates acted as representatives of how business transactions were carried out in their home countries to the companies in the companies in the foreign land. There are studies available that have focused on the involvement of professionals on the short contracts at the international level. Good examples of professionals who take such contracts are like the consulting engineers and managers that have an aim of developing ideas in the global market. In the Drill Bits case study, Sculzinski was offered an expatriate assignment that was to last for 3-4 years. The case study is significantly showing the reduced expatriate assignment period to less than five years. 

The second assumption of the theory depicted that there was a high rate of expatriates failing to execute their duties effectively. The significance of the assumption was that the businesses on the international levels were not making profits as the operation cost was much higher due to the extreme failures of expatriates. The studies of IHRM suggested that expatriates accompanied with their respective families were not in a position of adjusting to the cultural practises in other countries. Also, there was another reason for slow environmental adaptation was widely experienced with the expatriates while in the foreign land. It shows that there were many international companies that had not put in practise proper ways in the preparation of their staff for overseas assignments.

The third assumption was the demands of the hardship of international location that considered compensation mainly financial with the aim of encouraging expatriates to accept the jobs. The theory assumed that the relocation in the overseas was always inherently problematic. It did not matter the involved country host or the similarity in culture and socioeconomic practices to that of the country origin of the expatriate. For instance, expatriates from America may be given an international task that is in Chile, Mexico or Australia may be considered to have an equal level of hardship and alienation. Therefore, it implies a similar compensation payment for relocation. The traditional approach supported a substantial relationship between expatriate duties, financial compensation as well as difficulty.  The approach encouraged the relationship despite the negative issues experienced in real life business situation in several locations hosting the expatriate employees.

Increased use of expatriates was as a result of globalisation was the fourth assumption of the IHRM theory. The assumption was challenged both empirically and logically in changing the nature of the global business and the economic realities of globalisation. Greater cost effective emphasis was as a result of ever increasing global competition hence leading to failure rate that was unacceptable. The road path that globalisation is taking has also placed the local staffs at a position of acquiring requisite knowledge, as well as the required skills. The focus on cost reduction and increased productivity in the international business has suggested that there may be a possible decrease in the deployment of expatriates. Development of new perspectives is a requirement in the activities of globalisation in the regional and international economic levels. It will inform contemporary issues related to IRHM in the international business (Ashamalla, 1998).

Global corporations have increased the use of the alternative forms of organisations in different countries. A good example is the airline industry, many of the companies involved have made efforts to being a member of the alliances available so that they help them acquire a share in the competitive market. It also enables for technology transfer as well as facility sharing and to benefit from economies of scale. The business environment that is highly competitive will require new approaches that offer unique ways in employee staffing to fit the demands of operations in the international levels of business. These are the IHRM designs that offer short-term contracts, as well as “single status” expatriates. It is with the aim of avoiding the persistence of having situations of family members feeling uncomfortable relocating.

International corporations are now adopting localisation that opts to offer employment to local people and is thought to be advantageous. There is a preference for localisation system over the hiring of expatriates. Localisation fundamentally is concerned with the aspect of efficiency, equity, and control in the business environment. The economic crisis that was experienced in Asia back in 1997 had a negative impact on the deployment of international managers. It signified that there would decrease in numbers as a result of the sharp focus on cost minimisation. There are significantly reduced numbers in the deployment of expatriates especially in the Australian and the United States companies. It is due to the currency instability in Asia that has led to imperatives of having reduced costs (Ashamalla, 1998). There are international companies based in Japan that have come up with a way of eliminating some expatriate duties with the aim of reducing expatriate deployment in the response of kerbing the problem of employee relocation resistance. They also have a growing recognition of the available skilled local staff.

Solution

The theory outlines what an expatriate requires so as to be competent. It suggests that they need to possess unique qualities, skills, and specific competence in managerial for the designation of specific overseas deployment. The characteristics of a successful international manager need to have good communication skills, cultural flexibility, extensive social network, collaborative negotiation style as well as a cosmopolitan orientation. Approaches like this reinforce the active need for international personnel who provide skills that are unique enhancing their competence in their field of work. According to Ashamalla (1998), business in the international levels needs a high standard of skills that help in proper business operations. The staffs that are deemed to work on the international levels should be selected according to their identities based on socio-biography. It includes their gender, age, and ethnicity to ensure easy transition and acceptability in the foreign overseas location.

The early IHRM theory emphasised on management skills that were effective in the international environment. According to the previous studies, it is evident that there are many foreign corporations that do not offer required preparations to expatriates before assigning them duties (Ashamalla, 1998). The assertations are that the theory of international management is required to cater for appropriate preparedness and choosing of expatriates that will have the capacity to cope and adjust quickly to the culture of host-country. According to the staged approach to enculturation bases, foreign employees need to know what they require in the aspect of work adjustment, preparedness, interactive and general changes. The trainee analysis would result in diverse information and training responses.

Every aspect of the international expatriate management is apparently experiencing changes in the global structure. The international companies involvement in franchise arrangements with other companies has eliminated the justification for expatriate compensation. In the coming future, foreign level managers will have to acquire different skills commonly acquired in the field. It involves much of practical aspect rather than theoretical programmes. They need to be competent in every aspect of the host country’s language hence good communication skills.  

The theory of IHRM has strengthened correlations of exploration with that of inequality salary payments based on compensating employees working in the hardship locations. The argument on compensation is not easy to sustain as there is contemporary evidence that indicates companies tend to be towards flex patriate payment system rather than expatriate payments that are fixed. A recent case study found their respondents suggesting that there was a significant reduction of expatriate pay. Also, another case study finding revealed that almost a third of the international corporations had withdrawn premium services to their expatriates. Cost concern converges as there is evidence of inequality of how much salary expatriates earn compared to how their counterpart local workers receive (Harzing & Ruysseveldt, 2004). In the recent years, localisation campaigns are in countries like Hong Kong, Malaysia and Singapore.

The 1997-1998 Asian economic crises led many international companies to re-assess their packages in respect to remuneration and expatriate. A company like Motorola found out that the payroll of its barely 150 emigrants who were executing their duties in China was exceeding that of its local workers who were more than 5,500. It may have reflected the need for Motorola to maintain control of its burgeoning operations in China. The issue comes up that a company could have a potential of benefiting when there would be fair treatment and payroll balance for expatriates in relation to their local workers. Therefore, the suggestion is that a revision of the expatriate remuneration system is needed as it merely shows how multinational corporations focus on reducing all their operation costs (Dickmann, 2015). It will result in the companies maximising their competitiveness in the international markets.

In conclusion, for development to be positive there is a need for in-depth integration within the IHRM. The combination will help have a plan that strategically offers room for development on the issues of local and international management. It will allow a careful involvement of the considerations of the precise type of expatriate duty done in a given foreign land.  It will enhance a defined relationship of management personnel and the expatriates in locations that experience hardship. Required level of correlation within the managing department and the expatriate must have appropriate consideration as well as comprehensive selection methods. It will help to get the most qualified expatriate as well as determine appropriate programmes to given during their training that is according to how the work requires. The contemporary practices of the IHRM pose a challenge to the theory’s proposal in various aspects. The projections are that MNCS will employ expatriates that are middle and senior level managers to oversee the operations in foreign locations at the international levels. The option of the less expensive expatriate contract will have no significance as there are many alternatives available in the restructured international operations.

The recommendations are that new approaches to the international business should be adopted to achieve the innovative approaches to global staffing. It includes understanding the role of international manager and professionalism, their selection and employment conditions that are strategically innovative. Also the recognition of their relationship with their parent company that is more holistic, and carefully calculated flexible payments that coincide with their particular skills and their identified competencies. There is a need for implementation of research programmes that focus on non-multinational companies engaged in a joint venture or strategic alliances. More research on the links in practices, as well as strategies of domestic and international HRM, should be conducted. Primarily, the new approach of the IHRM should imply that globalisation results in international assignments to be standard, short-term in duration and more frequent. It will also focus on the future understanding of recruiting employees of the foreign firms with varying skills that are offshore. It implies that the traditional expatriate assignment is seemingly declining. The academics challenges must develop new frameworks generated from activities that are research-based. The human resource practitioners are challenged in testing and shaping the solutions so as to fit particular global business contexts.

References

Ashamalla, M. (1998). INTERNATIONAL HUMAN RESOURCE MANAGEMENT PRACTICES: THE CHALLENGE OF EXPATRIATION. Competitiveness Review, 8(2), 54-65. Doi: 10.1108/eb046368

Dickmann, m. (2015). Assessment of strategies, structures and processes of international HRM (1st ed.).

Harris, h. (2015). The role of international human resource management (1st ed.).

Harzing, A., & Ruysseveldt, J. (2004). International human resource management. London: Sage Publications.

Lee Jungah, & Chunsu Lee, (2013). A Study on the Effect of IHRM to Firm’s Competitive Advantage. International Commerce and Information Review, 15(1), 135-159. Doi:10.15798/kaici.15.1.201303.135

Merlot, E., Fenwick, M., & Cieri, H. (2006). Applying a strategic international human resource management framework to international non-governmental organisations. International Journal of Human Resources Development and Management, 6(2/3/4), 313. doi:10.1504/ijhrdm.2006.010402