The importance of International Human Resource Management (IHRM)

Question

What is HRM vs IHRM? Why is IHRM important? What are the factors affecting IHRM?

Answer

HRM (Human Resource Management) and IHRM (International Human Resource Management) differ mainly in their scope of managing employees (Stone, 2013). While HRM only deals with employees located in the home country, IHRM refers to the development, recruitment, selection and management of international employees either abroad or in the home country. The concept of IHRM has become increasingly important with the rise of Multinational Enterprises (MNEs) operating across many countries and continents (Hollinshead and Leat, 1995). Another prominent difference is that IHRM, in addition to the basic functions of HRM (such as training and development, health and safety, compensation… etc.), also includes employee training through cross-cultural communication workshops and seminars to overcome cultural barriers and to facilitate cooperation across cultures (Downling et al. 2013). The main factors which affect IHRM are legal, political, economic and cultural (Aswathappa, 2008). The legal and political factors determine how (if at all) an organisation could access a foreign labour market or employ foreign nationals in their home country. The economic dimension is important in case the organisation wants to exploit wage differences by moving operations or productions abroad. Finally, possibly the most influential factor, culture must be considered as it could ultimately determine the outcome of employing culturally different people to achieve organisational objectives.

References

Aswathappa, K. (2008) International human resource management text and cases 1st edition. New Delhi: Tata McGraw-Hill Publishing. Dowling, P. J., Festing, M. and Engle, A. D. (2013) International human resource management: Managing people in a multinational context. London, United Kingdom: Cengage Learning EMEA. Hollinshead, G. and Leat, M. (1995) Human resource management: An international and comparative perspective on the employment relationship. London: Financial Times Prentice Hall. Stone, R. J. (2013) Human resource management. Australia: John Wiley and Sons Australia.