What is International Human Resource Management?

Everything you need to know about international human resource management.

International human resource management is the process of employing, training and developing and compensating the employees in international and global organizations.

An international company is one which has subsidiaries outside the home-county which rely on the business expertise or manufacturing capabilities of the parent company. Generally, an MNC is considered to have a number of businesses in different countries but managed as a whole from the headquarters, located in one country.

International HRM deals with the typical HRM functions like recruitment, selection, training and development, performance appraisal, etc., at the international level.

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According to Hugh Scullion, International HRM (IHRM) involves the HRM issues and problems arising from the internationalisation of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalisation of business.

International Human Resource Management (IHRM) is “the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation”.

In the words of Edwin B. Flippo, “International or domestic HRM involves the planning, organizing, directing and controlling of the procurement, development, compensation, integration and maintenance of people for the purpose of contributing to organizational, individual and social goals.”

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1. What is International Human Resource Management? 2. Concept of International Human Resource Management 3. Objectives 4. Activities and Cultural Dimensions 5. Selection Process

6. Training and Development 7. Approaches 8. Practices 9. Challenges and Emerging Issues 10. Suggestive Measures.

What is International Human Resource Management?

Contents:

What is International Human Resource Management? – An Introduction
Concept of International Human Resource Management
Objectives of International Human Resource Management
Activities and Cultural Dimensions of International Human Resource Management
Selection Process of International Human Resource Management
Training and Development of International Human Resource Management
Approaches of International Human Resource Management
International Human Resource Management Practices
Challenges and Emerging Issues of International Human Resource Management
Suggestive Measures of International Human Resource Management

What is International Human Resource Management? – Introduction

An 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.

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International human resource management is the process of employing, training and developing and compensating the employees in international and global organizations. An international company is one which has subsidiaries outside the home-county which rely on the business expertise or manufacturing capabilities of the parent company. Generally, an MNC is considered to have a number of businesses in different countries but managed as a whole from the headquarters, located in one country.

According to Pigors and Myers, “International or domestic human resource management is a method of developing the potentialities of employees, so that they get maximum out of their work and give best efforts to the business organization”.

Another definition of IHRM is that “it is the systematic planning and co-ordination of the fundamental organizational processes of job and work design, staffing, training and development, appraising, rewarding, and protecting and -representing the human resources in the foreign operations of an organization”.

Concept of International Human Resource Management

The concept of HRM as we are familiar with today began to evolve from the early 19th century. But the concept of International HRM is of a recent origin. Increased international trade and widespread globalization over the past few decades have given rise to a contemporary branch of HRM, i.e., international HRM, also known as global HRM.

It deals with the typical HRM functions like recruitment, selection, training and development, performance appraisal, etc., at the international level. According to Hugh Scullion, International HRM (IHRM) involves the HRM issues and problems arising from the internationalisation of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalisation of business.

IHRM is concerned with the management of all the human resource activities in global organizations without regard to geographic boundaries. It is the process of procurement, allocation and effective utilization of human resources in international business. It is the interplay among the three dimensions human resource activities, types of employees and countries of operation.

In other words, the basic human resource processes such as HR planning, procurement, training and development, induction, compensation, performance management and industrial relations are influenced by two other groups of variables. First group of variables consists of types of employees; these may be host country nationals, parent country nationals and third country nationals.

Second group of variables consists of countries involved the host country where a subsidiary may be located, the home country where the company has its headquarters and the other countries that may be the source of finance or labour.

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.

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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.

1. It enhances to develop managerial skills, organisational knowledge and technical abilities of HR managers and employees;

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2. To develop more and better handle of global business operations;

3. To manage and secure the performance, compensation and career path of employees;

4. To manage and organise cross cultural counselling and language training programme;

5. To develop more feasible understanding of work practices at global levels;

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6. To raise and develop better and new performance management of human resources;

7. To get more and more opportunities within global HR scenario;

8. To develop better and competitive HR strategies in global competitive scenario;

9. 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.

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There are three major 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.

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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.

The cultural dimensions according to Hofstede are:

1. Power Distance Index (PDI) – The degree to which the less powerful members of a society accept and expect that power is distributed unequally.

2. Individualism versus Collectivism (IDV) – Preference for a loosely- knit social framework in which individuals are expected to take care of only themselves and their immediate families. The opposite of individualism is collectivism.

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3. Masculinity versus Femininity (MAS) – Masculinity side of this dimension represents a preference in society for achievement, heroism, assertiveness and material rewards for success, whereas femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life.

4. Uncertainty Avoidance Index (UAI) – The degree to which the members of a society feel uncomfortable with uncertainty and ambiguity.

5. Long-term Orientation versus Short-term Normative Orientation (LTO) – Cultures low on this dimensions, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Contrastingly, those high on this dimension have a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.

6. Indulgence versus Restraint (IND) – Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun. Opposite of indulgence is restraint.

The Hofstede center helps to understand how each nation features on these six dimensions and hence can give a very definitive picture of its national culture. It also lets users compare two national cultures.

Hofstede’s work established a major research tradition in cross-cultural psychology and has also been drawn upon by researchers and consultants in many fields relating to international business and communication.

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It continues to be a major resource in cross-cultural fields. It has inspired a number of other major cross-cultural studies of values, as well as research on other aspects of culture, such as social beliefs.

Selection Process of Employees in International Human Resource Management

International postings are complex and carry a lot of in-built pressures along with them. It would be erroneous to assume that the job requires the same set of skills in different locations. The local dynamics might be different; the cultural and social pressures might be too complex.

If the spouse and children join the expatriate, there are additional issues to be resolved – from learning a new language to shopping in new environs, to children finding new friends and attending new schools.

For an expat to succeed, therefore, the selection process must be rigorous and must invariably include criteria such as:

1. General and Technical Criteria:

Research findings consistently indicate that MNCs place heavy reliance on relevant technical skills during the expatriate selection process. In addition, the expatriate manager should be a good communicator, and possess management talent, maturity, emotional stability in ample measure.

2. Language Skills:

Most researchers argue that knowledge of the host-country’s language is an important factor affecting the performance of an expatriate. Where the expatriate is expected to communicate with host country subjects frequently, language skills come to occupy the centre-stage.

Tung and Anderson’s study indicated that the respondents (mostly Americans) greatly valued the ability to speak local language, regardless of how different the culture was from their home country.

3. Cross-Cultural Suitability:

Expatriate managers must be able to adapt to change. They must have the ability to translate their technical or managerial skills into meaningful action plans in a foreign environment. They should get along with local people easily without upsetting host country customs, traditions and other cultural niceties.

The expatriate managers should as a rule, have good interpersonal skills and extra-cultural openness — including a variety of outside interests, tolerance for ambiguity and non-judgmental behaviour.

4. Motivation for a Foreign Assignment:

The candidate for foreign assignment must believe in the importance of the job and possess a certain amount of idealism or a sense of mission. Applicants, who are not happy with their current situation at home and are looking to get away, rarely succeed as overseas managers.

5. Family Situation:

Several items including the adaptability of spouse and family, spouse’s positive opinion, willingness of spouse to live abroad, stable marriage comprises this factor. This factor was found to be the most important of the above list, contributing to the expat’s success or failure on a foreign locale.

Selection Process:

The selection process varies widely from country to country. Asian companies use extensive testing procedures and screening techniques. Europeans do not test as much as Asians, but considerably more than Americans. Testing in the US is not favoured because of its negative impact on equal employment and affirmative action efforts. In most global corporations, however, adaptability screening is usually followed.

The screening, carried out by a professional psychologist or psychiatrist, tries to assess the family’s probable success in handling the foreign transfer, and to alert the couple to personal problems (impact on children’s education, etc.) the foreign move may involve. Many companies more or less have realised the importance of preparing managers to work in foreign cultures. In fact, several companies try to give future managers exposure to foreign cultures early in their careers.

American Express Company’s Travel related services unit gives American business-school students summer jobs in which they work outside the United States for up to 10 weeks. Colgate-Palmolive selects 15 recent graduates each year and then offers up to 24 months of training prior to multiple overseas job stints. The overall US selection and training practices, however, continue to lag behind those of Japan and Germany.

In Japan, for example, expatriates are selected a year or more prior to their posting so that they and their families receive extensive cultural and language training. Not surprisingly, the overseas success rate for the Japanese is significantly higher than that for Americans.

Training and Development in International Human Resource Management

Careful selection is only the first step in ensuring the foreign assignee’s success. The expatriate may then require proper orientation, cross-cultural training, assistance in career planning and development, etc., in order to handle the assigned jobs in a competent way.

A. Orientation:

International positions require an extensive orientation to familiarise the employee with culture, language and other unique aspects of the assignment. Familiarisation trips could also be arranged for the prospective expatriates so that they can actually visit the country of their posting and live like natives there for a while.

The orientation programmes, generally cover areas such as:

1. Pre-Arrival Orientation:

(i) Cultural Briefing- Explaining the traditions, customs, living conditions, clothing and housing requirements, health stipulations, etc.

(ii) Assignment Briefing- Throwing light on length of assignment, vacations, compensation package, tax implications, repatriation policy etc.

(iii) Shipping Requirements- Shipping, packing, storage, housing facility in the new location etc.

(iv) Cross-Cultural Training- Differences in culture, language and laws may make it difficult for the global employees to be on track quickly. In order to lead a normal life, they need cross- cultural as well as language training. The failure to provide such training may create adjustment problems for the expatriate manager and the resultant culture shock (the inability to adjust to a different cultural setting) may compel the expatriate to quit the field altogether.

2. Post-Arrival Orientation:

Once global employees arrive in the host country, they will require further assistance in ‘settling in’. Someone should receive them and help them in obtaining housing accommodation, establishing bank accounts, getting driving licenses, arranging admissions to school for dependent children etc.

Firms can help employees avoid culture shock, of course, by using selection tools to choose the employees with the highest degree of cultural sensitivity. An important part of an expatriate manager’s training, further, should be an overview of the legal and ethical issues that are likely to be encountered on the overseas assignment.

B. Career Development:

The expatriate’s motivation to do well on an international assignment is primarily dependent on the following things:

(i) Whether the present assignment would help the expatriate to learn new things, expand his knowledge, create a unique position for himself in the organisation ladder, and grow vertically within the firm — once the job is successfully completed.

(ii) Whether the expatriate is enjoying continued support from the headquarters or not.

One of the important deterrents to accepting foreign assignments is the expatriates’ concern that they will be ‘out of sight, out of mind’. If they do not have direct and regular contact with their bosses and colleagues at headquarters, they feel isolated and thrown out of the system. To reduce their anxiety levels therefore, global companies must project foreign assignments as stimulating growth opportunities leading to continued career progression.

A monitoring system would certainly solve such issues. In this system, an expatriate is guided by a senior executive in the headquarters. This executive talk with the expatriate regularly, ensures that the expatriate’s name is submitted during promotion and development discussions at headquarters and resolves any headquarters-related problems faced by the expatriate.

Another approach has the expatriate coming back to the home office occasionally to foster a sense of belonging to the organisation. Alternatively, mini-sabbaticals could be offered to the expatriate and his family so that he or she can be in touch with current happenings in the headquarters.

MNCs Approach to International Human Resource Management

MNCs can approach the management of international human resources in a number of ways:

1. Ethnocentric Approach:

Here the MNC simply transfers HR practices and policies used in the home country to subsidiaries in foreign locations. Expatriates from the MNCs home country manage the foreign subsidiaries and the MNCs headquarters maintain tight control over the subsidiaries policies.

2. Polycentric Approach:

In this case, the subsidiaries are basically independent from headquarters. HR policies are developed to meet the circumstances in each foreign location. Local managers in the foreign sites are hired to manage HRM activities.

3. Region-Centric Approach:

This approach represents a regional grouping of subsidiaries. HR policies are coordinated within the region to as much an extent as possible. Subsidiaries may be staffed by manager from any of the countries within the region. Coordination and communication within the region are high, but quite limited between the region and the MNCs headquarters.

4. Geocentric Approach:

In this case, HR policies are developed to meet the goals of the global network of home country locations and foreign subsidiaries. This may include policies which are applied across all subsidiaries, as well as policies adapted to the needs of individual locations depending on what is best to maximize global results.

The firm is viewed as a single international business entity rather than a collection of individual home country and foreign business units. HRM and other activities throughout the MNC are managed by individuals who are most appropriate for the job regardless of their nationally. Thus, one may find a British manager handling HRM activities in the New York office of a Dutch MNC.

Practices of International Human Resource Management

An organization needs to consider the purpose for which it needs to send the employees for international assignments. For example, an organization may send its employees aboard to set up or explore a new market, or prepare them for top management positions. After the purpose of the international assignment is specified, the organization can initiate the process of selecting the best employees for the international project.

The following are the aspects of concern in IHRM:

i. International staffing

ii. Pre-departure training for international assignments

iii. Repatriation

iv. Performance management in international assignments

v. Compensation issues in international assignments.

i. International Staffing:

International staffing refers to the selection of the most appropriate employees for international operations of an MNC.

The selection of the most appropriate employees can be done by using the following three sources:

a. Home Country or Parent Country Nationals (PCNs):

Refer to the citizen of the country in which the headquarters of the MNCs is located. PCNs are not the citizens of the country in which they are working. For instance, an Indian citizen who is posted to an overseas subsidiary of an organization that has its headquarters in India is a PCN. In addition, PCNs are termed as expatriates.

Generally, PCNs are hired to occupy key and top-level management positions because they possess sound knowledge about the operations of parent organization. The knowledge about parent organization helps the PCNs in ensuring proper linkage between foreign subsidiaries and the headquarters. However, hiring PCNs is a costly affair for an organization as it has to bear the relocation cost for them.

b. Host Country Nationals (HCNs):

Refer to the employees of an organization, who are citizens of the country in which the foreign subsidiary is located. An Indian manager working in an Indian subsidiary of a US organization is an HCN. For example, IBM normally hires HCNs. In addition, HCNs generally occupy middle and lower management level positions. The recruitment of HCNs is not a costly affair for an organization because it does not need to incur extra cost in cross-cultural training of employees.

c. Third Country Nationals (TCNs):

Refer to the citizens of a country, other than the country where the organization is headquartered and the country that is hosting the subsidiary. Staffing is done on the basis of ability and not on the basis of nationalism. For example, a British citizen working in the Indian subsidiary of an organization whose headquarters is located in the US, is termed as a TCN. You should note that a TCN has substantial international experience and exposure that is quite advantageous for an organization.

The approach of internal staffing differs from organization to organization.

Some of the popular approaches for international staffing are explained in the following points:

a. Ethnocentric:

Refers to an approach in which all strategic decisions are made at headquarters and foreign subsidiaries are endowed with very little autonomy. PCNs or expatriates occupy key positions at headquarters as well as in subsidiaries. They control all the critical areas of operation, such as finance, production, and quality. McDonald’s is an organization that follows the ethnocentric approach.

b. Polycentric:

Refers to an approach in which MNCs treat each foreign subsidiary as a distinct entity. Therefore, each foreign subsidiary is provided with little autonomy to make its own decisions. The MNCs, which follow polycentric approach recruits HCNs in their foreign subsidiaries. The staff at headquarters comprises PCNs because HCNs are rarely promoted to key positions at the headquarters.

c. Geocentric:

Refers to an approach in which the focus is on staffing the best employee for a particular position. The geocentric approach is based on an integrated global philosophy. The MNCs following the geocentric approach may recruit PCNs, HCNs, or TCNs for any position in the headquarters or subsidiaries. The nationality of the candidate is not the key to staffing because the MNCs focus on the ability of the candidate.

ii. Pre-Departure Training for International Assignments:

There are various cultural differences that exist between countries. No two countries have similar or uniform cultural and societal norms and practices. For instance, the US society does not believe in rituals, ceremonies, or formalities as Indians do. Therefore, employees should gain knowledge and understanding of the country’s culture in which they are going to work.

It is the responsibility of the organization that its employees posted abroad should get proper cross-cultural training. This training should focus on skills that are needed to attain success in the international assignment and understanding cultural differences and socio-political environment of the country. Therefore, cross-cultural training has become very important for MNCs. Organizations, such as Coca-Cola, Procter & Gamble provide intensive training to their employees to prepare them for international assignments. These training sessions are usually conducted in the country where the employees are posted.

An organization must take into consideration the employee’s family, lifestyle, number of children, and preferences for the successful relocation of an employee to a foreign country. The organization should provide a pre-departure training to both employees and their families.

The pre-departure training, also known as expatriation, makes it easier for the employee to adjust to a different culture and assume job responsibilities in an effective manner. The pre-departure training covers three main aspects, such as language training, training to manage personal and professional life, and cultural training.

In addition to providing a pre-departure training, the organization helps the employees in relocating and finding transport and housing in the foreign country. It is important that an organization maintains regular contact with the employees posted aboard and keeps them informed about important organizational development and changes.

iii. Repatriation:

Repatriation is the process of bringing expatriates back to the home country after the completion of the international assignments. For expatriates, the return of expatriates to the headquarters of the organization within the parent country is accompanied with certain fears and anxieties pertaining to readjustment in the old position and job responsibilities.

It is important that the organization takes appropriate steps and initiatives to manage these anxieties and make the re-entry of expatriate to parent country easier. For instance, an organization may not have planned the return of the employee; therefore, he/she may have to remain without any position/portfolio in the organization for a while.

In addition, the managers of the parent country fear that a foreign-return employee may get a better position than them. The organization can resolve this issue by entering into a repatriation agreement with the employee that specifies the maximum tenure of the foreign posting, the nature and type of job he/she will be given upon return and the salary to be expected upon return. In addition, the organization should assign a senior manager as a mentor for the employee posted abroad to take care of his/her career interests.

iv. Performance Management in International Assignments:

Performance is the result of a combination of several factors, such as motivation, skills, experience, ability, and working conditions. Therefore, these factors should be taken into consideration to assess the performance of employees whether they are on international assignments and domestic assignments.

Financial compensation offered to the employee must be in accordance with the skills, level of responsibility, and the performance of the employee who is assigned an international project. If the inadequate financial compensation provided to the employees, it may result in loss of motivation.

The standards expected from employees and the tasks assigned to them must be clearly communicated. In addition to cross-cultural, technical training should be provided to employees. If employees fail to understand their roles and responsibilities and cultural differences, it will adversely affect their performance.

A major problem with expatriate performance evaluation emerges due to dual loyalty of the expatriate towards the home country (parent) as well as the host country. If there is a lack of regular communication between the managers of host as well as home country, it becomes difficult to understand and assess the contribution of the employee to the organization.

v. Compensating Expatriates in International Assignments:

One of the most important and complex aspects of IHRM is related to expatriate compensation (compensation given to employees posted abroad). Different norms of compensation are followed by different countries. An organization often adheres to the compensation laws of the country in which the expatriate is posted. Compensation is an important motivational tool for employees.

If the employees are not adequately paid for their services rendered, it may lead to dissatisfaction and loss of employee morale. An organization should make flexible plans that can be changed as per the industry norms and standards prevailing in different countries to accommodate particular needs of employees posted in different locations.

While designing the compensation package of expatriates, their needs and aspirations must be taken into consideration, as different expatriates have different sets of needs. For example, if expatriates live close to the office premises, they would not need a travel allowance, whereas the other one who stays far off may require a travel allowance. An expatriate may feel that money is the sole motivator, whereas another expatriate may feel that non-financial rewards in the form of recognition, challenging tasks, and innovative projects are far more motivating.

Therefore, an organization must identify the needs and aspirations of expatriates and accordingly provide them with appropriate compensation. For instance, Americans value performance-linked pay plans as they feel money is the main motivator. However, Japanese and Indians feel more satisfied and content with non-financial incentives, such as prestige and recognition.

Expatriate compensation must be just, fair, and equitable and in accordance with the international compensation norms. There are numerous factors, such as country’s compensation laws, cost of living, taxation policies, and currency value, which play an important role in determining the compensation packages of an expatriate. In addition, health benefits and insurance can be a part of expatiate compensation. An expatriate can also be compensated for the cost of housing and schooling of children.

Challenges and Emerging Issues in International Human Resource Management

There are certain problems and challenges as arising within the process and methods of global HR scenario.

Some of the challenges and emerging issues in IHRM are:

1. Ethics and corporate social responsibilities

2. Bribery

3. Code of conduct for MNCs

1. Ethics and Corporate Social Responsibilities:

Ethics and corporate social responsibilities in the international business environment are always debatable. MNCs have been accused of being indifferent to the problems of host countries as they are more concerned about the profitability of their companies. MNCs have to balance the ethics and moral of their country and host country.

i. Ethical relativist

ii. Ethical absolutist

iii. Ethical universalist

i. Ethical Relativist:

An ethical relativist believes that there is no right or wrong. What is right in a particular situation in one place may not be so in another. Relativism offers flexibility but may prove to be disastrous in the long-run for an MNC.

ii. Ethical Absolutist:

An MNC which believes in this approach is strongly influenced by the practices and policies of its home country. They do not give much importance to the culture and values of the host country. Ethical absolutists have been criticised for their arrogance and for showing little respect to the traditions and culture of the host countries.

iii. Ethical Universalist:

An ethical universalist believes that there are fundamental rules which help us differentiate between right and wrong. These rules need to be adhered to in any country and in any situation. An ethical universalist believes that cultural variations between countries should not lead to any wrongdoing on the part of the MNCs. There is a distinction between practices which are culturally different and ones which are morally wrong. MNCs should understand this difference and work towards achieving high ethical standards.

2. Bribery:

According to a survey conducted by J. Macken, developed countries give around $85 billion to underdeveloped countries in the form of bribes. MNCs from developed countries have been accused of bribing Government officials. Hence, countries should frame laws to prevent corruption. For example, in the US, there is a law called Foreign Corrupt Practices Act (FCPA), which prohibits US- based firms from bribing officials in other countries.

3. Code of Conduct for International Business:

The first step in framing a code of conduct for international business players came in the form of the Caux Roundtable Conference on ‘Principles for Business Conduct’ held in 1994. It was a conference on international business ethics, held at Caux in Switzerland and was attended by the business leaders from all countries.

The focus was to formulate a set of rules and ethical codes which would be used for benchmarking global business practices. Major work on this issue was done at Minnesota centre for corporate responsibility in the US. The main aim of Caux conference as given in the charter is, “to further the twin value of living and working together and human dignity by promoting free trade, environmental and cultural integrity and prevention of bribery and corruption.”

Suggestive Measures in International Human Resource Management

Within global scenario, in order to make a perspective viewpoints about international human resource management, the suggestive viewpoints are as given here:

Measure # 1. Significance of Individualism:

It is necessary to beware of the customs in which the people interact with each other. Some societies encourage individualism. Their belief is that if everybody takes care of himself. Then it would not be necessary to take care of anybody else. There are other societies which are characterised by a tight social framework where in exchange for loyalty, people expect to be taken care of.

The HR managers and organisations must recognise this trait. In America, as another type of example, people shake hands with each other when they meet, while in the Middle East, they embrace each other, and in Japan they bow their heads to each other.

Measure # 2. Overcome the Ethical and Legal Conflicts:

It is required to develop an understanding of how ethical and legal conflicts relate to managerial and organisational effectiveness, as well as how managers can work and manage their ethical and social responsibilities.

Measure # 3. Establish One-to-One Relationship towards Build Trust:

It may seem obvious, but an organisational relationship is built on many one-to-one relationships between members of each organisation. People who will be working together and taking risks together will need to get to know each other and establish trusting relationship. It may be possible by different ways. Some of the managers and employees can meet for informal discussions, recreation events, retreats, social events or other informal gatherings.

Measure # 4. Develop Basic Knowledge:

It is needful to develop a basic knowledge of how different culture work, what makes them unique, and how managers can work successfully across such environment. If culture and cultural differences can play an important role in managerial success in the global arena, it is logical to develop a greater understanding of how cultures differ and how they influence attitudes and behaviours across the globe.

Measure # 5. Involve the Stake Holders:

Within determine and implement the plans, programmes, process and strategies concerning of HR practices, it is needful to involve all the stakeholders. The stakeholders are group leaders, HR managers, staff, employees and other people who can help directly or indirectly the issues of HR scenario.

Measure # 6. Develop a Learning Strategy:

For better growth and career oriented HR practices there is need to develop training programmes, cooperative tendencies, motivational aspects, innovative ideas, new methods of techniques etc.

Measure # 7. Develop Effective Cross-Cultural Communication Skills:

It is often said that communication is the glue that holds organisations and inter-organisational relationships for best HR management together. It is also said that perceptions and patterns of what is being said is in the eye of the beholder. Here we discuss the relationship between language, logic and communication, as well as the challenge of working with colleagues who think and speak in a different language.

Measure # 8. Develop the Geocentric Approach:

At international level, the parent and host organisations must focuses on skills, competencies, abilities and efficiencies of the people who are involved in the working at global assignments. In this approach, the concept of nationality have a little attention within HR staffing.

Measure # 9. Managing the Pre-Departure Training Programmes:

International companies should develop the pre-departure training programme to provide various knowledge and skills for performing the foreign assignments.

Measure # 10. Motivational Compensation Package:

It is required to design motivational compensation packages for employees. By and large some of the important components of this package are cost of living adjustment, incentive benefits, travel allowance, home leave, relocation allowance, currency differential payments and hardship posting allowances etc.