This paper examines key components of international human resources management (IHRM) for mid- to large-sized corporations operating across national borders. It discusses how rapid advances in communications technology and global commerce have forced companies to adapt their HR practices beyond domestic norms. The paper addresses three central areas of change: staffing decisions involving parent country nationals (PCNs), host country nationals (HCNs), and third country nationals (TCNs); the development of a multicultural-supporting organizational culture; and the complexities of international compensation. Together, these areas illustrate how IHRM requires significant adjustments to standard HR practices in order to maintain organizational effectiveness, ethical standards, and cultural sensitivity.
In today's fast-paced, highly interconnected, and interdependent business environment, most companies — even those of medium size — that are attempting to grow and remain significant and viable players in their industry have had to include some level of international expansion, hiring, or at the very least contracting. The rapid growth in communications technologies and the ever-increasing efficiency of shipping have made international commerce not simply easier and more sustainable, but the new way of life for most businesses and industries. This has led to new challenges that must be overcome in order to take advantage of the opportunities provided by the existence and availability of a truly global market across many industries.
One area in which significant changes have occurred is human resources management. As more and more individuals from different countries find themselves working with each other, and/or for foreign companies in foreign lands, a host of issues has emerged that makes international human resources management considerably more difficult. Many of the concepts and practices in international human resource management (IHRM) are still largely the same as in standard human resource management, but certain details in all elements require change or adjustment, and several large-scale changes must be made in management practices (Vance & Paik, 2006; Dowling et al., 2008). This paper examines several key components of change in international human resources management for a typical mid- to large-sized corporation operating internationally.
One of the most basic changes that must be made when a company begins to operate internationally — one that might seem obvious yet contains many subtle details that can be overlooked — is in the staffing of the firm (Dowling et al., 2008). Internationally operating business organizations have significant options when staffing managerial and leadership positions that do not exist for domestic companies. Such figures can be parent country nationals (PCNs, from the country where the company is based), host country nationals (HCNs, from the country where the manager or executive will be working), or third country nationals (TCNs, from another country where the organization operates) (Dowling et al., 2008; Stahl & Bjorkman, 2006). There are significant advantages and risks to each selection, and the multicultural as well as personal and organizational issues involved must be taken into account when making such decisions (Stahl & Bjorkman, 2006).
The choice between PCNs, HCNs, and TCNs is not merely an administrative decision — it carries strategic and cultural implications that can shape the effectiveness of an entire international operation. Expatriate assignments, for example, are costly and carry high failure rates when cultural adjustment is underestimated, making the careful evaluation of each staffing option essential to long-term success.
"Integrating diverse national cultures within organizations"
"Balancing company pay standards with local cultural expectations"
There are few issues in international human resources management that are wholly distinct from issues in domestic human resources management. Nevertheless, significant changes and adjustments must be made in order to properly account for all of the specific considerations that arise in IHRM. The discussion above touches only briefly on a few of these issues, providing a concise yet revealing glimpse at the complexity and importance of international human resources management for organizations operating in today's global business environment.
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