What is the Importance of International Human Resource Management (IHRM)? Increasingly, companies are being wooed to expand into foreign lands and ‘globalization’; a word so commonly hear nowadays till it seems to be a facet of modern business model. Some underlying reasons for companies to go global are technological advancement, cost efficiency, and trade specialization. The above mentioned are just the tip of an iceberg as there are much more incentives that attract companies to globalize. However, as organizations reach outward for the market, many failed to recognize the importance of international human resource management (IHRM). Those organizations which hold little regard or no importance for IHRM often suffered setbacks and ‘chain effect’ consequences.
According to Stening et al, while the internationalization of business has increased opportunities for organizations and staff, it has inevitability created a myriad of Human resource management (HRM) challenges related to the diverse, multicultural workforce. More than often, these challenges prove to be much more complex and subtle.
In this essay, we will first look into the disparity between domestic and international HRM, the factors and elements that impetus the importance of IHRM, and the knowledge and skill that are so relevant, yet scarce in our modern organization's structure. On top of that, we will be looking into the areas of problems and challenges that HR managers and expatriates constantly faced.
The difference between Domestic and International HRM (IHRM);
Many organizations often have a misconception when it comes to IHRM. They often think that they could simply apply domestic HRM policies overseas and attain the same desired result back home. There is a vast difference between domestic HRM and IHRM, where the latter is much more complex and challenging. According to, domestic HRM is being defined as:
‘HRM is practiced within the geographical boundaries of one country. Its focus is the management of people in a single-country context’
While International HRM is being defined as:
‘HRM as practiced by multinational organizations. Its focus is the management of people in a multi-country context’
From Stone’s definitions, we can roughly tell the difference between domestic HRM and IHRM. Where domestic HRM is only practical in a single-country context, IHRM is applicable globally.
Conceptualization of International HRM policies;
Deriving from the basics of Human Resource Management (HRM), International HRM can be viewed as an add-on to the already existing HRM policies. Posed some valid questions concerning developing international HRM policies. Some examples were: what kind of organization are we looking at? Are we looking at a home country organization, a multinational organization, or a truly global organization? What are the organization’s mission and vision?
What is the organization's core business and how can the organization be successful? And lastly, what type of culture is desired in the organization. By answering Stone's questions, HR managers can then conceptualize the basic foundation of the organization, to set and streamline their HR policies to the organization's objectives. With that, we will be able to ensure that the organization and its people are moving in the same direction.
Challenges faced by International HRM;
Practicing HRM in a different environment, culture, and ethics background is sure challenging. Nevertheless, if IHRM is being executed appropriately, the reward reaped will contribute to the organization’s growth indirectly. Some typical challenges that the HR managers faced are cross-cultural issues; training and development, remuneration package, performance appraisal, and international staffing process. To fulfill these challenges, the HR managers must be sensitive to the people and adaptable to the environment while their organization establishes a foothold globally.
Cross-cultural issues;
Cross-cultural issues can turn disastrous if the HR managers are ignorant or refuse to spend efforts to understand the situations. Often so, this is the starting point where most misunderstandings and problems spawn. We will examine the few aspects of cross-cultural issues namely: communications, ethics, and management style.
Cross-cultural communications;
According to, cross-cultural communications occur when a person from one culture communicates with a person from another culture. Simple gestures, facial expressions, and words can turn out to be very different in meaning, depending on the individual culture and priority they have for ‘what’ and ‘how’ things are being said or written. Stone went on further to break cross-cultural communications into two parts, high-context cultures, and low-context cultures. Quoting from, high-context cultures can be defined as:
‘Cultures where non-verbal communications (such as body language and gestures) and indirect language are used to transfer meaning’
And low-context cultures are being defined as:
‘Cultures where verbal communications are explicit and direct. What is said is what is meant.’
High-context cultures can be commonly found in Asia countries where great importance is being placed in personal relationships like family relationships and friendships. HR managers must interpret the true meaning of what is being said over what the other party means. Failure to do so will lead to unnecessary misunderstanding and confusion.
Low-context cultures on the other hand are straightforward. This culture is most prevalent in a western country where ‘YES’ means yes and ‘NO’ simply means no. HR managers should not ‘beat around the bush’ when handling such situations. A direct and concise approach will lead to the progression of the matters on hand.
Ethics;
Ethics can be explained as the ability to differentiate between right and wrong. It is a moral value instilled in one since young, and changes constantly due to environmental, religious influences, and education level. What may seem right to you may be a big taboo to others. As there are many ‘grey’ areas where ethics is a concern, extra sensitivity should always be bear in mind. This is especially so in situations where organizations do business in places where bribery and corruption are the key to business success or should organization exploits the workers to their advantage when there is no worker union remains unanswered. HR managers should always refer back to the organization's values and direction to align their judgment and ethics to the best of the organization.
Management style;
Management style can be greatly influenced by the culture and the organization's structure. For example in Singapore Arm Forces (SAF), a military organization; the management style has to be a top-down approach. When the commander has given specific instructions, the rest will follow with no question asked and this management style is extremely critical, especially during wartime. Interestingly, this top-down approach or autocratic style is very common in Asia, mainly due to the respect and trust a subordinate has for their superiors, a clear display of cultural influence.
Another management style that is a contrast to the top-down approach is the paternalistic style. This particular management style allows subordinates and their superiors to be on equal ground, allowing decision-making to be distributed equally. This kind of management thrives in sectors where collative ideas are imperative to the success of the organization. A good example will be the engineering or research sectors where there might be chances of a better idea coming from the subordinates instead.
This kind of management style is widely practiced in western countries like the United States, where children are taught to ask questions whenever they don’t understand. Whichever management style is applied will have to depend on the host country and their cultural background as well as the organization's core business. HR managers will have to be open-minded and flexible as there is ‘no one medicine that cures all illness’.
Training and development;
Training and development in a foreign country can be a tricky issue. According to, diversity of the workforce, language, and cultural differences will influence how the training and development program be structured. A very good example will be the language of the program to be conducted, should English or the host-country language be used? Are there any taboo topics that should be avoided?
Which type of learning style will attain the most desired result, instructional or facilitative style? These are the few areas of concern that HR managers will tend to encounter frequently. As a general rule of thumb, new and innovative training and development can be good, but at the same time, it should not deviate too much from the cultural norms. To ensure that the best result can be achieved while not creating confusion and difficulties for the participants.
Remuneration package;
‘National culture is an important consideration in strategic remuneration’ Remuneration packages will vary in different parts of the world, depending heavily on the cultural environment of the host country. In places where seniority is valued, the remuneration style will be based on the rank and the number of years in service to the companies. Such remuneration style is prevalent in Asia countries and in organizations that adopt the hierarchy concept. A stark difference to this will be the meritocracy concept of the remuneration package, where remuneration will be based on individual achievement and contribution to the organization.
This style of remuneration is widely practiced in western countries and in organizations where achievement and contribution can be quantified. Adopting the right remuneration package will not only spur employees to give their best but more importantly, it can retain the talents and boost the organization’s reputation.
Performance Appraisal;
Conventionally, performance appraisal was considered as a knotty problem in the HR function, and the internationalization of the organization simply complicates this function further. Different cultures will have a different appreciation for performance and it is virtually impossible to set a standard for performance. For example, to get a good performance appraisal in China, one will need to have a good personal relationship with their superior. Knowing strong and influential people will also ensure a smooth work life.
But this might not be the case in an organization where good performance simply means high sales figures or other factors which can be quantified. Performance appraisal for expatriates is much more elaborated. The scarcity of resources available( eg. Poor infrastructure and communication) and the expatriate's soft skills ( eg. Adaptability and resourcefulness) must also be taken into account when doing their performance appraisal to establish a system of fairness to the expatriate.
A reliable method to ensure that a professional and unbiased performance appraisal is being carried out is to have a set of guiding questions. These questions will act as a guide as to how a performance appraisal should be done. Listed a few questions which are fundamental to performance appraisal. Questions akin to the definition of performance; what is the performance criteria; will the same criteria be used across all level in the organization and will the performance appraisal be assessed on a group or individual basis.
International staffing process;
International staffing can also be termed as an international recruitment process. Organizations typically have three options of candidates namely the home country nationals, host country nationals, and third-country nationals. The home country nationals are the natural choice when it comes to international staffing as they are much well versed in the organization's goals, objectives, and culture. Expatriates are constantly employed in global organizations. But what are the problems faced when employing expatriates? We can broadly classify the problems into the expatriate selection and expatriate failure.
Expatriate selection process;
Expatriate selection can be very complex. Expatriates are constantly being exposed to a spectrum of social and personal problems examples language barriers, cultural differences, and physical environment. If these are unanswered, it will ultimately lead to the failure of the expatriate. Organizations often perceive that a high flyer back home will do equally well in a foreign country, therefore emphasis is always on the expatriate’s work experience and capability rather than focusing on the expatriate's ability to blend into the new environment.
Did a survey of different HR managers all over the world. Stone’s survey was to determine the essential selection criteria for expatriates. Stone’s study revealed that different countries' HR managers have different emphases on the selection criteria, Stone went on further to suggest that this may be due to the different cultural values which the HR managers held. Stone concluded a list of desired selection criteria for expatriates and here are some of the criteria: effective communication; listening skill; stress tolerance; empathy; flexibility in dealing with foreign cultures; political skills and previous international experience.
Expatriate failure;
Expatriates often fail due to their partner and their inability to adapt. Adaptability seems to be the determinant factor for expatriates to make or break. Other factors include sub-standard performance, poor healthcare, safety implication, and unattractive remuneration. Such situations can be reduced if organizations have some pre-departure programs for their expatriates and families.
Programs like cross-cultural orientation where expatriates will gain knowledge of the cultural aspect of the host country to avoid cultural shock. Allowing the expatriates and their families to stay in the host country for about a month will enable the expatriates to adapt to the physical environment and slowly immerse themselves into the country’s culture. To add on, providing a factual job scope and environment description to the expatriates will have them prepared mentally. All these will give the expatriates an expectation of the host country and avoid any unnecessary shock.
Conclusion;
With the increase of globalization, international human resource management (IHRM) plays an important role in achieving the organization’s goals. Organizations that recognize the importance of IHRM will benefit from those that do not. They will be more ready to move their operations into another country and effectively manage their employees to achieve smooth operations of the organizations.
As an HR manager, one has to be very sensitive and flexible to the cultural aspects. Besides that, having a good knowledge and positive attitude towards the host country will make the HR manager’s job less tedious. Organizations that rely heavily on expatriates must know the expatriate selection criteria well to send the best candidate out and reduce the chances of an expatriate failure.
A comprehensive expatriate program must also be implemented to assist and prepare the expatriates for their long and scabrous journey. Preparing the expatriates adequately in terms of both physically and mentally will ensure a pleasant job experience for the expatriate while maximizing the expatriate's capability and contributions to the organization.
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| Importance of International Human Resource Management (IHRM); Image by Anastasia Gepp from Pixabay. |