Why is IHRM such an important issue for MNE’s?
International Human Resources Management is the process of procuring, allocating, and effectively utilizing human resources in a multinational corporation. It is born thanks to globalization and to the growth of multinational enterprises all around the world.
Globalization and the effective use of international human resources are two major issues facing firms in today’s global economy. As more and more firms operate internationally, there is a clear need to understand how to manage human resources that are located outside the domestic environment.
A HRM system cannot be an efficient approach for a multinational enterprise (MNE) to optimize their employees’ performances because compared to IHRM: it has less HR activities, a smaller perspective, less involvement in employees’ personal lives, and difficulties to adapt to the workforce mix (expatriates and locals). Indeed, an MNE has to deal with different types of employees: * Host-country Nationals (HCNs): locals of a country a MNE operates in a subsidiary. * Parent-country Nationals (PCNs): expatriates from the country where the MNE has its headquarters. * Third country Nationals (TCNs): employees from countries other than the host or home country. These are also expatriates.
The correlation between HCNs and PCNs in an MNE is crucial because they both have different points of view about the activity. HCNs are useful thanks to their knowledge of foreign market, language and needs and they know human resources policies for local employees, whereas PCNs have the ability to maintain control (for example with a newly established subsidiary), to adapt an ethnocentric attitude and to process an expatriation management (staffing, training, compensation).
An IHRM system is a product of distinct activities, functions and processes that are directed at attracting, developing and maintaining the human resources of a MNE. Indeed, IHRM seeks to assist...
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