Multinational Corporation and Country Nationals

Topics: Human resource management, Management, Human resources Pages: 9 (2744 words) Published: December 12, 2010
In the recent decade, international human resource management (IHRM) experienced tremendous research growth due to the increase number of organizations begun to extend their businesses into overseas markets. Multinational Corporation (MNC) is the term used to describe a business with overseas operation. Some of the main reasons for the growth of interest in IHRM are: 1) the number of MNC has increased with rapid growth of global competition which resulted in increased mobility of human resource. 2) Effective HRM strategy has been recognized as determinant of success or failure of organization. 3) It is more difficult to exercise control and implementation of corporate strategy over remote subsidiaries with different culture and background. (Fernando, 2006) In this article, we will discuss the difference between international and domestic human resource management and the challenges that organization faced when selecting, developing, motivating and maintaining the employees for the overseas assignment and how these issues will affect the strategy of the organization. Finally, the article will conclude that IHRM is complex, difficult and critical to global business success. (Stone, 2008) It faces a lot of challenges as compared to domestic human resource management mainly due to the geographic dispersion and multiculturalism. Defining International Human Resource Management (IHRM)

There is no consensus about what the term IHRM covers although most studies in the area have traditionally focused on the area of expatriation (Brewster and Harris, 1999). Taylor et al. (1996) define IHRM as a range of people management functions, processes and activities which involve consideration of more than one national context.

Difference between Domestic Human Resource Management and International Human Resouce Management IHRM has similar human resource activities as domestic human resource management except that it is at a global level. Regardless of whether they are specific to one or several countries, the external constraints such as political, legal, economic and cultural can significantly influence the way HR functions are carried out and the HR manager will have to plan for the human resources, do acquisition for the right people in the right number at the right time, train and develop, maintain and motivate the employees. As stated by Dowling and Welch (2005), the complexities of operating in different countries and employing different national categories of workers are a key variable that differentiates domestic and international HRM. Domestic HRM involved employees within only one national boundary while IHRM deals with three national or country categories: the parent country where the firm is usually headquartered; the host country where a subsidiary may be located; and other countries which may be the source of labour, finance or research and development. In addition, there are three types of employees of an international firm: parent-country nationals (PCNs); host-country nationals (HCNs) and third-country nationals (TCNs) (Dowling, Welch and Schuler, 1999). Dowling (1988) argues that the complexity of international HRM can be attributed to six factors such as more HR activities; the need for a broader perspective; more involvement in employees’ personal lives; change in emphasis as the workforce mix of expatriates and locals varies; risk exposure and broader external influences. Types of employees

Managers can be hired three types of employees: parent country nationals; host country nationals and third country nationals. Parent country nationals (PCNs) are residents of the international business headquarter who are transferred to one of its overseas operations. Even though communications and coordination with headquarters is typically facilitated when PCNs are employed since they share a common culture and education background with headquarter but the number of PCNs employed in an organization is...

References: Adler N. J. (2002) International Dimensions of Organisational Behavior, 4th edition. Cincinnati: South Western
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Caligiuri P., Lepak D. & Bonache J. (2010) Managing the Global Workforce, UK: John Wiley & Sons
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Dowling P. J.(1988) International and Domestic Personnel / Human Resource Management: Similarities and Differences, in Readings in Personnel and Human Resource Management, 3rd edition. St Paul, MN: West Publishing
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Dowling P. J., Welch D. E. (2005) International Human Resource Management: Managing People in a Multinational Context, 4th edition, Italy: South Western College Publishing.
Fernando K. V. (2006) Strategic HRM Issues for Growth & Globalization, Singapore: ST Printing & Packaging
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Infante V. (2001) Three Ways to Design International Pay: Headquarters, Home Country, Host. Workforce, January 2001 page 21-24
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