Lecture 3.1.4 - PPT Domestic and IHRM

Topics for Discussion
• Domestic v/s IHRM

Introduction
• Domestic HRM' refers to the Human Resources Management done within the domestic
borders of a country as opposed to
• An International HRM, which would operate on an international level overseeing the other
domestic HRMs of other countries where the company has a presence.
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Comparison of Domestic HRM and International HRM
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• International HRM differs from domestic HRM in six major dimensions , viz., (i)wider
nationalities of employees , (ii) variety of functions to be performed ,(iii) influence of
international environment ,(iv)broader and deeper relationships , (v) different approaches
for the domestic functions ,(vi) enduring complexity of domestic HRM activities
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1. Wider Nationalities – IHRM deals with the employees drawn from the number of nations in
contrast to domestic HRM , where employees are drawn from one nation. People from
different nations come with a variety of cultures, values, ethicaal interpretations , religion
beliefs and the like. Cultures and behaviour of people do also vary based on geographical
regions.
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2. Broader Relations and Complexities Organizations seek the information on broader aspects
of employees, and their family members while recruiting and selecting employees from
foreign countries. These aspects include: age, health, educational qualifications, driving skills
criminal record of employee and his/her family members. Organizations arrange for work
permit for employee, visas and resident permits or different kinds of visas for employee and
family members, air tickets and all other logistics etc.
Domestic HRM creates only a few relationships as the relationship among the people of the
same nation or community have already been built and developed. Understanding and
managing the people of the same nation is relatively less complex than that of expatriates.
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3. Influence of International Environment- International environment has become complex,
highly competitive, dynamic, vibrant, intertwined and interdependent. The emergence of
World Trade Organization, increased phase of globalization of all facets of business, widening
scope of regional integrations and strides in information technology transformed the domestic
environment of most of the countries into international environment.
4. Enduring Complexities of IHRM Activities- IHRM deals with the expatriates and nationals.
Expatriates in case of MNCs comprise of home country nationals, host country nationals and
third country nationals. Expatriates in case of a purely domestic company include foreigners.
Thus, IHRM deals with expatriates and nationals whereas domestic HRM deals with exclusively
nationals
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5. Variety of Functions- International human resource managers perform certain additional
functions compared to domestic human resource managers, as indicated earlier while defining
the term 'international human resource management'. These functions include:
• Additional Information: Procuring additional information about the culture, family
members, and current employment details of the prospective employees at the
recruitment stage itself.
• Additional Techniques of Recruitment: Using additional techniques of recruitment to
attract and inspire the prospective employees to apply like describing the culture of the
country, exchange value of the currency, exchange stability, percentage of repatriation of
earnings to home country, medical facilities, educational facilities to children,
entertainment facilities, physical security etc.
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• On-Line Selection: Arranging for on-line selection techniques and process
• Special Training: Organizations provide special training to the expatriates in language, work
culture apart from job related activities that are common t nationals also.
• Translation Facilities: HR departments of some MNCs which employ the people from a
number of countries particularly for short duration provide translation facilities to foreign
employees
• Designing Attractive Pay Package within the Tax Laws of the Country: Organizations have
to follow the taxation rules of the host government with regard to individual income tax for
expatriates also unless otherwise special mentions are made. Salary levels of organizations
may not be attractive for the foreign employees due to high tax rates in some countries, at
the same time they are costly for the organizations. Therefore, the organizations design the
salary and benefits structure within the tax laws in order to make it attractive to the
foreign employees and relatively less cost to the organizations.
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• 6. Different Approaches to Domestic HRM Functions- HR managers in purely
domestic companies perform various HRM functions. viz.,
• Recruitment, Selection, Induction and Placement.
• Training and Development.
• Salary Administration and Benefits.
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Conclusion
• It is rather difficult to define the term IHRM due to the complexities involved and varieties
in operations and functions. In fact the terms used to denote the foreign employees are
also confusing as different institutions/MNCs/TNCs use a variety of terms. IHRM is defined
as, performing HRM and its related activities and arranging for related and necessary
immigration facilities for prospective and current expatriate employees, by organizations
operating in domestic and/or foreign countries. IHRM is different from domestic HRM.
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Topics for Discussion

• Domestic v/s IHRM

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