International Human Resource Management (IHRM), as the name suggests, refers to the recruitment, management, and development of employees who come from other countries or who are stationed in other countries for their jobs. Many organisations that manage their human resources activities at an international level deal with diverse workforce. By the end of 2021, it’s predicted that 87% of businesses will have presence in one or more foreign markets as their expansion strategy.  When MNCs expand around the globe handling different payroll systems, country wise HR policies can become a huge strain on a company’s HR team. HR conduct will affect the company culture. Positive results can be achieved by having communication channels that allow for open talks and exchange of feedback. 

3M Corporation’s culture is made for thriving Innovation. It was founded by five businessmen in 1902.  3M has managed to expand and thrive for over 100 years because of its culture of innovation. The company has been able to slowly, but relentlessly, develop their 46 technology platforms of which every 3M product is based on. The organization believes in empowering employees. They allow employees to work on projects they are passionate about. They promote innovative ideas and empower employees to look at their daily tasks through an innovation lens. And, most importantly the employees are acknowledged and rewarded for innovative ideas.

IHRM practice emphasizes on innovation

In 1948, 3M launched its 15 per cent program, where 15 per cent of employees’ time was dedicated to innovation. The Post-It note was invented during 15 per cent time.

Organizations such as Hewlett-Packard and Google have both replicated this approach. Gmail and Google Earth were conceived during Google’s 20 per cent employee time dedicated to innovation. IHRM practices encourage workers to deliberate and implement on their ideas. Of course, they must complete their daily work first. When innovative ideas make it through the ideation phase, employees are given technology grants to pursue these ideas.

IHRM thrives on cultural diversity

Progressive companies all over the world recognize the advantages of integrating workers from culturally diverse backgrounds. These companies view diversity as a business plan as in today’s global marketplace companies interact with different clients with cultures and different code of conduct.  In the early stages, International business was conducted with an ethnocentric outlook that means the orientation and type of operation was based on the parent company.  The modern multinational corporations have geocentric orientation. The total organization is viewed as an independent system operating in many courtiers.  The relationships between headquarters and subsidiaries are collaborative.  Communication flowing from both directions encourages viewpoints of workers at all levels.  Furthermore, managers of different nationals occupy key positions.

The orientation of multi-national corporations is truly international and goes beyond a narrow nationalistic viewpoint. MNCs recognize business opportunities in many different countries.  They raise money for its operations throughout the world.  Moreover, multinational firms benefit by establishing production facilities in countries where their products can be manufactured more effectively and efficiently and at lower cost.  Companies with worldwide operations sometimes have access to natural resources and materials that may be available to domestic firms only.  Also large number of MNCs can recruit management and other professionals from a worldwide labour pool.   Companies have recognized the various plus points of diversity.

The diverse workforce Increase creativity

When people from different cultures are put together towards a common solution there is no one best answer to any question because the organization can obtain more and more ideas.  Different cultures of the employees can offer insightful alternatives to a problem.

Increase in Productivity

When people of variety of culture and variety of backgrounds are made to work together it increases their productivity exponentially. This happens because it kills monotony of work culture, brings freshness in work atmosphere.  Different people have different styles of performing work.  Every employee motivates the other with his difference of style.

Managing cultural diversity is an art

We all need to address the myths, stereotypes and cultural differences that interfere with our daily chores.  The age-old gender fact that only male and females exist in organizational workforce has lost ground; today we have gay and transgender individuals making vital contributions to our economy. Nations and workforce are both becoming more diverse. The share of people of different color, cast, creed, religion, tradition, language, diction, practice, and ethnicity is part of organizational workforce.

More women taking leadership positions

More and more women are increasingly seen at the forefront. They are occupying vital roles and are the decision makers in more organizations. The fact is that businesses that embrace diversity have a more solid footing in the marketplace than others. Whatever color, black or brown or white.  That is it.   The word “global village” may appropriately describe the world we live in today.  The fibre optics, aerospace and satellites link the globe like never before. The geographical boundaries are shrinking day by day.   Obsolesce has no space, organizations need to move forward to improve productivity.

IHRM facilitates talent management

The HR functions include a broad range of tasks including: processes for recruiting new staff, on boarding, orientation, performance management and evaluation. .

In some cases, a system may allow an HR representative to create a job posting online, view incoming applications and track candidates through the hiring process.

Increasingly, orientation materials such as filling out payroll information and other paperwork are being relegated to online applications so HR staff is not required to be physically present to handle some of the basics, freeing them to do other work. Once great employees are on board, other components work to track performance metrics and provide professional development to retain top performers.

Base Salary

This term has a slightly different meaning in an international context than in a domestic one. In the latter case, it denotes the amount of cash compensation that serves as a benchmark for other compensation elements like bonus, social benefits. For the expatriate, it denotes the main component of a package of allowances directly related to the base salary and the basis for in-service benefits and pension contributions. Base salary actually forms the foundation block of the international compensation. Foreign Service Inducement Premium is a component of the total compensation package given to employees to encourage them to take up foreign assignments. This is with the aim to compensate them for the possible hardships they may face while being overseas. Organization also pays relocation allowances, spouse assistance allowance, education allowance besides, some additional benefits such as pension plans which normally differ from country to country due to difference in national practices. Thus all these and other benefits (medical coverage, social security) are difficult to imitate across countries.

IHRM gives importance to employee engagement

Some HR departments may extend their HRMS tools by also utilizing social media and online applications to engage their employees and stimulate interaction within the corporate environment. Through these channels, employees can collaborate on projects, learn more about the corporate brand, refer qualified friends for job openings, and respond to company surveys designed to measure job satisfaction.

Meet Compliance Standards

Industries that operate in financial, health, insurance or public sector capacities are required to follow specific regulations and are subject to reporting and compliance standards. An HRMS component specifically designed to keep track of frequently changing regulations allows HR departments to stay on top of the necessary record-keeping and reporting requirements. Automated maintenance informs the HR department when background checks, licenses or continuing educational requirements need to be updated and assures that the company is operating in compliance.

People Analytics is one of IHRM Trends

The growth of people analytics is global and not confined to one country. The areas of people analytics are wide in the organization from talent acquisition in identifying right talent to minimizing bias in hiring, employee retention, increasing employee engagement, measuring culture, workforce readiness, and employee experience to name few. For example, Google has turned people analytics into a winning culture with project oxygen. The tech giant has turned into one of the best companies known for hiring the best, and retaining them with the highest engagement rate. With people analytics Google has registered significant improvement in metrics like employee turnover, performance, and satisfaction.

It’s observed that in most MNCs analytics are increasingly important to upper level managers and HR departments. Programs that track the effectiveness of HR initiatives and recruitment methods help key executives pinpoint what works in attracting new talent to the company. They can also compare salary levels within the industry and make adjustments if needed. Data that is compiled from the fluctuating workforce also helps leaders gain a better understanding of turnover trends, such as why employees move on to another company or how to improve worker retention.