Difference between global HRM Vs Domestic HRM

Recently updated on August 20th, 2023 at 11:38 am

  1. Increased functional activities

In order to manage human resources across countries, the functional activities of human resource departments increase multi-­fold. These activities include managing expatriation, cross-country relocation, international taxation, trans-national labour legislation, etc.

  1. Functional heterogeneity

Since an MNE operates in diverse business environments with wide variations in government policies, culture, and regulatory environments, it has to carry out a variety of HRM functions, such as recruitment and selection, performance evaluation, managing compensation, and training and development, with considerable heterogeneity.

Satisfying various stakeholders, such as the employers, business partners, and the host country governments with effective human resource management in cross-country settings is indeed a challenging task.

  1. Increased involvement in employees’ personal lives

Managing expatriates involves relocating their entire families across countries: this is an important factor in ensuring employees’ satisfaction as satisfied employees are crucial to effective output.

Relocating includes preparing not only the employees but their entire families, including spouse and children, to develop an understanding and appreciation for cross-cultural environment and equip them for potential cultural shock.

Further, issues such as education of children, meaningful engagement/employment for the spouse, accommodation, and transport become highly significant for employees, not only in the capacity to influence the decision to take up an overseas assignment but also in determining the employees’ level of satisfaction and job performance.

  1. Enhanced risks

Since human resource activities involve relocation of employees and their families across a country, which requires substantially higher costs in terms of their travel, training, and relocation expenses, the consequences of under- performance of expatriates or their premature return from international assignments is much higher compared to domestic assignment.

Therefore, an MNE has to develop and implement its international HRM strategies effectively so as to minimize such risks. Besides, the risks of employees’ and their families’ safety in terms of health and life increases multi-fold in trans-national assignments due to changes in climatic conditions, epidemic, war, terrorism, and incidence of riots and robbery.

  1. Increased influence of external environment

Like all other activities in international business, managing human resources is also influenced by external environment. The diversity of cultural, regulatory, financial, and political environments requires considerable adaptations in a firm’s HRM strategy.

International managers have to take into account the cultural differences in values, expectations, behaviours, negotiation, and communication styles of international workforce while designing organizations and recruiting, selecting, training, motivating, compensating, evaluating, and controlling of employees.

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