The Comparison of HRM with IHRM are described below:
Comparison
1. Encompasses More Functions:
When compared with domestic human resource management, IHRM requires a much broader perspective on even the most common HR activities. This is particularly sq for HR managers operating from an MNC’s headquarters (HQ).
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2. Have More Heterogeneous Functions:
The number and variety of IHRM activities are daunting (intimidating / discouraging). International HR managers must deal with issues as varied as
(a) International Taxation:
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Expatriates are subject to international taxation, and often have both domestic (i.e., home-country) and host-country tax liabilities.
Therefore tax equalisation policies must be designed to ensure that there is no tax incentive or disincentive associated with any particular international assignment.
(b) International Relocation and Orientation:
Involve arranging for pre- departure training; providing immigration and travel details: providing housing, shopping, medical care, recreation, and schooling information; etc.
(c) Various other Administrative Services for Expatriates:
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Providing administrative services can often be a time-consuming and complex activity because policies and procedures are not always clear cut and may conflict with local conditions. Ethical questions can arise when a practice that is legal and accepted in the host country may be at best unethical and at worst illegal in the home country.
(d) Selecting, Training, Appraising Local and International Employees and Managing Host-Government Relations in a Number of Countries around the World:
Host-government relations represent an important activity for an HR department, particularly in developing countries where work permits and other important certificates are often obtained more easily when a personal relationship exists between the relevant government official and multinational managers. Maintaining such relationships helps resolve potential problems.
3. Involves Constantly Changing Perspectives:
It is common in the United States for companies to provide health insurance benefits to the employee and the family. Here, the term “family” means spouse and children. The same term in India may include spouse, parents and children.
Whereas in certain countries where polygamy is practiced, it may include multiple spouses and children. Whereas in certain other countries the term family encompass a more extended group of relatives – spouses, aunts, uncles, grandparents, nephews and nieces.
4. Requires More Involvement in Employees’ Personal Lives:
Personal lives of the employees take centre stage in relation to IHRM. A great degree of involvement in employees’ personal lives is necessary for the selection, training, and effective management of both PNC and TNC employees.
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The HR department or professional needs to ensure that the expatriate employee understands housing arrangements, health care, and all aspects, of the compensation package provided for the assignment (cost-of- living allowances, premiums, taxes etc.)
Increased involvement of IHRM in the personal lives of employees becomes particularly apparent and many multinationals have an “International HR Services” section that coordinates administration of the above programmes and provides services for PNCs and TNCs such as handling their banking, investments, home rental while on assignment, coordinating home visits, and final repatriation. It is not unusual for subsidiary HR managers to be involved in arranging housing, health care, transportation, education, and recreational activities for expatriate and local staff.
5. Is Influenced by More External Sources:
IHRM activities are also influenced by a greater number of external forces than are domestic HRM activities. HR managers working in a domestic environment generally administer programmes for a single national group of employees who are covered by a uniform compensation policy and taxed by one national government.
HR managers working in an international environment face the problem of designing and administering programmes for more than one national group of employees.
The broad scope of IHRM is that HQ- based manager’s deal with employee groups that have very different cultural backgrounds. The HQ manager must coordinate policies and procedures to manage expatriates from firm’s home country (PCNs – parent- country nationals), host-country nationals (HCNs) and third-country nationals (TCNs).
6. Involves a Greater Level of Risk than Typical Domestic HRM:
The final difference between domestic and international HRM relates to the level of risks and consequences associated with HR decisions. Frequently, the human and financial consequences of failure in the international arena are more severe than in domestic business. For example,
(a) Expatriate failure i.e., the premature return of an expatriate from an international assignment means a potentially high cost for the company.
(b) Direct costs i.e., salary, training cost and travel and relocation expenses.
(c) Indirect cost i.e., loss of market share and damage to international customer relationships.
These are certainly some of the risks associated with HRM in international situations. The other risks associated with IHRM are: if HR policies antagonise host-country unions or important political groups, the MNC may be asked to leave the country.
Terrorism is another aspect of risk exposure relevant to international HRM. The HR department may also need to devise emergency evacuation procedures for highly volatile assignment locations. This sort of risk is not faced by domestic HR managers.