Difference between Global HRM and Domestic HRM

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Broader Perspective and More Functions

Company needs a wider outlook while dealing with the different issues at international level.

For example, if the company wants to decide on issues like the basic pay, benefits, incentives and compensation, the international HR manager will face more complex situation. The pay system and currencies will be different in different currencies. The payments will have to be disbursed in different currencies that may change in relative value to one another over time.

While evaluating the training needs the need for cross-cultural training has to be assessed. The international operation broadens and extends the core HR functions.

More Heterogeneous Function

IHRM is more complex than domestic HRM. In domestic HRM all the business transactions are executed in one country but in IHRM more than one country is involved.

Therefore, it becomes very difficult to manage human resources of two or more countries at the same time. Countries have different culture, political environment, economic systems, customer’s preferences and social set up. This will influence the differences in the functioning of a plant in one country to the functioning of other plants in another country.

The company will manage the human resource of the plant or office according to the requirement and laws and regulations of the country in which it is operating. This not only broadens the functions but also augments them.

The additional functions of IHRM include analyzing the impact of international taxation on salary of expatriates, facilitating international relocation and orientation, providing administrative services for expatriates.

Higher Exposure to Risk

In IHRM more risk is involved than domestic HRM. The risks involved in international business are unique and more intimidating. The involvement of risk factor varies from country to country.

Huge investment is done on travelling expenses, relocation and training of expatriates and if they fail to perform or underperform, it can have disastrous effect on the organization. Another risk involved is the political risk especially in the countries having civil unrest or are target of terrorist activities.

Hence physical safety in this regard becomes very important necessitating creation of the emergency evacuation procedure for highly risky locations.

More Involvement in the Employee’s Personal Life

IHRM involvement is more in the personal life of the employees as compared to domestic HRM.. Before sending the expatriate to the host country the HR department must ensure that he is aware of the health and medical facility, culture, language, political environment of the country and many other factors.

They have to give assistance and support to their spouse and family also while relocation, like providing suitable housing facilities and schooling to children. If the family is able to adjust well in the assigned location the expatriate will be able to handle work assignment smoothly.

All this will help the expatriate to settle down in a host country. In order to provide the support and service needed by the expatriate in the host country, HR manager demonstrates greater involvement in the personal life of employees.

More External Influences

External factors to a large extent influence the IHRM activities. The managers in the host country are dictated by host country’s laws of hire and remuneration.

The general code of conduct and generally accepted business practices also influences the functions of HR managers. He may have to deal with ministers, political figures, and various economic and social interest groups that domestic HR managers would normally not come across.

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