Differences Between Domestic and International Hrm free essay sample

Differences between domestic and international HRM 1. Introduction With the development of globalization, the blending and collision of domestic enterprises and foreign enterprises is becoming more and more fierce (Xinqi, 2004). More and more foreigners are sent out of their own countries and work in another country. It is probably no exaggeration to say that every day in every country in the world, there are people being sent out and sent in.And the increase of expatriates between one country and another country inevitably bring new challenges to human resource management, such as culture shock and the differences between domestic HRM and international HRM. Many firms underestimate the complexities and problems involved in international businesses, and do not pay enough attention on them. It is no surprise when the firms fail in the international businesses. Evidences have been found and prove that business failures in the international arena are usually relative to poor human resource management (Dowling, Festing, Engle, 2008, p. 9).In addition, human resource management in an international environment is even more complex than domestic human resource management. Therefore, if the firms want to succeed in the international arena, they should not only have a good domestic HRM, but also have a good international HRM. To have a good international HRM, they can not just copy domestic HRM. They should know that there are differences between domestic HRM and international HRM. The complexity of operating in foreign countries and employing workers from different countries is a key variable that makes domestic and international HRM different (Dowling, et al. 008, p. 5). The complexity of international HR can be attributed to six factors, but here we just discuss three of them (more human resource activities, more involvement in employees’ personal lives, higher risk) and the differences of the training of employees. 2. Differences 2. 1 International HRM has more human resource activities than domestic HRM. Domestic HRM include at lease six activities: human resource planning; staffing; performance management; training and development; compensation and benefits; industrial relations.However, the scope of international HRM is much broader than that of domestic HRM. In other words, international HRM has some activities the same as domestic HRM (e. g. , human resource planning and staffing), but some activities which are not necessary in domestic HRM will be necessary in international HRM, too. These activities are issues connected with: international taxation; international relocation and orientation; administrative services for expatriates; host-government relations; and language translation services (Aswathappa, 2007).Firstly, in domestic environment, employees of the company are all from only one country, and activities such as international relocation, orientation and language translation services are not needed. The company will save much time, effort and money in this case. But when the company goes into international environment, it must put additional time, effort and money on international relocation, orientation and language translation services, etc. to help expatriates adapt the new environment which is differ from their own countries (Sims, 2007).Secondly, in domestic environment, company just needs to deal with domestic taxation. However, in international environment, company not only needs to deal with domestic (home-country) taxation, but also needs to deal with international (host-county) taxation. Thirdly, in international environment, company should provide administrative services for expatriates, because policies and procedures will sometimes be vague and be opposite to local environment.But these services are usually a time-consuming and complex activity. Let me give an example of ethical conflicts. Ethical problems will occur when some thing which is legal and accepted in the home country becomes illegal or unethical in the host country (Dowling, et al. 2008). Fourthly, in the international environment, host-government relations are activities that are very important in the human resource management of the company, especially in developing countries.In developing countries, if multinational managers of the company have a good personal relationship with the host- country government officials, it will be helpful to solve potential problems such as work permits and other important certificates, which are cause by vague eligibility and compliance criteria (Dowling, et al. 2008). There are more other human resource activities that are not needed in domestic HRM, but here they will not be introduced one by one in detail. 2. 2 International HRM has more involvement in employees’ personal lives than domestic HRM.In the domestic environment, the human resource department of the company has a limited involvement in its employees’ personal lives. In domestic environment, company will provide health insurance programs for employees. And the company will also provide help and convenience for employees and their families when the employees have an assignment to transfer in domestic (Dowling, et al. 2008). However, company can not just do what it does when it is in domestic. It must involve more in its employees’ personal lives.And this is necessary for the selection, training and effective management of staffs (Dowling, et al. 2008). In my opinion, there are two reasons for a greater degree of involvement in employees’ personal lives. One is that the way an employee acts and talks outside of their job may have an effect on the company’s image (whether bad or good). We are living in global village. Information is very easily to get. If an employee has misbehaviors and most probably these misbehaviors would damage the company and the guilty employee (â€Å"Personal Life Matter Company,† 2010).Another is that in order to get a better performance from employees, knowing more about the personal lives of employees and involved more will help company to meet the employees’ demand and provide the required level of support. Consequently, in the international environment, the human resource department involved in housing arrangements, health care, transportation, education, entertainment for expatriates and local staffs, and all aspects of the compensation provided for the assignment (cost-of-living allowances, premiums, taxes, etc. ).Most of these activities will only occur in the international assignment, and in the domestic assignment these activities will be done by employee themselves instead of the human resource department of the company (Dowling, et al. 2008). 2. 3 International HRM has higher level of risk than domestic HRM. As a resource risk, domestic human resource risk not only has mutual risks of general resources (shortage risk, backlog risk, loss risk, etc. ), but also has its own unique and proprietary risks (value-added risk, confidential risk, competitive risk, etc. ).And these risks are in the daily work of human resource management (Nengyuan, 2011). Apart from these risks, there are other important risks, such as the risk of employee recruitment, the risk of staff placement, the risk of salary management, the risk of labor relationship management (â€Å"Human Resource Risk Management,† n. d. ). Because the complexity of international businesses, international HRM has more risks and higher level of risk. If the company fails, the result will be more severe than that in domestic. There are mainly three more risks in international HRM.Firstly, they are expatriate failure (the premature return of an expatriate from an international assignment) and under-performance in the international assignment. For companies in the international arena, these two things are high-cost problems and potentially risks. If one of these happens, the large amount of money (may be as large as three times the domestic salary plus relocation expenses) the company paid will be in vain. Secondly, it is terrorism. Since September 11, 2001, the tragic 9/11 attack in New York, terrorism has became a great risk.Company and its human resource managers may have to worry about the safety of employees. Of course, it depends on the countries or regions the company operates. In some countries, the degree of safety is low; and in some others, it is relatively high. But in the world today, where terrorism is common in many countries, companies have to spend some of their revenues in protecting employees from terrorism. Usually domestic human resource managers do not have to deal with this trouble problem—terrorism (Aswathappa, 2007). Thirdly, it is political risk. For companies in the international arena, political risk  is the risk which a host country will make political decisions that  will prove to greatly and badly affect the profits and goals of the companies (â€Å"Political Risk and What Can Company Do,† n. d. ). Political risk can range from very adverse activities,  such as great damage from revolution, to financial policies, such as the change of import and export interest rate. Generally speaking, there are two types of political risk,  macro risk  and micro  risk.Macro risk is the actions that will have a bad effect on all the foreign companies, such as expropriation or insurrection, yet micro risk is the actions that will only have a bad effect on a certain area or business of industry, such as corruption and prejudice against foreign companies (â€Å"Political Risk and What Can Company Do,† n. d. ). Anyway, regardless of the type of political risk that companies will face, companies should prepare well for these bad situations or in other word, political risk. Otherwise, companies will probably pay a lot of money for their unprepared actions. 2. International HRM on the training of employees is different from that of domestic HRM. Companies provide training for employees in order that new employees can match with their job better and old employees can keep pace with the times and technology. Therefore, training of employees has become an important part of human resource management of companies (â€Å"Thoughts about Training of Staffs,† 2011). In the domestic setting, training is to provide learning and progress of knowledge, skills and attitudes for employees. Learning of knowledge is the main aspects of employees’ training.It includes learning of truth knowledge and learning of procedure knowledge. Through the training, employees can grasp the basic knowledge of their jobs (â€Å"Employees’ Training and Development,† n. d. ). The usage of knowledge must have certain skills. Thus there will be training for technical ability (cognitive ability, reading ability and writing ability). In addition, training of interpersonal ability may be included in the training course. In the international setting, training of employees also contains the training activities that domestic training has (e. . various aspects of practice training, such as management training, technical training, system training, operating procedure training, etc. ). But international human resource training is not completely the same as domestic human resource training. If the company wants its expatriates to meet the skills and performance needs of the certain job to avoid personal professional failure and reduce the likelihood of expatriate assignment failure, it has the responsibility to enhance the expatriates’ cross-cultural awareness (Black and Mendenhall, 1991).Cross-cultural awareness training can lead to positive outcomes of employees such as increasing employees’ tolerance, understanding, appreciation and respect for the differences of others (Oddou and Mendenhall, 1991), and help employees increase their interpersonal and team work effectiveness in the cross-cultural environment through the development of their practical skills (Vance Paderon, 1993). Consequently, international human resource training focuses on cross-cultural awareness training.In other words, the main content of international human resource training is cross-cultural awareness training. Cross-cultural awareness training includes trainings such as cultural sensitivity training, language learning, cross-cultural communication, cross-cultural conflict resolution, regional environment simulation, etc. Through these cross-cultural awareness trainings, culture shocks which expatriates may face to can be reduced, and expatriates can adapt the local environment quickly and play their role effectively (Xinqi, 2004). 3. ConclusionFrom the development process of the enterprise operation management in nearly one hundred years, it is not hard to find that the enterprise management has experienced the following evolution process. That is from production orientation to market orientation, and then to human resource orientation. According to this evolution process, we can know that the 21st century today is the times for human resource orientation of enterprise. However, in the 21st century, human resource management has also developed. It was not only a simply human resource management just in the domestic setting any more.It has gone outside of domestic and transcended the limitations of traditional national borders. With the fast development of globalization, MNCs’ are becoming more and more into the center of the global economy stage, and the HRM is becoming more and more into the international HRM (Xinqi, 2004). Thus if companies want to succeed in the international arena, it is very important to grasp international HRM well and identify the differences between traditional domestic HRM and international HRM. Refference: [1] Black, J. S. and M. E. Mendenhall. (1991).