The concept and reasons for IHRM
Over the past two decades we have witnessed major organisational changes worldwide
such as mergers, acquisitions, and partnerships in order to face the international busi-
ness environment in a more competitive manner. These changes have led to the opening
up of branches abroad where both local people and foreign expatriates work together.
These changes have given rise to international human resource management, which en-
tails performing human resource functions by taking international diversity on board in
socio economic development, culture, religion, ideologies, values, social structure and
expectations in order to gain a competitive advantage. Michael Armstrong looks at
IHRM as ‘the process of employing, developing and rewarding people in international
or global organisations’ (Armstrong 2006: 99). In this regard, it is observed that there
are several factors that have pushed for the need to have IHRM as a distinct field within
in HRM. These are:
The increasing globalisation and growth of multinational corporations.
Today, geographical distances between one continent and country and another is no
longer a problem. We are virtually living in a global village where improvement in sci-
ence and technology has drastically reduced market information barriers. Market infor-
mation from one continent or country to another can be obtained within a minute of
clicking a button on a computer connected to the internet. This has immeasurably con-
tributed to increasing awareness of new markets, formation of more MNCs and at the
same time stiffer competition at a global level.
Ability to manage multicultural workforce as it influences performance.
Going international also means accepting the rules of the game in international business.
Such rules include the ability to manage a workforce with different backgrounds under
the same roof through strategies that optimise diversity in order to produce goods and
services that can compete both locally and internationally. Studies in large American
firms have shown that organisations with a multicultural workforce (Whites, Mexicans,
Afro Americans, Indians, and Japanese) were performing far better than those without.
Shortage of managers with competence to manage MNCs.
The demand for knowledge, skills and the right attitude for international jobs has been
increasing over the years. International managerial jobs require multiskilled staff. It is
difficult to get those people because knowledge and training in international business
operations in a multidisciplinary approach is still new relative to the historical traditions
of specialised training which focused on specific disciplines and professions.
It is expensive to fail in international business
It is a very expensive and risky endeavour to establish an international business because
of the initial and operational capital requirements as well as the possibility of a change
in the political or economic environment. Human resources as the manager of other re-
sources can cause the success or failure of a business. For example, unqualified market-
ing staff can potentially cause the loss of market share and a damage of reputation to
overseas customers. This cannot be tolerated. Therefore precautions have to be taken
right from recruitment level.