International Human Resource Management: The Organisational Context of IHRM, IHRM and Sustainable Business, the Functions of IHRM, Cross-Cultural Studies, Cultural Diversity, Transnational Organisations and IHRM Models

IHRM is the set of HR activities of a firm operating across national boundaries. Peter Morgan's model (1986), the standard definition in Dowling's textbook, describes it as the interplay of three dimensions: the broad HR activities (procurement, allocation and utilisation), the three national or country categories involved (the host country where a subsidiary is located, the home or parent country where the firm is headquartered, and "other" countries that may be sources of labour or finance), and the three types of employees (host-country nationals, HCNs; parent-country nationals, PCNs; and third-country nationals, TCNs). IHRM differs from domestic HRM in having more functions (international taxation, relocation and orientation, administrative services for expatriates, host-government relations), a broader perspective, more involvement in employees' personal lives, greater exposure to risk, and more external influences.

An expatriate is an employee working and temporarily residing in a foreign country, and the expatriate cycle is the core of IHRM. Selection criteria (Tung, 1981) include technical ability, cross-cultural suitability, family requirements (the spouse's adjustment is the most commonly reported cause of failure), language ability and the country's cultural distance. Expatriate failure is premature return or poor performance; its direct costs are high and its indirect costs (lost contacts, damaged relations with the host government) higher. Pre-departure training runs from area briefings and language classes to cultural assimilators and field experience; Mendenhall and Oddou tied the rigour of training to the degree of interaction and cultural novelty. Kalervo Oberg named "culture shock" in 1960, and the U-curve of adjustment runs from honeymoon through culture shock and adjustment to mastery. Compensation usually follows the balance-sheet approach, which keeps the expatriate's home-country standard of living and adds premiums (foreign-service, hardship, cost-of-living, housing, education) and tax equalisation; the alternative is the going-rate (host-market) approach. Repatriation — the return home, often with reverse culture shock and no suitable job waiting — is the most neglected stage.

International labour relations add their own problems. Unions are national, while the multinational can shift production across borders, so unions have tried international trade union federations (the International Trade Union Confederation, formed in 2006, and the global union federations for each sector), international framework agreements with individual multinationals, European Works Councils under the EU directive of 1994, and the ILO's Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (1977) and the OECD Guidelines for Multinational Enterprises (1976), both voluntary. Performance management abroad must allow for the host environment, time zones, and the distance between the subsidiary and the rater at headquarters.

Geert Hofstede's study of IBM employees in some forty countries, later extended to more than fifty (Culture's Consequences, 1980) gave the most used framework: power distance (the extent to which the less powerful accept that power is distributed unequally), individualism versus collectivism, masculinity versus femininity (assertiveness and achievement against caring and quality of life), and uncertainty avoidance (tolerance of ambiguity). A fifth dimension, long-term versus short-term orientation, came from Michael Bond's Chinese Value Survey (added in 1991), and a sixth, indulgence versus restraint, from Michael Minkov's analysis (2010). India scores relatively high on power distance. Fons Trompenaars and Charles Hampden-Turner set out seven dimensions, five of relationships with people (universalism–particularism, individualism–communitarianism, neutral–affective, specific–diffuse, achievement–ascription), one of attitudes to time (sequential–synchronic) and one to the environment (internal–external control). Edward T. Hall distinguished high-context cultures, where meaning lies in the setting and relationships, from low-context cultures, where it is stated explicitly, and monochronic from polychronic time. The GLOBE project led by Robert House (2004) measured nine cultural dimensions across 62 societies and linked them to leadership.

Cultural diversity in the workforce — of nationality, language, religion, caste, gender, age, disability and sexual orientation — can raise creativity, market knowledge and problem-solving, or produce conflict, stereotyping and communication failure, depending on how it is managed. Taylor Cox distinguished monolithic, plural and multicultural organisations; only the last fully integrates minorities formally and informally. Managing diversity involves diversity audits, inclusive recruitment, anti-discrimination and anti-harassment policies (in India, the Sexual Harassment of Women at Workplace Act 2013 requires an Internal Committee in workplaces with ten or more employees), mentoring, employee resource groups, cross-cultural training and building cultural intelligence (Earley and Ang, 2003: the capability to function effectively across cultures, with cognitive, motivational and behavioural facets).

Christopher Bartlett and Sumantra Ghoshal (Managing Across Borders, 1989) classified international firms by the pressures they face for global integration (efficiency) and for local responsiveness. The international firm transfers parent-company knowledge and technology to subsidiaries; the multinational (multidomestic) firm is a decentralised federation of responsive national units; the global firm is centralised and treats the world as one market for standard products; and the transnational firm seeks efficiency, responsiveness and worldwide learning at once, through an integrated network in which subsidiaries are specialised and interdependent and knowledge flows in every direction. For HRM the transnational means a geocentric mindset, managers developed through global rotation, and shared values as the "glue" in place of central control.

• Morgan's three-dimensional model (1986): HR activities × country categories × employee types, the definitional model.
• Schuler, Dowling and De Cieri's integrative framework of strategic IHRM (1993): strategic MNE components (inter-unit linkages and internal operations) shape SIHRM issues, functions and policies, which aim at competitiveness, efficiency, local responsiveness, flexibility and learning.
• Taylor, Beechler and Napier (1996): an exportive orientation (parent practices transferred), an adaptive orientation (local practices adopted) and an integrative orientation (best practices combined across the network).
• The convergence–divergence debate: whether HR practices are becoming alike worldwide (convergence, through technology and global competition) or remain shaped by national institutions and culture (divergence), with "crossvergence" as a hybrid.

A sustainable business meets present needs without compromising those of future generations (the Brundtland Commission, 1987) and, in John Elkington's phrase (1994), accounts for a triple bottom line of people, planet and profit. IHRM carries the "people" line across borders: it must apply consistent labour standards in subsidiaries and in suppliers' factories, where child labour, forced labour, unsafe buildings and denial of freedom of association are most likely. The collapse of the Rana Plaza garment building near Dhaka in April 2013, which killed more than 1,100 workers, led to the Accord on Fire and Building Safety in Bangladesh, a binding agreement between brands and unions. The frameworks are the UN Global Compact (launched in 2000; ten principles on human rights, labour, environment and anti-corruption, four of them the ILO's core labour principles), the UN Guiding Principles on Business and Human Rights (2011; "protect, respect and remedy"), the ILO's MNE Declaration, and standards such as SA8000. In India, the Business Responsibility and Sustainability Report that the Securities and Exchange Board of India requires from the largest listed companies includes principles on employee well-being and human rights. Sustainable HRM, finally, treats the workforce itself as a resource to be regenerated rather than used up: health, work–life balance, employability and fair pay.