Human resource management (HRM) refers to the activities that a company, whether local or global, takes to staff its organisation. To operate a business companies need to determine their human resource requirements, hire people to meet the needs, motivate them to perform well, upgrade their skills so they can take on more challenging task and to retain them. HRM in multinational companies are more complex than in domestic businesses. These complexities come in the form of political, cultural, legal, and economic differences between countries.

 

Research has confirmed that companies that adopt superior human resources sustain high productivity, competitive advantage and value creation. Studies also prove that superior HR is a determinant of stronger financial performance.

 

Now more than ever multinationals have to hire, develop, reward, and retain people whose performance improves the firms core competencies within the context of how it configured and coordinates its value chain. How successful a multinational is with its choice of strategy depends on how well it chooses the right person for the right job in the right place at the right time for the right salary. The choice of strategy can vary:

1. International strategy and the quest to leverage core competencies abroad
2. Multidomestic strategy and the quest to maximise the local responsiveness of its foreign operations.
3. Global strategy and the quest to maximise global integration of its operations.
4. Transnational strategy and the quest to optimise all three tasks (core competence, local responsive and global integration) simultaneously.

 

In technical terms, executives in multinational are normally one of three classes of employees: (i) locals, (ii) citizens of country in which they are working, or (iii) expatriates.

 

Host-country Nationals are Citizens of the country where they live and work. They are familiar with the culture and know the language. They are less expensive than home-country personnel. Host-country governments often prefer use of host- country nationals and some require it. Hiring them is good public relations. Several multinational companies tend to rely heavily on host-country nationals. 

 

An expatriate (expat) is an employee who is temporarily sent to work in a country other than his or her legal country of residence. An expatriate can be either:

1. Home-country Nationals are citizens of the country where the company is headquartered but live and work elsewhere. Often used to start up operations (most common reason). To provide technical or managerial expertise. To help the company maintain financial control. In top management positions. Companies sometimes start with home-country nationals and switch to host-country nationals as qualified people become available. 
2. Third-country Nationals are people who are citizens of neither the home country or the host country. Example: A Tanzanian, employed by a Ugandan company, working in Kenya. The employee's native country and the country where he works are often in the same geographic region. An advantage of Third-Country Nationals is that they often require less compensation than home- country nationals. They usually have experience with the company. They know the company's culture, values, and policies. If they are from the same geographic region as the host country and also know the company's culture, they can often achieve objectives better than other types of managers. 

Inpatriate ‎ is an employee of a multinational company who is from a foreign country, but is transferred from a foreign subsidiary to the corporation's headquarters