Approches to International StaffingBy:

Bhavyaa GuptaHimani SainiShruti Priya

Surabhi Taneja

Staffing

• Staffing deals specifically with the acquisition, training and allocation of the organisation's human resources.

• In both the domestic and the international context, the staffing process can be seen as a series of steps that are performed on a continuing basis to keep the organisation supplied with the right people in the right positions at the right time.

Staffing Steps

• The steps in this process are:• Human resource planning (this is part of the organisation's

strategic plan)• Recruitment• Selection• Induction and orientation• Training (to improve job skills)• Development (to educate people beyond the requirements

of their present position)• Performance appraisal• Remuneration and rewards• Transfers• Separations.

Classifying Employee

1. Parent country national (PCN): the nationality of the employee is the same as that of the headquarters of the global organization

2. Host country national (HCN): the employee’s nationality is the same as that of the subsidiary

3. Third country national (TCN): The employee’s nationality is neither that of the headquarters or of the local subsidiary

Approaches to International Staffing

• In an international business, the way in which these steps are administered depends very much on the firm's strategy and the staffing policy chosen to support that strategy.

• There are four choices in policy:• The ethnocentric approach• The polycentric approach• The geocentric approach• The regiocentric approach.

Ethnocentric approach

• Ethnocentricity (ethnocentrism) is a belief in the superiority of one's own ethnic group. The firm basically believes that parent-country nationals are better qualified and more trustworthy than host country nationals.

• Experience curve effects derive from standardisation of production.

• The firm produces in the home country initially and transfers its core competency to the host country under the guidance of expatriate managers.

• These managers have the knowledge to create value through core competencies.

• They also contribute to the maintenance of the corporate culture.

Rationale and Advantages

Problems and Disadvantages

• Denies advancement to host country nationals.

• This may breed resentment and diminish the firm's public image.

• Expatriate managers are expensive to maintain: they may become insular in their attitudes and be prone to cultural myopia.

• The latter may result in management overlooking market niche opportunities.

Polycentric Approach

• Polycentricity (polycentrism) is a belief that local people know the local environment better than outsiders.

Rationale and advantages

• Gives hope for profit maximisation through flexibility because local managers can react quickly to market needs in the areas of pricing, production, product life cycle, and political activity.

• Absence of problems associated with expatriate managers including cultural myopia. Provides continuity in the management of foreign subsidiaries.

Problems and Disadvantages

• No synergy because there is little communication between national units.

• Limits experience of host nationals to their own country.

• Corporate headquarters may become isolated from national units and lead to lack of integration.

• This in turn may lead to corporate inertia.

Ethnocentric and Polycentric

• Ethnocentric and polycentric pressures are balanced in favour of optimising the company's operations.

• The ethnocentric pressure for low cost standardised operations is satisfied because enough of the right kinds of products exist in the global customer base to permit scale economies and experience curve effects.

• The polycentric pressure for local responsiveness is satisfied because of the need to meet the distinctive characteristics which remain in every market.

Ethnocentric and PolycentricAspects of the Enterprise Ethnocentric Polycentric

Primary strategic orientation/stage

International Multidomestic

Perpetuation (recruiting, staffing, development)

People of home country developed for key positions everywhere in the world

People of local nationality developed for key positions in their own country

Complexity of organization Complex in home country, simple in subsidiaries

Varied and independent

Authority; decision-making High in headquarters Relatively low in headquarters

Evaluation and control Home standards applied to people and performance

Determined locally

Rewards High in headquarters; low in subsidiaries

Wide variation; can be high or low rewards for subsidiary performance

Communication; information flow High volume of orders, commands, advice to subsidiaries

Little to and from headquarters; little among subsidiaries

Geographic identification Nationality of owner Nationality of host country

Geocentric approach

• Geocentricity (geocentrism) is the notion that the best people should be employed, regardless of their nationality.

Rationale and Advantages

• Enables the firm to make best use of its human resources and builds a cadre of executives who feel comfortable working in any culture.

Problems and Disadvantages

• May be contrary to host countries' desire for the MNE to employ local citizens.

• Expensive to implement because of the need for considerable cross-cultural training and development.

Regiocentric Approach

• Regiocentricity is the variation of staffing policy to suit particular geographic areas.

Rationale and Advantage

• Policy varied to suit the nature of the firm's business and product strategy.

• Allows interaction between executives because of inter-regional transfers.

• Shows some sensitivity to local conditions.• Provides a 'stepping stone' for a firm

wishing to move from an ethnocentric or polycentric approach to a geocentric approach.

Problems and Disadvantages

• May produce federalism at a regional (rather than a country) basis and constrains the firm from taking a global stance.

• May improve career prospects at the national level, but only to the regional level: staff may never attain positions at corporation headquarters.

Geocentric and Ragiocentric

Aspects of the Enterprise Regiocentric GlobalPrimary strategic orientation/stage Regional TransnationalPerpetuation (recruiting, staffing, development)

Regional people developed for key positions anywhere in the region

Best people everywhere in the world developed for key positions everywhere in the world

Complexity of organization Highly interdependent on a regional basis

“Global Web:” complex, independent, worldwide alliances/network

Authority; decision-making High regional headquarters and/or high collaboration among subsidiaries

Collaboration of headquarters and subsidiaries around the world

Geocentric and Ragiocentric

Evaluation and control Determined regionally Globally integratedRewards Rewards for contribution to regional

objectivesRewards to international and local executives for reaching local and worldwide objectives based on global company goals

Communication; information flow Little to and from corporate HQ, but may be high to and from regional HQ and among countries

Horizontal; network relations

Geographic identification Regional company Truly global co., but “glocal”

Factors to be Considered in the Ultimate Selection of a IHRM Approach

1.National concerns2.Economic concerns3.Technological concerns4.Organizational concerns5.Cultural concerns