Chapter 4

IHRM: Sustaining International

Business Operations

Dr.Vimala,SCT 1
Approaches to Staffing
 Factors affecting approaches to staffing
 General staffing policy on key positions at
headquarters and subsidiaries
 Constraints placed by host government
 Staff availability

Ethnocentric
Polycentric
Geocentric
Regiocentric

Dr.Vimala,SCT 2
Ethnocentric
 Strategic decisions are made at
headquarters;
 Limited subsidiary autonomy;
 Key positions in domestic and foreign
operations are held by headquarters’
personnel;
 PCNs manage subsidiaries.

Dr.Vimala,SCT 3
Polycentric
 Each subsidiary is a distinct national
entity with some decision-making
autonomy;
 HCNs manage subsidiaries who are
seldom promoted to HQ positions;
 PCNs rarely transferred to subsidiary
positions.

Dr.Vimala,SCT 4
Geocentric
 A global approach - worldwide integration;
 View that each part of the organization
makes a unique contribution;
 Nationality is ignored in favor of ability:
 Best person for the job;
 Color of passport does not matter when it
comes to rewards, promotion and
development.

Dr.Vimala,SCT 5
Regiocentric
 Reflects a regional strategy and structure;
 Regional autonomy in decision making;
 Staff move within the designated region,
rather than globally;
 Staff transfers between regions are rare.

Dr.Vimala,SCT 6
Ethnocentric Approach
Advantages: Disadvantages:
 To ensure new subsidiary Limits the promotion opportunities
complies with overall of HCNs, leading to reduced
corporate objectives and productivity and increased
policies turnover among the HCNs
 Has the required level of Longer time for PCNs to adapt to
competence host countries, leading to errors
 Assignments as control and poor decisions being made
High cost
Considerable income gap, high
authority, and increased standard
of living may relate to lack of
sensitivity
Dr.Vimala,SCT 7
Polycentric Approach
Advantages:
Employment of HCNs eliminates language
barriers, avoids adaptation of PCNs, reduces
the need for cultural awareness training
programs
Employment of HCNs allows a multinational
company to take a lower profile in sensitive
political situations
Employment of HCNs is less expensive
Employment of HCNs gives continuity to the
management of foreign subsidiaries (lower
turnover of key managers)

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Polycentric Approach
Disadvantages:
Difficult to bridge the gap between HCN
subsidiary managers and PCN managers at
headquarters ( language barriers, conflicting
national loyalties, cultural differences)
HCN managers have limited opportunities to
gain experience outside their own country
PCN managers have limited opportunities to
gain international experience
Resource allocation and strategic decision
making will be constrained when headquarter
is filled only by PCNs who have limited
exposure to international assignment

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Geocentric Approach
Advantages: Disadvantage:
 Ability of the firm to Host government may use
develop an immigration controls in
international executive order to increase HCNs
team employment
 Overcomes the Expensive to implement
federation drawback of due to increased training
the polycentric and relocation costs
approach Large numbers of PCNs,
 Support cooperation HCNs, and TCNs need to
and resource sharing be sent across borders
across units Reduced independence of
subsidiary management
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Regiocentric Approach
 Advantages:
Allow interaction between
executives transferred to
regional headquarters from
subsidiaries in the region
and PCNs posted to the
regional headquarters
Provide some sensitivity to
local conditions
Help the firm to move from
a purely ethnocentric or
polycentric approach to a
geocentric approach
Dr.Vimala,SCT
 Disadvantages:
Produce federalism at a
regional rather than a
country basis and
constrain the firm from
taking a global stance
Staff’s career
advancement still limited
to regional
headquarters, not the
parent country
headquarters
11
Parent-Country Nationals
Advantages
 Organizational control and
coordination is maintained.
 Rising stars are given
international experience.
 PCNs may be the best
people for the specific job
due to special skills and
experience.
 An assurance that the
subsidiary will comply with
company objectives &
policies.
Dr.Vimala,SCT
Disadvantages
 Promotional opportunities
of HCNs are limited.
 Time and performance
costs associated with
adaptation to the host
country.
 PCNs may impose an
inappropriate HQ style.
 Compensation for PCNs
and HCNs may differ.
12
Host-Country Nationals
Advantages
 Language and other barrier
eliminated
 Reduced hiring costs
 Continuity of management
 Government policy may
require hiring HCNs
 Possible increased morale
because of increased
career potential
Dr.Vimala,SCT
Disadvantages
 Hiring of HCNs may
encourage a federation of
national rather than global
units
 HCNs have limited career
opportunity outside the
subsidiary
 Control and coordination of
HQ may be impeded
 Hiring HCNs limits
opportunities for PCNs to
gain foreign experience
13
Third-Country Nationals

Advantages Disadvantages
 Salary and benefit  Transfers must consider
requirements may be national animosities.
lower than for PCNs.  Host government may
 TCNs may be better resent hiring TCNs.
informed than PCNs  TCNs may not want to
about host-country return to their own
environment. countries after
assignment.

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Reasons for International
Assignments
 Position filling, e.g.
 Skills gap, launch of new endeavor,
technology transfer
 Management development
 Training and development purposes, assisting
in developing common corporate values
 Organizational development
 Need for control, transfer of knowledge,
competence, procedures and practices
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Types of International Assignments
 Short term: up to 3 months
 Troubleshooting
 Project supervision
 A stopgap until a permanent arrangement is found
 Extended: up to 1 year
 May involve similar activities as short-term
assignments
 Long term
 Varies from 1 to 5 years
 The traditional expatriate assignment
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Non-standard Assignments
Commuter assignments
Rotational assignments
Contractual assignments
Virtual assignments

Some of these arrangements assist in overcoming

the high cost of international assignments but are
not always effective substitutes for the traditional
expatriate assignment.
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Roles of an Expatriate
A Simple Management Network
 Agent of direct control
 Agent of socialization
G E
 Network builder B
 Boundary spanner C D
 Language node
 Transfer of competence
A F
and knowledge
Informal
Informalcontacts
contactsbetween
between
managers
managerswithin
withinaaMNE
MNE

Dr.Vimala,SCT 18
The Role of Non-expatriates
 People who travel internationally yet are
not considered expatriates as they do not
relocate to another country
 Road warriors, globetrotters, frequent fliers
 Much of international business involves
visits to foreign locations, e.g.
 Sales staff attending trade fairs
 Periodic visits to foreign operations

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But a High Level of Stress!
 Home and family issues
 Frequent absences
 Work arrangements
 Domestic side of position still has to be
attended to
 Travel logistics
 waiting in airports, etc.
 Health concerns
 Poor diet, lack of sleep, etc.
 Host culture issues
 Limited cultural training

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 Various Roles of Corporate HR
Centralized HR Decentralized HR Transition HR
Companies Companies Companies
 Large well-resourced  Small HR departments  Medium-sized HR
HR departments departments
 Key role: Managing all  Key role: Managing  Key role: Management and
high-grade management elite corporate managers development of senior
positions worldwide managers and expatriates
 Key activities: Planning  Key activities:  Key activities: Persuading
international assignments Influencing operating divisional managers to
and performance units to support release key staff using
management globally, international informal and subtle methods,
identifying high-potential assignments, supporting strategic staffing.
staff decentralized HR

Source: Based on H. Scullion and K. Starkey, in Search of the Changing Role of the Corporate Human Resource Function in the International
Firms, International Journal of Human Resource Management, V 11, N 6 (2000) pp. 1061-1081.

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