Four Approaches to International Staffing- Microsoft and Red Cross

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Four approaches to international staffing, advantages and disadvantages. The globalisation of the world’s business economy has been particularly significant, resulting in an increase in the importance of, and interest in, international human resourcing. The international company is a type of multi-unit business organisation, which has a corporate centre in its home and its business units located in various host countries. International HRM distinguishes itself from domestic HRM primarily by having to deal with greater complexity, large amount of uncertainty and a higher level of operating risk. The basic functions however are the same.

HRM in the typical MNE is a tough task that, when successfully done, it drives the company’s strategy. When poorly done, it ruins careers and decreases profitability. Heenan and Perlmutter (1979) have provided four approaches to international staffing: polycentric, ethnocentric, geocentric and regiocentric. In ethnocentric approach managerial positions are filled by staff from the parent company. Ethnocentrism is based on a belief that the home culture is superior. This means that the organisational culture will mirror that of the home country and that little account is taken of the cultures of the host country. This approach might be cost effective but also can create conflict because it ignores local norms. Other disadvantages of this approach of international staffing is that there is no promotion opportunity for HCN’s as promotions for managerial position stays with PCN expatriates. There are also many difficulties with adjustment of PCN especially related to languages barriers. There can be compensation disparities between HCN’s and PCN’s and this can influence already high cost of expatriation. This approach ensures compliance with corporate objectives what is an important advantage. It also ensures that the company has qualified people on the managerial position especially is there is a shortage of those in HCN’s. In the polycentric approach local managers from the host country are appointed and a subsidiary develops local HRM practices. Each business unit has some autonomy with regard to local human resourcing decisions and activities, though strategic decisions are invariably controlled at headquarters. The advantage of this approach is that t eliminates languages barriers between managers and theirs staff. Because company hires local staff people are more attached to the business. It is also less expensive to filled managerial position with local staff than transferred them from HCN’s even though they may need an expensive training. Disadvantage of this approach is that there is a language barrier dealing with parent company and significant cultural differences between HCN’s and PCN’s. Geocentric approach creates greater cultural flexibility as the managers are recruited from within the company or from outside with no importance attached to their nationality. Basically it ignores nationality in favour of ability. This approach facilitates the development of international executive teams and it eliminates the creation of federation. P. Barnevik (1997) a chairman of ABB company emphasises the importance of developing the multinational cadre of international managers. This will ensure having the best people in place and also deliver the competitive advantages as you have the managers from the diverse cultures. The disadvantages of this approach is that work permits ans associates documentation might be needed especially in terms of moving the team to different location. In the regiocentric approach recruitment of managers is undertaken on a regional basis. Subsidiaries operate as a part of a regional strategy and HRM practices are formulated regionally. The advantage of this approach is that it facilitates interaction between those transferred to regional headquarters from subsidiaries and PCN’s to regional subsidiaries. This approach is also sensitive to local condition and it...
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