Why Do Selection Factors for Parent Company Nationals (Pcns) Differ from Third Company Nationals (Tcns) and Host Country Nationals (Hcns)?

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The globalization of Business has had a significant impact on human resource management. The rapid expansion of global trade & geographical diversification are forcing organizations for the change in their management structure and human resource management. Another factor driving the need for international assignments is the global merger & acquisitions. Acquisitions of new business in an international context creates the need for appropriate staffing and allocation of human resources to the organization’s numerous international operations to ensure effective strategic outcomes. As international assignments are an important vehicle for staffing, it is critical that they are managed effectively and finding the right people to fill positions particularly key managers – PCN, HCN & TCN determines international expansion of the organization. Hence it is imperative to select the appropriate employee depending on the nature of the international assignment for achieving success of the assignments (Charles Vance, Yongsun Paik, 2006). This essay will focus on some of the selection factors of international staffing and the factors influencing selection process for international assignments

Theories & Models of Staffing Approaches

Before analyzing the selection factors for various national employees, a better understanding of international human resource management (IHRM) is required. A model developed by Morgan helps us to understand IHRM on the three dimensions.

Source : Adapted from P.V. Morgan, ‘International Human Resource Management : Fact or Fiction’, Personnel Administrator, vol 31, No. 9 (1986) p.44

National or country & employee categories involved in IHRM activities

oThe host-country, where a subsidiary is located and Host Country Nationals (HCN) are the employees belongs to this country (eg. Dell Computers, Singapore)

oThe home-country, where the firm is headquartered and Parent Country Nationals (PCN) are the employees belongs to this country (Dell Computers, United States)

o‘Other’ countries, that may be the source of labor, finance and other inputs and Third Country Nationals (TCN) are the employees belongs to other country (eg. Dell Computers, Malaysia)

Approaches to International Human Resource Management

H.V. Perlmutter identified three primary attitudes (Ethnocentric, polycentric & geocentric) among international executives based on top management assumptions toward building a Multinational Enterprise (MNE) upon which key product, functional and geographical decision were made. Later a fourth attitude – Regiocentric – was added (By David A. Heenan and Howard V. Perlmutter)

Ethnocentric - Highly centralized, HQ control, PCNs dominate. Though Dowling and Welch (2004) argued that ethnocentric policies are appropriate strategies in ensuring the subsidiaries (acquired by the MNE) complies with the corporate policies and objectives, it has a number of disadvantages like high cost involved in sending expatriates (PCNs), to incorporate corporate policies and culture in subsidiaries, limiting the promotion opportunities of HCNs and poor decisions being made and considerable income gap between PCN & HCN (Zeira, 1976). Refer to the Case Study 1 conducted by Price Waterhouse Coopers in Appendix I.

Polycentric – Highly Decentralized. Each subsidiary has some degree of decision making autonomy, HCNs manage subsidiaries. This approach is consistent with Bartlett and Ghoshal’s (1989) multi-domestic organizational model which has numerous advantages, specifically language and cultural barriers are reduced, receptiveness of host government as the key position of the companies are held by the HCNs i.e localization of staff which is perceived as a commitment to the host economy (Selmer 2004) etc.

Geocentric: Ignores nationality in favor of ability (that includes TCNs). The color of one’s passport does not matter when it comes to rewards,...
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