MODULE-03

Recruitment, Selection & Staffing in the

international context.

Introduction:• There are staffing issues that internationalizing firms

confront that are either not present in the domestic environment or are complicated by the international context in which these activities take place.

• Eg: A US multinational wishes to appoint a finance director for its Irish subsidiary, it may decide to fill the position by selecting from finance staff available in its parent operation(PCN), to recruit locally(HCN) or seek candidate from its other foreign subsidiary(TCN)

There are four major approaches to international staffing:

1.Ethnocentric approach

2.Polycentric approach

3.Geocentric approach

4. Regiocentric approach

1.Ethnocentric approach

• Few foreign countries have no autonomy & strategic decisions are made at the head quarters

• Key positions in domestic & foreign operations are held by HQ personnel

• Subsidiaries are managed by staff from the parent country itself.

Definition:

• It is an approach of multinational staffing where in the personnel of the parent country holds the key position in the host country operations.

• The approach appears to be appropriate for small co just entering international operations or co with minimal international commitments over seas.

Reasons for pursuing an ethnocentric staffing policy:

• Perceived lack of qualified host country nationals• The need to maintain good communication, co-

ordination & control links with corporate head quarters

• For firms at the early stages of internalization, an ethnocentric approach can reduce the perceived risk.

• When a multinational acquires a firm in another country ,the local manager is replaced by a parent country national to ensure that the subsidiary complies with overall corporate objectives.

An ethnocentric policy has a number of disadvantages:

• It limits the promotion opportunities of HCNs, which may lead to reduced productivity & increased labor turnover.

• The adaptation of an expatriate manager to host countries often takes a long time, during which PCNs make mistake & poor decisions

• When PCNs & HCNs compensation packages are compared the considerable income is in favor of PCNs & HCNs view this as unjustified.

• Expatriates are also very expensive to maintain in overseas location, the average cost of expatriates was four times the normal salary .

2. Polycentric Approach:

• The multinational environment treats each subsidiary as a distant national entity with some decision making autonomy.

• Subsidiaries are usually managed by local nationals (HCNs)

• HCNs are seldom transferred to the head quarters & PCNs are also rarely transferred to foreign subsidiary operations

Definition:

• A polycentric approach of staffing refers to the staffing where in the host country national is placed in the key position of the subsidiary operations.

• This is because of the inherent differences in the overseas market.

• Local managers are recognized as being psychologically close to people & market

Advantages of Polycentric policy:• Employing HCNs eliminates language barrier• Avoids the adjustment problems of expatriate

manager & their families• Removes the need for expensive cultural

awareness training programmes.• Allows a MNC to take a lower profile in sensitive

political situations• Employment of HCNs is less expensive even if a

premium is paid to attract high quality applicants• This approach assures the key positions &

reduces turnover

Disadvantages of polycentric approach: • Bridging the gap between HCN subsidiary

manager & PCN manager at corporate is difficult• Language barriers, conflicting national loyalties

& a range of cultural differences may isolate the corporate HQ

• This results in nominal links with corporate office.

• HC managers have limited opportunities to gain experience outside their own country & cannot progress beyond the senior position of the subsidiary unit

• PC managers also have limited opportunities to gain overseas experience

3. Geocentric Approach:

• In this approach the multinational environment is taking a global approach to its global operations

• It recognizes that subsidiary & corporate makes unique contribution with its unique competency.

• It is accompanied by a worldwide integrated business & nationality is ignored in favor of ability.

E.g. The CEO of Swedish multinational Electrolux claims that within its company there is no tradition to hire Managing Director form Sweden or locally, but to find the person best suited for the job.

i.e. The color of ones passport does not matter when it comes to rewards, promotion & development.

• PCNs, HCNs, & TCNs can be found in key positions anywhere, including those at senior management levels & on the board of directors

Advantages of Geocentric Approach:

• It enables a multinational to develop an international executive team which assists in developing a global perspective

• An internal pool of labor is developed for deployment thought the global organization

• It does not isolate the corporate & subsidiary• It supports co-operation & resource sharing

across units.

Disadvantages of Geocentric Approach:

• Host govt want a high number of their citizens employed & may utilize immigration controls in order to force host country employment even if enough people & adequate skills are unavailable

• Many western countries requires companies to provide extensive documentation if they wish to hire a foreign national instead of a local national.

• This documentation is time consuming, expensive & sometime futile. (Work permit)

• A geocentric approach may be expensive to implement because of the increased training & relocation costs

• Composition structure with international base pay is higher than national levels in many countries

• Large no of PCNs, HCNs, & TCNs need to be sent abroad in order to build & maintain the international team required to support staffing policy.

Globalization momentum

Search for Global Operators

Staff Transfer

International team

BARRIERS•Staff Availability

•Time & Cost Constraints•Host Govt Policy

•HRM Policy

Top management commitment

Geocentric Staffing

Policy

Momentum Maintained

4. Regiocentric Approach;

• This approach reflects the geographic strategy & structure of the multinational.

• Similar to the geocentric approach, it utilizes a wider pool of managers but in a limited way.

• Staff may move outside their country but only within the particular geographic region.

• Regional managers may not be moved to the corporate but enjoys a greater degree of regional autonomy in decision making.

E.g. A US based firm could create three regions:

Europe—America—Asia

• European staff would be transferred thought the European region

( Briton to Germany, a French to Belgium & a German to Spain)

• Staff transfer to Asia region from Europe would be rare.

Advantages of using Regiocentric Approach:

• It allows interaction b/w executives transferred to regions

• It can be a way for multinational to move gradually from a purely ethnocentric or polycentric to regiocentric.

• Sensitivity to local conditions is present.

Disadvantages of Regiocentric approach:

• There is no global stance

• Does not improve career prospective at the national level

Types of Staffing Policy

Ethnocentric

Key management positions filled by

parent-country nationals

Polycentric

Host-country nationals manage

subsidiaries, parent company

nationals hold key Headquarter

positions

Geocentric

Seek best people, regardless

of nationality

Comparison of Staffing Approaches

Staffing Strategic

qualified managers in host country

Alleviates cultural Limits career mobilityInexpensive to from foreign

Transnational

Uses human resources National immigration

myopia

Approach Appropriateness Advantages Disadvantages

Ethnocentric International

Polycentric Multi-domestic

Geocentric Global and

Overcomes lack of Produces resentment

in host nation Unified culture Can lead to cultural

Helps transfer core competencies

myopia Isolates headquarters implement subsidiaries

efficiently policies may limitimplementationHelps build strong

culture and informal management network

Expensive

Higher cost

1. Position filling:

• The organization has a need & depending on the type of position & level involved will either employ someone locally or transfer a suitable candidate to the vacant position

• Global Relocation Services conducted a survey & asked the respondents to indicate their primary objectives for international assignments

• The most common reason was to fill the skill gap, followed by the changing technology.

• Wongs study of two Japanese department stores in Hong Kong found that short-term job filling was the main reason for using expatriate staff rather than long term development.

2.Management Development• Staff can be moved into other parts of the

organization for training & development purpose & to assist in the development of common corporate Values.

• Assignments may be for varying length of time

• The perceived link between international experience & career development can be a motivation for staff to agree to such transfer.

3. Organization Development• Here strategic objectives of the

operation come into action• The need for control, the transfer

of knowledge, competence, procedures & practices followed in various locations & to exploit global market opportunities.

• Price Water house Coopers report found that:

• The greatest staff mobility assisted in supporting a global culture & assisted cross fertilization of ideas & practices.

• International assignments allow staff to gain a broader perspectives they become familiar with more than one operation.

Types of International Assignment

1. Short Term

2. Extended

3. Long Term

4. Commuter Assignments

5. Rotational Assignments

6. Contractual Assignments

7. Virtual Assignments

1. Short Term

• Up to thee months

• These are usually for trouble shooting or project supervision or are a stopgap measure until a more permanent arrangement can be found.

2.Extended:

• Up to one year

• These may involve similar activities to those for short term assignments

3. Long –Term

• Varies from 1 to 5 years, involving a clearly defines role.

• Managing Director.

• The long term assignment has also been referred to as a traditional expatriate assignment.

4.Commuter Assignment

• Special arrangements where the person concerned communicates from the home country on a weekly or bi-weekly basis to the place of work in another country

• E.g. the person lives in London but works in Moscow.

Issues in Staff SelectionThe Myth of the Global Manager:

Myth-1:There is a universal approach to management

• This myth prevails despite the evidence from cross cultural studies that many multinationals have blundered when trying to introduce trying to introduce home based work practices into foreign operations

Myth-2 : People can acquire multinational adaptability & behaviors.

• Some people can adopt culturally appropriate behaviors but that does not apply at all the time in all cultural settings.

• It depends on the individuals reaction to a particular cultural environment.

• It is always easy to put into practice what one knows is the right way to behave.

• Some individuals have goo effectiveness & coping skills• Effectiveness Skills are defined as the ability to translate

successfully the managerial & technical skills into foreign environment

Myth-3 There are common characteristics shard by successful international managers:

• There are common characteristics shared by successful international managers

• Expatriate selection tends to reflect this approach• It is possible to identify predictors of success in a

individual who has certain characterists, traits & experience so that he is more likely to perform effectively in foreign environment

• However this has to be supported by other factors involved not just in the selection process, but also in the way the person responds to the foreign location.

Myth-4: There is no impediments to mobility

• Large multinationals are developing an internal labor market

• Firms may have become more global in their operations but their people have not

• Cost constraints & host government requirements revel the multinationals ability to deploy best person into a particular position can be curtailed.

Recruitment

Recruitment Methods

• Head Hunters

• Cross National Advertising

• E-recruitment

Headhunting• Headhunting is recruiting the top management

executives ,who are highly skilled and resource full and whose contribution to the organization leads to success or these employees are the competitive advantage of the organization.eg,

• Those employees who are competitive advantage of some company is offered the fancy designations and high salary package and made to join their company this process is called headhunting.

• Headhunting can be done via ads, job portals referrals etc.

Cross National Advertising

• Advertising for an international position in different national & international dailies so as to fill the vacancies & positions in different parts of the subsidiary countries

E-recruitment• Use of technology or the web based tools to

assist the recruitment process.

• The tool can be either a job website like naukri.com, the organization’s corporate web site or its own intranet.

• Companies advertise job vacancies through worldwide web.

• Job seekers place their CV’s in worldwide web, which can be drawn by prospective employees depending upon their requirements.

Technical Ability

• Indeed, the 2002 GMAC-GRS survey found that locating suitable candidates is the top relocation challenge facing companies. It should b noted that selection is a two-way process between the individual and the organization.

• A prospective candidate may reject the expatiate assignment, either for individual reasons, such as family considerations, or for situational factors, such as the perceived toughness of a particular culture.

• It is a challenge for those responsible for selecting staff for international assignments to determine appropriate selection criteria.

• Naturally, the person’s ability to perform the required tasks is an important consideration Tec t’al and managerial skills are therefore an essential criterion.

• Indeed, resrarcf’ in!ings consistendy indicate that multinationals place heavy reliance on relevant technical skifls during the expatriate selection process

Cross Cultural Sutiability

• Cultural Empathy• Adaptability• Diplomacy• Language Ability• Positive Attitude• Emotional Stability• Big 5 personality-EACEO

Family Requirements

• Dual Carrere

• Aged parents

• Children