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IHRM Module-3

Recruitment, Selection and Staffing in International Operations

22IHRM Chapter 4

Expatriate roles:

agent of direct controlagent of socializationlanguage nodenetwork builderboundary spanner

Approaches to staffing:impatriates

expatriates

flexpatriates

Assignments: short-termextendedtraditionalcommuterrotationalcontractualvirtual

ethnocentric polycentricgeocentric regiocentric

ROI approach

Terms

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Approaches to Staffing

• ethnocentric• polycentric• geocentric • regiocentric

• 1. Ethnocentric. The home country practice prevails with this approach. Headquarters from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice. 

•2. Polycentric. Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters’ managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally. 

•3. Geocentric or global. The company that applies the global integrated business strategy manages and staffs employees on a global basis. For example, Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises. 

• A regiocentric approach to hiring selects management personnel from within a region of the world which most closely resembles that of the host country. The company has expanded its search beyond the borders of the host country, but has stopped short of seeking management personnel from its operations throughout the world. The theory behind this selection process is that nationals of the region in which operations actually take place are better able to deal with language and cultural problems than are managers from outside the region. The logic behind this hiring approach is probably sound, but it ignores the potential growth a manager goes through when forced to deal with different situations than those in which he or she is comfortable.

attribution http://www.citehr.com/13375-ethnocentric-approach-recruitment.html#ixzz2PNUi6g6J

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Ethnocentric

• few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters

• key positions in domestic and foreign operations are held by headquarters’ personnel

• subsidiaries are managed by staff from the home country (PCNs).

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Advantages & Disadvantages of Using PCNs

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Cost of Employing Expatriates

• the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. – based manager.

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Advantages & Disadvantages of Using TCNs

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Polycentrism

• subsidiary is treated as a distinct national entity with decision‑making autonomy

• subsidiaries are managed by local nationals (HCNs) • HCNs are seldom promoted to positions at headquarters

• PCNs are rarely transferred to foreign subsidiary operations

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Advantages & Disadvantages of Using HCNs

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Geocentrism

• a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution

• world wide integrated business; nationality is ignored in favour of ability.

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Advantages of Geocentrism

• develops international executive teams and internal pools of labour

• overcomes federation drawback

• supports cooperation and resource sharing across units

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Disadvantages of Geocentrism

• host governments may utilize immigration controls in order to force HCN employment

• companies required to provide extensive documentation

• increased training and relocation costs

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Disadvantages of Geocentrism

• compensation structure with standardized international base pay

• large numbers of PCNs, TCNs, and HCNs need to be sent abroad

• requires longer lead time and centralized control of the staffing process

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Regiocentrism

• reflects the geographic strategy and structure of the MNE

• it utilizes a wider pool of managers but in a limited way

• staff may move outside their countries but only within the particular geographic region

• regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy

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Advantages of Regiocentrism

• interaction between executives

• sensitivity to local conditions (staffed by HCNs)

• way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach

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Disadvantages of Regiocentrism

• can produce federalism at a regional rather than a country basis

• improves career prospects at the national levels

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A Philosophy Towards Staffing

The internal and external contingencies facing an internationalizing MNE influence its staffing practices

• managerial attitude• degree of culture differences• local government requirements• foreign market• maturity of operation• organizational needs

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Determinants of Staffing Choices

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Transferring Staff for International

Business Activities

HRM implications• reasons for using international assignments• types of international assignments• role of expatriates and non-expatriates• role of inpatriates

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Reasons for International Assignments

• position filling

• management development

• organization development

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Types of International Assignments

Short term up to 3months

Extended up to 1year

Long term (traditional expatriate assignment) 1 to 5 years

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Short-Term Assignments

• take up to three months

• usually for troubleshooting, project supervision, or a stopgap measure

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Extended Assignments

• up to one year

• may involve similar activities as that for short term assignments

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Long-term Assignments

• traditional expatriate assignment varying from one to five years

• involving a clearly defined role in the receiving operation

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Differences Between Traditional & Short-term Assignments

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Non-standard International Assignments

Commuter go home every one to two weeks

Rotational commute for set period followed by in home country

Contractual specific skills employees hired for6 to 12 months on specific projects

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Non-standard International Assignments

Virtual

• employee manages international responsibilities from home country base

• relies on communications technologies such as telephone, email or video conferences

• frequent visits to the host country

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Virtual Assignments

Advantages• overcoming high costs of international assignments • fills shortage of mobile staff prepared to accept longer

term postings

Disadvantages• stress resulting from intensive travel commitments• role conflict, dual allegiance, and identification issues• interpersonal and work relationships

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The Roles of an Expatriate

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Agent of Direct Control

• subsidiary compliance through direct supervision

• enables strategic objectives for local operations to be achieved

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Agent of Socialization

• the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism

• assist in knowledge sharing and competence transfer, and adoption of common work practices

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Network Builders

• develop social capital: fostering interpersonal linkages that can be used for informal control and communication purposes

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Boundary Spanners

• collect host country information and act as representatives of their firms in the host country

• can influence agents

• bridge internal and external organizational contexts

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Language Nodes

• many MNEs operate through language standardization – or corporate language, usually English.

• employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE.

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Transfer of Competence and Knowledge

• elements from all roles

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The Role of Non-Expatriates

• travel internationally yet do not relocate to another country

• a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects

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Stress Factors

• the international component of their work is performed within the context of their ‘normal’ duties

• a high level of stress involved for those whose job

responsibilities contain a large proportion of international business travel

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Stress Factors

• home and family • work arrangements • travel logistics• health concerns• host culture issues

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The Role of Inpatriates

• international assignments of HCNs or TCNs from a foreign location to the MNE headquarters

• “linking pins” between the different organizational units

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Expatriate ROI

• a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment

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ROI Indicators for Calculating International Assignment

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4-Steps to Calculate Expatriate ROI

• identify financial and non-financial costs and benefits.• link the costs and benefits to the purpose of the long-term

assignment.• identify the appropriate antecedents from a system’s

perspective.• conduct the calculation at an appropriate time within the

context of the assignment’s purpose.

4444IHRM Chapter 4

Various Roles of Corporate HR

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Discussion Questions

45IHRM Chapter 4

1. Outline the main characteristics of the four approaches to international staffing.

2. Which factors determine the choice of a staffing approach? Would a MNE choose the same staffing approach worldwide? Place your arguments in the context of the model outlining determinants of staffing choices.

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Discussion Questions

46IHRM Chapter 4

3. What are the reasons for using international assignments?

4. What is the role of inpatriates? Do inpatriates guarantee a geocentric staffing policy?

5. Why is it important to measure return on investment of international assignments? Which indicators can be used?

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Discussion Questions

47IHRM Chapter 4

6. As a newly appointed Project Manager of a research team, you consider that you will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective?

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Case: RBC Dexia Investor Services

Questions PART A

1. When two international companies like Renault and Nissan partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem?

2. What are some of the other key HR challenges in an international partnership such as Renault from France and Nissan from Japan?

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Case: RBC Dexia Investor Services

Questions PART A

3. What are your options to fill the 300 additionally required jobs in the present Merger?

4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees?

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Case: RBC Dexia Investor Services

Questions PART B

1. Based on the message from this note what are the consequences for employees wanting to move between RBC to RBC Dexia?

2. With regard to service history, pensions and benefits,

what are the options for HRM to help employees wanting to move from RBC to RBC Dexia?