IHRM Sustaining international business operations

Chapter-3 Click to edit Master subtitle style

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Approaches to Staffing
Ethnocentric approach:

Reasons

A perceived lack of qualified HCNs The need to maintain good communication, coordination and control links with corporate headquarters

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Disadvantages :

Limits the promotion opportunities for HCNs Adaptation of expatriates may take long Comparison of compensation packages Higher status of expatriates may affect their sensitivity towards HCN 4/29/12

Polycentric approach: The MNEs are treated as distinct national entities with some decision making autonomy. Advantages:

Eliminates language barriers, avoids the adjustment problems of expatriates and their families and removes the need for expensive 4/29/12 cultural awareness training programs

Allows a multinational to take a lower profile in sensitive political situations Employment of HCNs is less expensive Avoids the turnover of key managers which might result from an ethnocentric approach

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Disadvantages:

The gap between HCN subsidiary managers and PCN managers at corporate headquarters; federation of independent national units with nominal links to corporate headquarters Limited career paths of HCN and PCN managers
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Host Govt. restrictions

Geocentric approach: Is accompanied by a worldwide integrated business and nationality is ignored in favour of ability Advantages:

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Develops an international executive team, global perspective and an internal pool of labor for deployment throughout the organization

It overcomes the federation drawback of the polycentric approach Supports cooperation and resource sharing across units

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Disadvantages:

Host Govts restriction Western companies requirement of extensive documentation Can be expensive to implement Large number of PCN, TCN and HCNs need to be sent abroad that requires longer lead time and centralized staffing policy 4/29/12

Regiocentric approach: Advantages:

Some interaction across subsidiaries and corporate headquarters Provides sensitivity to local conditions Can be a way for gradual shift from ethnocentric or polycentric to geocentric 4/29/12

Disadvantages:

Can produce federalism at a regional rather than on country basis Improves career paths but still limited

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Advantages/disadvantages

PCNs: Adv.

Control & coordination are maintained International experience Availability of special skills and abilities Assurance of subsidiary compliance with objectives, policies etc.

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Disadvantages:

Promotional opportunities of HCNs are limited Adaptation may take a very along time PCNs may impose an inappropriate HQ style Compensation for PCN and HCN may differ

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TCNs: Advantages:

Salary and benefit requirements may be lower than PCNs May be better informed about the host country environments

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Disadvantages:

Transfers must consider possible national animosities The host government may resist May not want to return to their home country after after assignment

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HCNs: Advantages:

Language and other barriers are eliminated Hiring costs are reduced and no work permit Continuity of management improves; stay longer Govt. policy may be complied

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Disadvantages:

Control and coordination may be impeded Limited career opportunity outside the subsidiary Limits PCN opportunity of foreign experience May encourage a federation of national rather than global units

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Determinants of IHRM approaches and activities

Contextual variables:

Legal system Cultural distance Stage in internationalization Type of industry Strategy and structure organization

Firm specific variables:

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Situation variables:

Staff availability Location of assignment Need for control Locus of decision Selection Training & development Compensation

IHRM activities:

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Reasons for using international assignments

Position filling Management development Organization development

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Types of international assignments

Short term Extended Long term Commuter assignment Rotational assignment Contractual assignment Virtual assignment
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conflict

The roles of an expatriate

As an agent of direct control: (Bears) As an agent of socialization: (bumblebees) As network builders: (spiders) As boundary spanners: As language nodes: Transfer of competence and knowledge:
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The role of non-expatriates

Non-expatriate are the people who travel internationally yet are not considered expatriates, as they do not relocate to another country. Stress issues:

Home and family issues Work arrangements Travel logistics Health concerns

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The role of the corporate HR function

Like other functional areas have to deal with strategic choices:

Can the work force be globalized? What HR matters require central control and what can be delegated to a subsidiary?

Organizational & administrative imperatives

Economic & political imperatives of the 4/29/12 host location

Various roles of corporate HR

Centralized HR companies:

Large well resourced HR departments Key role: management of all high grade management positions worldwide Key activities: planning international assignments and performance management globally, identifying high potential staff

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Decentralized HR companies:

Small HR departments Key role: managing elite corporate managers Key activities: influencing operating units to support international assignments, supporting decentralized HR
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Transition HR companies:

Medium-sized HR departments Key role: management and career development of senior managers and expatriates Key activities: persuading divisional managers to release key staff using informal and subtle methods, strategic staffing

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Change of role from bureaucratic administrators to influencers Assist in homogenizing best practices while endeavoring to maintain specific capabilities and responsiveness at the local subsidiary level by encouraging career ladders to assist in global staffing decision and designing performance appraisal and 4/29/12