Chapter 5
Sourcing HR for Global Markets:
Staffing, Recruitment &
Selection
IHRM, Dr. N. Yang
1
Chapter Focus and Aim
 The previous three chapters have addressed the
global, cultural, and organizational contexts for
the increasing complexity and strategic role of
HRM.
 We now focus on the managing people aspect.
 The aim is to establish the role of HRM in
sustaining international business operations and
growth.
IHRM, Dr. N. Yang
2
Chapter Objectives
 Issues related to various approaches to staffing




foreign operations
Reasons for using international assignments
Various types of international assignments
Expatriate, inpatriate and non-expatriate roles in
supporting international business activities
Recruitment and selection of international managers
Debates and trends concerning expatriate failure and
success
Selection criteria
Gender and dual career issues
IHRM, Dr. N. Yang
3
Approaches to Staffing
 Ethnocentric
PCNs are favored
 Polycentric
HCNs manage subsidiaries
 Geocentric
Ability is more important than nationality
 Regiocentric
Similar to geocentric, but limited to a given region
IHRM, Dr. N. Yang
4
Ethnocentric
 Strategic decisions are made at
headquarters;
 Limited subsidiary autonomy;
 Key positions in domestic and foreign
operations are held by headquarters’
personnel;
 PCNs manage subsidiaries.
IHRM, Dr. N. Yang
5
Polycentric
 Each subsidiary is a distinct national
entity with some decision-making
autonomy;
 HCNs manage subsidiaries who are
seldom promoted to HQ positions;
 PCNs rarely transferred to subsidiary
positions.
IHRM, Dr. N. Yang
6
Regiocentric
 Reflects a regional strategy and structure;
 Regional autonomy in decision making;
 Staff move within the designated region,
rather than globally;
 Staff transfers between regions are rare.
IHRM, Dr. N. Yang
7
Geocentric
 A global approach - worldwide integration;
 View that each part of the organization
makes a unique contribution;
 Nationality is ignored in favor of ability:


Best person for the job;
Color of passport does not matter when it
comes to rewards, promotion and
development.
IHRM, Dr. N. Yang
8
Approaches to Staffing
 General staffing policy on key positions at
headquarters and subsidiaries
Ethnocentric
Polycentric
Geocentric
Regiocentric
 Constraints placed by host government
 Staff availability
IHRM, Dr. N. Yang
9
Table
5.1a
Advantages and Disadvantages of Using PCNs
IHRM, Dr. N. Yang
10
Table
5.1b
Advantages and Disadvantages of Using TCNs
IHRM, Dr. N. Yang
11
Table
5.1c
Advantages and Disadvantages of Using HCNs
IHRM, Dr. N. Yang
12
Figure
5.1
Determinants of Staffing Choices
IHRM, Dr. N. Yang
13
Staffing a New International
Venture
 An Australian wine company
has successful and growing
exports in three markets:
U.K., U.S., and Scandinavia;
 Gained a global recognition
for quality wine;
 Assisted by technological
improvements, and
aggressive marketing;
 Now the Board wants the
company to “ride the
Australian wave” and gain
more market shares in the
European continent.
 The company recently made





an acquisition in France, its
first time FDI;
Which is a middle-level
player in the Fench home
market;
With efficient operation in the
French context;
Modest profit margin;
Limited sales to EU
neighboring countries;
The Board believes there is
room for improvement
particularly in production
techniques and marketing
IHRM, Dr. N. Yang
14
How would you staff the
new venture?
 Staffing approaches to
consider?
 Key positions to be filled:






Managing Director, head
of the new venture
Production Manager
Marketing Manager
Chief Wine Technologist
HR Manager
Chief Finance Manager
 Factors to consider:
 Strategic goal
 Mode of entry
 Degree of control
 French culture and
labor law
 EU works council
 Competence transfer
 Brands, the “Australian
wave”
IHRM, Dr. N. Yang
15
Reasons for International
Assignments
 Position filling, e.g.
 Skills gap, launch of new endeavor, technology
transfer
 Management development
 Training and development, assisting in developing
common corporate values
 Organizational development
 Need for control, transfer of knowledge,
competence, procedures and practices
 Exploit global market opportunities
IHRM, Dr. N. Yang
16
Types of International Assignments
 Short term: up to 3 months, e.g.
 Troubleshooting
 Project supervision
 A stopgap until a permanent arrangement is found
 Extended: up to 1 year
 May involve similar activities as short-term
assignments
 Long term
 Varies from 1 to 5 years
 The traditional expatriate assignment
IHRM, Dr. N. Yang
17
Non-standard Assignments
Commuter assignments
Rotational assignments
Contractual assignments
Virtual assignments
Some of these arrangements assist in overcoming
the high cost of international assignments but are
not always effective substitutes for the traditional
expatriate assignment.
IHRM, Dr. N. Yang
18
Table
5.2
Differences between Traditional and
Short-term Assignments
IHRM, Dr. N. Yang
19
Figure
5.2
The Roles of an Expatriate
IHRM, Dr. N. Yang
20
Factors that influence effectiveness
of international assignments






An environment of openness and support for crossfertilization of ideas and implementation of “best
practice”
Knowledge and information to travel dyadically between
the expatriate, host country, and parent country
Consideration for personal networks
Some knowledge transfer requires longer assignments
(e.g., where there is much tacitness)
Expatriate’s ability and motivation to act as an agent of
knowledge transfer
Abilities, motivation and relationship of local employees
IHRM, Dr. N. Yang
21
The Role of Non-expatriates
 People who travel internationally yet are not
considered expatriates as they do not relocate to
another country

Frequent fliers, road warriors, globetrotters, and flexpatriates
 Much of international business involves visits to
foreign locations, e.g.




Sales staff attending trade fairs
Periodic visits to foreign operations, subcontractors, etc.
Dealing with foreign agents, clients, distributors, suppliers,
subcontractors, alliance partners, etc.
Meeting with host-country government officials
IHRM, Dr. N. Yang
22
Stress Factors with International
Business Travelers
 Home and family issues
 Work arrangements
 Travel logistics
 Health concerns
 Host culture issues
IHRM, Dr. N. Yang
23
The Role of Inpatriates
 As both knowledge senders and
receivers


Share their local contextual knowledge
with the HQ staff
Socialize in the HQ corporate culture
and learn firm-specific routines and
behaviors
 Increasing the capabilities of
organizations to “think global and
act local”
IHRM, Dr. N. Yang
24
Drivers for Recruiting and
Transferring Inpatriate Managers
 Desire to create global core competency and
a cultural diversity of strategic perspectives in
the top management team
 Desire to provide career opportunities in host
countries, i.e. for HCNs and TCNs
 The emergence of developing markets which
often are difficult locations for expatriates:
»
»
Quality of life adjustment
Cultural adjustment
IHRM, Dr. N. Yang
25
Recruitment & Selection of
International Managers
 Recruitment
Searching for and obtaining potential job
candidates in sufficient numbers and quality so
that the organization can select the most
appropriate people to fit its job needs
 Selection
The process of gathering information for the
purpose of evaluating and deciding who should
be employed in particular jobs
IHRM, Dr. N. Yang
26
International vs. Domestic Recruitment
and Selection
 Predispositions of the firm
 The constraints imposed by host-country
governments
 Smaller number of external recruits
 Preference for internal recruitment
»
»
To reduce selection risk
To secure present & past human capital
investments
 Headhunting
IHRM, Dr. N. Yang
27
Expatriate Failure and Success
 Definition: Premature return of an expatriate
 Under-performance during an international
assignment
 Retention problem upon completion
IHRM, Dr. N. Yang
28
Table
5.3
Expatriate Failure Rates
IHRM, Dr. N. Yang
29
Reason for Expatriate Failure
 US Firms
 Japanese Firms
Inability to cope with
larger overseas
responsibilities
Difficulties with the new
environment
Personal or emotional
problems
Lack of technical
competence
Inability of spouse to
adjust
Inability of spouse to
adjust
Manager’s inability to
adjust
Other family problems
Manager’s personal or
emotional immaturity
Inability to cope with
larger overseas
responsibilities
European Multinationals: Inability of spouse to adjust.
IHRM, Dr. N. Yang
30
Expatriate Destinations
Top Emerging
Destinations
 China
 Singapore
 United States
 India
 U.A. Emirates
 Canada
Locations with
Highest Failure Rates
 China
 India
 United States
 Saudi Arabia
 United Kingdom
 Russia
Source: Global Relocation Trends Survey Report, Brookfield 2010.
IHRM, Dr. N. Yang
31
Expatriate Turnover
 Premature return 7%
 Spouse/partner dissatisfaction 65%
 Other family concerns 47%
 Poor candidate selection 39%
 Expatriate attrition average annual 13%
 During assignment 17%
 Within 1 yr. of return 38%
 Between 1-2 yrs. of return 23%
 Over 2 yrs. 22%
Source: Global Relocation Trends Survey Report, Brookfield 2010.
IHRM, Dr. N. Yang
32
Direct Costs of Expatriate Failure
 Direct costs:
Airfares
 Associated relocation
expenses
 Salary and benefits
 Training and
development
 Averaged $250,000 per
early return

 Costs vary according to:




IHRM, Dr. N. Yang
Level of position
Country of destination
Exchange rates
Whether a ‘failed’
manager is replaced by
another expatriate
33
Indirect Cost of Expatriate Failure
 Damaged relationships with key stakeholders
in the foreign location
 Negative effects on local staff
 Poor labor relations
 Loss of market share
 Negative effects on expatriate concerned
 Family relationships may be affected
IHRM, Dr. N. Yang
34
Figure
4-3
ROI Indicators for Calculating Intl
Assignments
IHRM, Dr. N. Yang
35
Steps to Calculate Expatriate ROI
1. Identify financial and non-financial costs and
benefits.
2. Link the costs and benefits to the purpose of the
long-term assignment.
3. Identify the appropriate antecedents from a
system’s perspective.
4. Conduct the calculation at an appropriate time
within the context of the assignment’s purpose.
IHRM, Dr. N. Yang
36
Selection Criteria
 A two-way process
 Concerning both individual and situational
factors
IHRM, Dr. N. Yang
37
Figure
5.3
Factors in Expatriate Selection
IHRM, Dr. N. Yang
38
Figure
5-2
The U-Curved Phases of Cultural
Adjustment
IHRM, Dr. N. Yang
39
The Phases of Adjustment
 The U-Curve is not normative
 The time period involved varies between
individuals
 The U-Curve does not explain how and why
people move through the various phases
 It may be more cyclical than a U-Curve
 Needs to consider repatriation
IHRM, Dr. N. Yang
40
Table
5.4
Overview of Important Adjustment
Variables
IHRM, Dr. N. Yang
41
Current Expatriate Profile
Category
To/From HQC (56%)
Gender
Age (Yrs)
Marital status
Male (83%)
40-49 (40%); 50-59 (16%)
Married (70%)
MM (63%), MF (37%)
Spouse/Partner (79%)
Female (17%)
20-29 (10%); 30-39 (32%)
Single (26%)
Partner (7%)
Children (47%)
Dual career couples
Employment status
Duration
Before assignment 50%
New hires (8%)
Long-term (64%)
Extended (32%)
During assignment (9%)
From within (92%)
Short-term (21%)
On schedule (59%)
Intra-regional transfers
EMEA (49%)
Americas (26%)
Asia-Pacific (25%)
Primary reason
Prior international experience
Fill skill gaps (43%)
10%
MGR (22%); Tech (21%)
Accompanied by
To/From non-HQC (44%)
Source: Global Relocation Trends Survey Report, Brookfield 2010.
IHRM, Dr. N. Yang
42
Solutions to the Challenges of
Dual-career Couples
 Alternative assignment arrangements
 Short-term, commuter, others (e.g. unaccompanied,
business travel, virtual assignments)
 Family-friendly policies
 Inter-company networking
 Job-hunting assistance
 Intra-company employment
 On-assignment career support



Language training, educational assistance
Employer-sponsored work permits
Career planning assistance
IHRM, Dr. N. Yang
43
Table
5.6
Strategies for Breaking the Expatriate
Glass Ceiling
IHRM, Dr. N. Yang
44
Summary






Through this chapter we have looked at various
approaches to international staffing with context
specifics
Primary reasons for using international assignments
Traditional and alternative types of international
assignments
Various roles of expatriates, inpatriates, and nonexpatriates
Expatriate failure, success, and implications
Issues concerning gender and dual-career couples in
managing international assignments
IHRM, Dr. N. Yang
45
Vocabulary
 ethnocentric, polycentric,
geocentric, regiocentric
 types of assignments:
traditional – short-term,
extended, long-term;
nontraditional – commuter,
rotational, contractual, virtual,
self-initiated
 Expatriate roles:
language node, agent of direct
control, agent of socializing,
network builder, transferor of
competence & knowledge,
boundary spanner
 best practice
 tacitness
 ethnorelativism
 inpatriates,
 external recruits, internal





recruitment, headhunting
expatriate failure, EFRs,
direct & indirect costs
selection criteria, soft skills,
intercultural competence,
cultural intelligence, common
corporate language
honeymoon = tourist phase
coffee-machine system
IHRM, Dr. N. Yang
46
Discussion Questions
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 and pros
and cons of using PCNs, TCNs, and HCNs.
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?
6. What are the most important factors involved in the selection decision?
IHRM, Dr. N. Yang
47