Revision topic 2
International HRM (from week 9)
Types of Global Staff Members
•
Home country national or Parent country national: Employee
working in firm who is not a citizen of country in which firm is
located, but a citizen of country where organization is
headquartered
•
Host-country national: Employee’s nationality same as location of
subsidiary
•
Third-country national: Citizen of one country, working in second
country, and employed by organization headquartered in third
country
Parent-country Nationals
Advantages
 Control and co-ordination by
HQ is maintained.
Disadvantages
 HCNs promotion opportunities
are limited.
 Adaptation to host country may
take a long time.
 Promising managers get
international experience.
 PCNs may be the best people
for the job.
 Assurance that the subsidiary
will comply with company
objectives policies etc.
 PCNs may impose an
inappropriate HQ style.
 Compensation differences
between PCNs and HCNs may
cause problems.
(Torrington, Hall, and Taylor, 2011)
Host-country Nationals
Advantages
• No problems with language
and culture.
Disadvantages
•
HQ may have less control over
operations.
•
HCNs may still have limited
career opportunities outside the
subsidiary.
•
Reduced hiring costs.
•
No work permits required.
•
Continuity of management
improves since HCNs stay
longer in positions.
•
Hiring HCNs limits
opportunities for PCNs to gain
overseas experience.
•
Govt. policy may force hiring
of HCNs.
•
•
Promotional opportunities not
limited - so higher morale
among HCNs.
Hiring HCNs may encourage a
federation of disintegrated
national units rather than one
integrated global unit.
(Torrington, Hall, and Taylor, 2011)
Third-country Nationals
Disadvantages
Advantages
• Salary and compensation
may be lower than for
PCNs.
• May be more familiar
with host country than the
PCNs.
•
Transfers must consider
national animosities.
•
Host government may
resent TCNs as much as
PCNs.
•
TCNs may not comply with
HQ style of management.
•
TCNs may not want to return
after assignment.
(Torrington, Hall, and Taylor, 2011)
Employees in an International
Workforce
•
When organizations operate overseas, they hire a combination of
parent-country nationals, host-country nationals, or third-country
nationals.
• Expatriates – employees assigned to work in another country.
Approaches to Global Staffing
• Ethnocentric staffing: Primarily hiring expatriates for
higher-level foreign positions
• In this approach, all key management positions are held by parent
country nationals.
•
Ethnocentric corporations believe that home country nationals are more
intelligent, reliable and trust worthy than foreign nationals
•
Example, when a Japanese corporation invests in Mexico, Japan is the home country and
Mexico is the host country. If the Japanese Corporation is ethnocentric, it will except Mexicans
to accept the inherent superiority of Japan. Investments will be made on the Japanese methods
of conducting business.
(Perlmutter H 1969,1974)
Approaches to Global Staffing
• Polycentric staffing: More host-country nationals are used
throughout the organization, from top to bottom.
• The polycentric staffing requires host country nationals to
be hired to manage subsidiaries, while parent-country
nationals occupy key positions at corporate headquarters
• The polycentric message is: ‘Local people know what is best
for them’.
• Employing HCNs eliminate language problems for the
expatriates and their family members, reduces cost on
costly awareness training programs, and takes care of the
adjustment problems to a large extent.
(Perlmutter H 1969,1974)
Approaches to Global Staffing (Cont.)
•
Regiocentric staffing: Regional groups of subsidiaries reflect
organization’s strategy and structure work as a unit
•
•
•
These are regionally oriented organizations. A Corporation implements
a regional strategy when synergistic benefits can be obtained by sharing
functions
across regions.
•
Regional headquarter organizes collaborative efforts among local subsidiaries,
•
The international staff is transferred with in the same region they work,
•
For example: a manager working in Asia-Pacific region will be moving within
the
same region only, if the company adopts regiocentric approach
•
(Perlmutter H 1969,1974)
Approaches to Global Staffing
(Cont.)
• Geocentric staffing: Using worldwide integrated business
strategy to hire the best person for the job
• This staffing philosophy seeks the best people for key jobs
throughout the organization, regardless of nationality, selecting
the best person for the job, irrespective of nationality is most
consistent with the underlying philosophy of a global
corporation
• The MNC is taking a global approach to its operation,
recognizing that each part (subsidiaries and headquarters)
makes a unique contribution with its unique competence
• It is accompanied by a worldwide integrated business and
nationality is ignored in favour of ability.
(Perlmutter H 1969,1974)
Unions
Operations
Human Resource
Management
Finance
Safety and
Health
Customers
Competition
Other
Functional
Areas
Labor Market
Shareholders
Political Parties
Marketing
Society
Unanticipated Events
Economy
GLOBAL ENVIRONMENT
EXTERNAL ENVIRONMENT
INTERNAL ENVIRONMENT
Technology
Legal Considerations
Challenges to International Human Resource Management
Practice questions
1. Discuss ethnocentrism, polycentrism, regiocentrism and
geocentrism staffing approaches and explain its
importance to the Multi National Companies. You should
analyse strength and limitation of each approach.
2. What are the challenges to HRM in the MNCs or in the
Global Company? Explain in detail and provide examples.
•
1. Discuss different types of expatriate and explain
advantages and disadvantages of employing expatriate by
MNCs.