Alternate philosophies of managerial staffing abroad are known as the ethnocentric, polycentric, egocentric, and global approaches. Firms using an ethnocentric staffing approach fill key managerial positions with people from headquarters - that is, parent-country nationals (PCNs). Among the advantages of this approach, PCNs are familiar with company goals, products, technology, policies, and procedures, and they know how to get things accomplished through headquarters. This policy is likely to be used where a company notes the inadequacy of local managerial skills and determines a high need to maintain close communication and coordination with headquarters. It is also the preferred choice when the organization has been structured around a centralized approach to globalization and is primarily at the internationalization stage of strategic expansion.
Frequently, companies use PCNs for the top management positions in the foreign subsidiary - in particular, the chief executive officer (CEO) and the chief financial officer (CFO) - to maintain close control. PCNs are usually preferable where a high level of technical capability is required. They are also chosen for new international ventures requiring managerial experience in the parent company and where there is a concern for loyalty to the company rather than to the host country: in Cases, for example, where proprietary technology is used extensively.
Disadvantages of the ethnocentric approach include (1. the lack of opportunities or development for local managers, thereby decreasing their morale and their loyalty to the subsidiary, and (2. the poor adaptation and lack of effectiveness of expatriates in foreign countries. Procter & Gamble, for example, routinely appointed managers from its headquarters for foreign assignments for many years. After several unfortunate experiences in Japan, the firm realized that such a practice was insensitive to local cultures and also underutilized its pool of high- potential non-American managers.5 Further, an ethnocentric recruiting approach does not enable the company to take advantage of its worldwide poor of management skill. This approach also serves to perpetuate particular personnel selections and other decision-making processes because the same types of people are making the same types of decisions.
With a polycentric staffing approach, local managers - host-country managers (HCNs) - are hired to fill key positions in their own country. This approach is more likely to be effective when implementing a multinational strategy. If a company wants to “act local,” there are obvious advantages to staffing with l-ICNs. These managers are naturally familiar with the local culture, language, and ways of doing business, and they already have many contacts in place. HCNs are more likely to be accepted by people both inside and outside the subsidiary, and they provide role models for other upwardly mobile personnel.
As far as cost, it is usually less expensive for a company to hire a local manager than to transfer one from headquarters, frequently with a family and often at a higher rate of pay. Transferring from headquarters is a particularly expensive policy when it turns out that the manager and her or his family do not adjust and have to be transferred home prematurely. In fact, rather than building their own facilities, some companies acquire foreign firms as a means of obtaining qualified local personnel. Local managers also tend to be instrumental in staving off or more effectively dealing with problems in sensitive political situations. Some countries, in fact, have legal requirements that a specific proportion of the firm's top managers must be citizens of that country.
One disadvantage of a polycentric staffing policy is the difficulty of coordinating activities and goals between the subsidiary and the parent company, including the potentially conflicting loyalties of the local manager. Poor coordination among subsidiaries of a multinational firm could constrain strategic options. An additional drawback of this policy is that the headquarters managers of multinational firms will not gain the overseas experience necessary for any higher positions in the firm that require the understanding and coordination of subsidiary operations.
In the global staffing approach, the best managers are recruited from within or outside of the company, regardless of nationality - a practice used for some time by many European multinationals. Recently, as more major U.S. companies adopt a global strategic approach, they are also considering foreign executives for their top positions. General Motors hired J. Ignacio Lopez de Arriortua as vice president for worldwide purchasing, Xerox hired Vitoria Cassini as executive vice president, and Esprit de Corp hired Fritz Amman as president.6
There are several important advantages of a global staffing approach. First, this policy provides a greater pool of qualified and willing applicants from whom to choose, which, in time, results in further development of a global executive cadre. A further advantage is that the skills and experiences that those managers use and transfer throughout the company result in a pool of shared learning, which is necessary for the company to compete globally Second, where third-country nationals (TCNs) are used to manage subsidiaries, they usually bring more cultural flexibility and adaptability - as well as bilingual or multilingual skills - to a situation than parent-country nationals, especially if they are from a similar cultural background as the host-country coworkers and are accustomed to moving around. In addition, when TCNs are placed in key positions, they are perceived by employees as an acceptable compromise between headquarters and local managers, which works to reduce resentment. Third, it can be more cost-effective to transfer and pay managers from some countries than from others because their pay scale and benefits packages are lowest Indeed, those firms with a truly global staffing orientation are phasing out the entire ethnocentric concept of a home or host country; and as part of that focus, the term transpatriates is increasingly replacing that of expatriates. 7 Firms such as Philips, Heinz, Unilever, IBM, and ABB, have a global staffing approach, which makes them highly visible and seems to indicate a trend.8
Generally it seems that “the more distant geographically and culturally the subsidiary, the more expatriates are used in key positions, especially in less developed countries.”9 Clearly, this situation arises out of concern about uncertainty and the ability to control implementation of the corporation's goals. However,
given the generally accepted consensus that staffing, along with structure and systems must “fit” the desired strategy) firms desiring a truly global posture should adopt a global staffing approach. That is easier said than done. As shown in Exhibit 9-I, such an approach requires the firm to overcome barriers such as the availability and willingness of high-quality managers to transfer frequently around the world, dual career constraints, time and cost constraints, conflicting requirements of host governments, and ineffective human resource management policies.
In a egocentric staffing approach, recruiting is done on a regional basis - say within Latin America for a position in Chile. This staffing approach can produce a specific mix of PCNs, HCNs, and TCNs, according to the needs of the company or the product strategy'1
What factors influence the choice of staffing policy? Among them are the strategy and organizational structure of the firm as well as the factors related to the particular subsidiary (such as the duration of the particular foreign operation, the types of technology used, and the production and marketing techniques necessary). Factors related to the host country also play a part (such as the level of economic and technological development, political stability, regulations regarding ownership and staffing, and the sociocultural setting).12 As a practical matter, however, the choice often depends on the availability of qualified managers in the Host country. Most MNCs use a greater proportion of PCNs (also called expatriates) in top management positions, staffing middle- and lower-management positions with increasing proportions of HCNs (“inpatriates”) as one moves down the organizational hierarchy. The choice of staffing policy has a considerable influence on organizational variables in the subsidiary, such as the locus of decision- making authority the methods of communication, and the perpetuation of human resource management practices. These variables are illustrated in Exhibit 9-2.
STAFFING PHILOSOPHIES FOR GLOBAL OPERATIONS : Developing a Global Management Cadre article from Global Human Resource Management Catagory STAFFING PHILOSOPHIES FOR GLOBAL OPERATIONS
STAFFING PHILOSOPHIES FOR GLOBAL OPERATIONS Developing a Global Management Cadre article from Developing a Global Management Cadre Global Human Resource Management.Free learning from data about STAFFING PHILOSOPHIES FOR GLOBAL OPERATIONS Developing a Global Management Cadre Global Human Resource Management Business Management,online business management,business management classes,online business management degrees