Submitted by: Kanya Patil APPROACHES TO INTERNATIONAL STAFFING

 There are 4 approaches to staffing for international operations  Ethnocentric  Polycentric  Geocentric  Regiocentric  These are the ways that one may decide to allocate human resources to different countries for international operations APPROACHES

 When subsidiaries of companies are managed by staff from the home country – PCNs  EXAMPLE: The Indian operations of Coke (an American MNC) are managed by an American. He/ she is the PCN ETHNOCENTRIC APPROACH

ADVANTAGESDISADVANTAGES 1. Suitable in case of a lack of quality of HCNs 1. Limited promotion opportunity for HCNs 2. Good communication, co-ordination and control with corporate HQ 2. Adaptation of expats in host country is a long process (therefore business may suffer) 3. Suitable in case of newly introduced international operations 3. Often there is a significant income gap between same positions of PCNs and HCNs 4. Ensures proper dissemination of company culture, values and overall business objectives 4. Expat may become too high-handed as he has new authority and power

 MNC treats each subsidiary as a distinct national entity (with significant decision making autonomy)  When subsidiaries of companies are managed by staff from the host country – HCNs  EXAMPLE: The Indian operation of Coke are managed by an Indian. He/ she is the HCN POLYCENTRIC APPROACH

ADVANTAGESDISADVANTAGES 1. Overcoming language barriers1. Difficult to bridge the gap between HCN subsidiary managers and PCN managers at the HQ 2. Avoids expat adjustment and adaptability problems 2. Barriers of language, national loyalties and cultural differences with the corporate HQ 3. Usually less expensive to employ HCNs even if a premium is paid for top quality 3. The MNC could wind up becoming a set of independent units instead of one cohesive organization 4. Allows an MNC to take a low profile in sensitive political situations 4. Limited career paths of HCNs to get opportunities outside their own country 5. Continuity and stability of management (not the case in ethnocentric approach) 5. PCN managers also lose the opportunity to gain overseas experience and exposure

 MNC takes a global approach to operations  Recognition of the fact that each part (subsidiaries and headquarters) make unique contributions to the growth of the business  Ability and Competence is favored over nationality or ethnicity  This method aims to create truly international managers  EXAMPLE: The UK telecom company, Vodafone does not choose its managers for international assignments based on their own nationalities at all. It is based purely on their abilities and skills GEOCENTRIC APPROACH

ADVANTAGESDISADVANTAGES 1. Allows the development of an “international” executive team with representation from various nations 1. Host government may insist on employing HCNs in positions of responsibility 2. Development of a global perspective and internal pool of labour that can be deployed anywhere 2. Many a times extensive documentation is required when hiring a foreign national. This can be tedious and time consuming 3. Overcomes the polycentric approach drawback of subsidiaries working as independent units 3. Expensive due to larger training and relocation costs. Also companies need to be in keeping with international pay standards (not local standards – and this adds to the expense too) 4. Supports co-operation and resource sharing across units 4. Takes a lot of time to implement in practice and requires tremendous centralization in the staffing function

 Mixture of polycentric and geocentric approaches  Here managers are chosen, not necessarily from the host country, but from the surrounding region  Utilizes a wider pool of managers but in a limited way  While there is relocation, it is still within the same broad geographical region  EXAMPLE: The Sri Lankan operations of Coke are managed by an Indian. He/ she is a TCN REGIOCENTRIC APPROACH

ADVANTAGESDISADVANTAGES 1. Allows interaction between executives transferred to regional HQ from subsidiaries in the region and PCNs posted to the regional HQ 1. May promote federalism at a regional level instead of a national one 2. Reflects some sensitivity to local conditions 2. May prevent an organization form growing past a regional level 3. Can be a way for an organization to move from a purely ethnocentric or polycentric approach towards a geocentric approach of staffing 3. Only a mild improvement in terms of opportunities for the regional employees to grow globally