You are on page 1of 50

IHRM Module-3

Recruitment, Selection and Staffing in International Operations


1

Terms
Expatriate roles: Assignments: agent of direct control agent of socialization ROI approach language node network builder boundary spanner impatriates expatriates flexpatriates
IHRM Chapter 4

short-term extended traditional commuter rotational contractual virtual

Approaches to staffing: ethnocentric polycentric geocentric regiocentric


2

Approaches to Staffing

ethnocentric polycentric geocentric regiocentric

1. Ethnocentric. The home country practice prevails with this approach. Headquarters from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice. 2. Polycentric. Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally.

3. Geocentric or global. The company that applies the global integrated business strategy manages and staffs employees on a global basis. For example, Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises.

A regiocentric approach to hiring selects management personnel from within a region of the world which most closely resembles that of the host country. The company has expanded its search beyond the borders of the host country, but has stopped short of seeking management personnel from its operations throughout the world. The theory behind this selection process is that nationals of the region in which operations actually take place are better able to deal with language and cultural problems than are managers from outside the region. The logic behind this hiring approach is probably sound, but it ignores the potential growth a manager goes through when forced to deal with different 4 situations than those in which he or she is comfortable.

Ethnocentric

few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters key positions in domestic and foreign operations are held by headquarters personnel subsidiaries are managed by staff from the home country (PCNs).
5

Advantages & Disadvantages of Using PCNs

Cost of Employing Expatriates


the costs of sending this manager on a international assignment are nearly a million dollars, compared to the approximately $300,000 it would cost to employ a U.K. based manager.

Advantages & Disadvantages of Using TCNs

Polycentrism

subsidiary is treated as a distinct national entity with decision-making autonomy subsidiaries are managed by local nationals (HCNs)
HCNs are seldom promoted to positions at headquarters PCNs are rarely transferred to foreign subsidiary operations
9

Advantages & Disadvantages of Using HCNs

10

Geocentrism

a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution
world wide integrated business; nationality is ignored in favour of ability.

11

Advantages of Geocentrism

develops international executive teams and internal pools of labour overcomes federation drawback
supports cooperation and resource sharing across units

12

Disadvantages of Geocentrism
host governments may utilize immigration controls in order to force HCN employment companies required to provide extensive documentation
increased training and relocation costs

13

Disadvantages of Geocentrism
compensation structure with standardized international base pay large numbers of PCNs, TCNs, and HCNs need to be sent abroad requires longer lead time and centralized control of the staffing process
14

Regiocentrism
reflects the geographic strategy and structure of the MNE it utilizes a wider pool of managers but in a limited way

staff may move outside their countries but only within the particular geographic region
regional managers may not be promoted to headquarters positions but enjoy a degree of regional autonomy
15

Advantages of Regiocentrism

interaction between executives


sensitivity to local conditions (staffed by HCNs) way to gradually move from a purely ethnocentric or polycentric approach to a geocentric approach

16

Disadvantages of Regiocentrism
can produce federalism at a regional rather than a country basis improves career prospects at the national levels

17

A Philosophy Towards Staffing


The internal and external contingencies facing an internationalizing MNE influence its staffing practices managerial attitude degree of culture differences local government requirements foreign market maturity of operation organizational needs
18

Determinants of Staffing Choices

19

Transferring Staff for International Business Activities

HRM implications reasons for using international assignments types of international assignments role of expatriates and non-expatriates role of inpatriates

20

Reasons for International Assignments

position filling management development organization development

21

Types of International Assignments

Short term
Extended Long term (traditional expatriate assignment)

up to 3months
up to 1year 1 to 5 years

22

Short-Term Assignments

take up to three months


usually for troubleshooting, project supervision, or a stopgap measure

23

Extended Assignments

up to one year
may involve similar activities as that for short term assignments

24

Long-term Assignments

traditional expatriate assignment varying from one to five years involving a clearly defined role in the receiving operation

25

Differences Between Traditional & Short-term Assignments

26

Non-standard International Assignments


Commuter
Rotational

go home every one to two weeks


commute for set period followed by in home country specific skills employees hired for 6 to 12 months on specific projects

Contractual

27

Non-standard International Assignments


Virtual employee manages international responsibilities from home country base relies on communications technologies such as telephone, email or video conferences frequent visits to the host country
28

Virtual Assignments
Advantages overcoming high costs of international assignments fills shortage of mobile staff prepared to accept longer term postings Disadvantages stress resulting from intensive travel commitments role conflict, dual allegiance, and identification issues interpersonal and work relationships
29

The Roles of an Expatriate

30

Agent of Direct Control

subsidiary compliance through direct supervision


enables strategic objectives for local operations to be achieved

31

Agent of Socialization

the transfer of shared values and beliefs; related to the use of corporate culture as an informal control mechanism assist in knowledge sharing and competence transfer, and adoption of common work practices

32

Network Builders

develop social capital: fostering interpersonal linkages that can be used for informal control and communication purposes

33

Boundary Spanners

collect host country information and act as representatives of their firms in the host country can influence agents
bridge internal and external organizational contexts

34

Language Nodes

many MNEs operate through language standardization or corporate language, usually English. employees competent in other languages may be the person in which other country representatives preferred to conduct queries from the MNE.

35

Transfer of Competence and Knowledge


elements from all roles

36

The Role of Non-Expatriates

travel internationally yet do not relocate to another country


a large proportion of their role involves constant international visits to foreign markets, subsidiary units, international projects

37

Stress Factors

the international component of their work is performed within the context of their normal duties a high level of stress involved for those whose job responsibilities contain a large proportion of international business travel

38

Stress Factors

home and family work arrangements travel logistics health concerns host culture issues

39

The Role of Inpatriates

international assignments of HCNs or TCNs from a foreign location to the MNE headquarters linking pins between the different organizational units

40

Expatriate ROI

a calculation in which the financial and non-financial benefits to the MNC are compared to the financial and non-financial costs of the international assignment

41

ROI Indicators for Calculating International Assignment

42

4-Steps to Calculate Expatriate ROI


identify financial and non-financial costs and benefits. link the costs and benefits to the purpose of the long-term assignment. identify the appropriate antecedents from a systems perspective. conduct the calculation at an appropriate time within the context of the assignments purpose.

43

Various Roles of Corporate HR

44

IHRM Chapter 4

44

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.

45

IHRM Chapter 4

45

Discussion Questions

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?


46

IHRM Chapter 4

46

Discussion Questions

6. As a newly appointed Project Manager of a research team, you consider that you will be able to manage the project virtually from your office in London, even though the other six members are located in Munich. This will solve your personal dilemma as your family does not want to be relocated. The project has a six-month deadline. What factors should you need to consider in order to make this virtual assignment effective?

47

IHRM Chapter 4

47

Case: RBC Dexia Investor Services


Questions PART A 1. When two international companies like Renault and Nissan partner up in a joint venture many positions are double occupied. From a HR perspective how would you approach this problem? What are your options to solve this problem? 2. What are some of the other key HR challenges in an international partnership such as Renault from France and Nissan from Japan?
48

Case: RBC Dexia Investor Services


Questions PART A 3. What are your options to fill the 300 additionally required jobs in the present Merger?

4. What kind of impression could the sudden and justification lacking announcement of changes at the top management level have on employees?

49

Case: RBC Dexia Investor Services


Questions PART B 1. Based on the message from this note what are the consequences for employees wanting to move between RBC to RBC Dexia? 2. With regard to service history, pensions and benefits, what are the options for HRM to help employees wanting to move from RBC to RBC Dexia?
50