Description
The PPT describes on the various approaches to staffing international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options.
Ethnocetrism,Polycentrism,Regi ocentrism& Geocentrism
1
The aim is to establish the role of HRM in sustaining international business operations and growth. We will cover the following:
? Issues related to various approaches to staffing
foreign operations; ? Reasons for using international assignments: position filling, management development and organizational development; (cont.)
2
? Various types of international assignments:
? Standard assignments: Short-term, extended, and longer-term; ? Non-standard arrangements: Commuter, rotator, contractual, and virtual.
? The role of expatriates and non-expatriates (international business travellers) in supporting international business activities ? The role of the corporate HR functions
3
Approaches to Staffing
? Factors affecting approaches to staffing
? General staffing policy on key positions at
headquarters and subsidiaries ? Constraints placed by host government ? Staff availability Ethnocentric Polycentric Geocentric Regiocentric
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.
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.
6
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.
7
Geocentric Staffing Requirements
8
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.
9
Ethnocentric Approach
Advantages:
? To ensure new subsidiary complies with overall corporate objectives and policies ? Has the required level of competence ? Assignments as control
Disadvantages:
Limits the promotion opportunities of HCNs, leading to reduced productivity and increased turnover among the HCNs Longer time for PCNs to adapt to host countries, leading to errors and poor decisions being made High cost Considerable income gap, high authority, and increased standard of living may relate to lack of sensitivity
10
Polycentric Approach
Advantages:
Employment of HCNs eliminates language barriers, avoids adaptation of PCNs, reduces the need for cultural awareness training programs Employment of HCNs allows a multinational company to take a lower profile in sensitive political situations Employment of HCNs is less expensive Employment of HCNs gives continuity to the management of foreign subsidiaries (lower turnover of key managers)
11
Polycentric Approach
Disadvantages:
Difficult to bridge the gap between HCN subsidiary managers and PCN managers at headquarters ( language barriers, conflicting national loyalties, cultural differences) HCN managers have limited opportunities to gain experience outside their own country PCN managers have limited opportunities to gain international experience Resource allocation and strategic decision making will be constrained when headquarter is filled only by PCNs who have limited exposure to international assignment
12
Geocentric Approach
Advantages:
? Ability of the firm to
Disadvantage:
Host government may use immigration controls in order to increase HCNs employment Expensive to implement due to increased training and relocation costs Large numbers of PCNs, HCNs, and TCNs need to be sent across borders Reduced independence of subsidiary management
develop an international executive team ? Overcomes the federation drawback of the polycentric approach ? Support cooperation and resource sharing across units
13
Regiocentric Approach
? Advantages: ? Disadvantages: Allow interaction between Produce federalism at a executives transferred to regional rather than a regional headquarters from country basis and subsidiaries in the region constrain the firm from and PCNs posted to the taking a global stance regional headquarters Staff’s career Provide some sensitivity to advancement still limited local conditions to regional headquarters, not the parent country Help the firm to move from a headquarters purely ethnocentric or polycentric approach to a geocentric approach
14
Parent-Country Nationals
Advantages
? Organizational control and
Disadvantages
? Promotional opportunities of
coordination is maintained. ? Rising stars are given international experience. ? PCNs may be the best people for the specific job due to special skills and experience. ? An assurance that the subsidiary will comply with company objectives & policies.
HCNs are limited. ? Time and performance costs associated with adaptation to the host country. ? PCNs may impose an inappropriate HQ style. ? Compensation for PCNs and HCNs may differ.
15
Host-Country Nationals
Advantages
? Language and other barrier
? ?
Disadvantages
? Hiring of HCNs may
?
?
eliminated Reduced hiring costs Continuity of management Government policy may require hiring HCNs Possible increased morale because of increased career potential
encourage a federation of national rather than global units ? HCNs have limited career opportunity outside the subsidiary ? Control and coordination of HQ may be impeded ? Hiring HCNs limits opportunities for PCNs to gain foreign experience
16
Third-Country Nationals
Advantages
? Salary and benefit
Disadvantages
? Transfers must consider
requirements may be lower than for PCNs. ? TCNs may be better informed than PCNs about host-country environment.
national animosities. ? Host government may resent hiring TCNs. ? TCNs may not want to return to their own countries after assignment.
17
Determinants of IHRM Approaches and Activities
18
Reasons for International Assignments
? Position filling, e.g.
? Skills gap, launch of new endeavor, technology
transfer
? Management development
? Training and development purposes, assisting in
developing common corporate values
? Organizational development
? Need for control, transfer of knowledge,
competence, procedures and practices
19
Types of International Assignments
? Short term: up to 3 months ? 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
20
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.
21
Factors Influencing Virtual Assignments
22
Roles of an Expatriate
? Agent of direct control ? Agent of socialization ? Network builder ? Boundary spanner ? Language node ? Transfer of competence
A Simple Management Network
B
G C
E
D F
and knowledge
A
Informal contacts between managers within a MNE
23
The Role of Non-expatriates
? People who travel internationally yet are
not considered expatriates as they do not relocate to another country
? Road warriors, globetrotters, frequent fliers
? Much of international business involves
visits to foreign locations, e.g.
? Sales staff attending trade fairs
? Periodic visits to foreign operations
24
A Glamorous Life
? International business travelers cite the
positives as:
? Excitement and thrills of conducting business
deals in foreign locations ? Life style (top hotels, duty-free shopping, business class travel) ? General exotic nature
25
But a High Level of Stress!
? Home and family issues
? Frequent absences
? Work arrangements
? Domestic side of position still has to be attended to
? Travel logistics
? waiting in airports, etc.
? Health concerns
? Poor diet, lack of sleep, etc.
? Host culture issues
? Limited cultural training
26
Various Roles of Corporate HR
Centralized HR Companies
? Large well-resourced
Decentralized HR Companies
? Small HR
Transition HR Companies
? Medium-sized HR
HR departments
? Key role: Managing all
departments
? Key role: Managing
departments
? Key role: Management
high-grade management positions worldwide
? Key activities:
elite corporate managers
? Key activities:
and development of senior managers and expatriates
? Key activities:
Planning international assignments and performance management globally, identifying high-potential staff
Influencing operating units to support international assignments, supporting decentralized HR
Persuading divisional managers to release key staff using informal and subtle methods, strategic staffing.
Source: Based on H. Scullion and K. Starkey, in Search of the Changing Role of the Corporate Human Resource Function in the International Firms, International Journal of Human Resource Management, V 11, N 6 (2000) pp. 1061-1081.
27
The Role of the Corporate HR Function
? Can we manage our people like a global
product, e.g., the feasibility of:
? The concept of a global internal labor
market ? Standardization of work practices and HR activities
? What HR matters require central control
and what can be decentralized?
28
Summary
This chapter has expanded on the role of IHRM in sustaining international business operations. We have:
? Looked at the various approaches to staffing
international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options. ? Considered the reasons for using international assignments: position filling, management development and organization development.
(cont.)
29
Summary (cont.)
? Discussed the various types of international assignments:
short, extended and long-term (traditional); and nonstandard forms such as commuter, rotational, contractual and virtual assignments. ? Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organization’s perspective.
(cont.)
30
? Recognized that non-expatriates are also critical to
international business operations. International business travellers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors. The management of such individuals, however, does not appear to fall within the domain of the HR department. ? Looked at the role of the corporate HR function as the firm grows internationally
31
doc_334961536.pptx
The PPT describes on the various approaches to staffing international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options.
Ethnocetrism,Polycentrism,Regi ocentrism& Geocentrism
1
The aim is to establish the role of HRM in sustaining international business operations and growth. We will cover the following:
? Issues related to various approaches to staffing
foreign operations; ? Reasons for using international assignments: position filling, management development and organizational development; (cont.)
2
? Various types of international assignments:
? Standard assignments: Short-term, extended, and longer-term; ? Non-standard arrangements: Commuter, rotator, contractual, and virtual.
? The role of expatriates and non-expatriates (international business travellers) in supporting international business activities ? The role of the corporate HR functions
3
Approaches to Staffing
? Factors affecting approaches to staffing
? General staffing policy on key positions at
headquarters and subsidiaries ? Constraints placed by host government ? Staff availability Ethnocentric Polycentric Geocentric Regiocentric
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.
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.
6
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.
7
Geocentric Staffing Requirements
8
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.
9
Ethnocentric Approach
Advantages:
? To ensure new subsidiary complies with overall corporate objectives and policies ? Has the required level of competence ? Assignments as control
Disadvantages:
Limits the promotion opportunities of HCNs, leading to reduced productivity and increased turnover among the HCNs Longer time for PCNs to adapt to host countries, leading to errors and poor decisions being made High cost Considerable income gap, high authority, and increased standard of living may relate to lack of sensitivity
10
Polycentric Approach
Advantages:
Employment of HCNs eliminates language barriers, avoids adaptation of PCNs, reduces the need for cultural awareness training programs Employment of HCNs allows a multinational company to take a lower profile in sensitive political situations Employment of HCNs is less expensive Employment of HCNs gives continuity to the management of foreign subsidiaries (lower turnover of key managers)
11
Polycentric Approach
Disadvantages:
Difficult to bridge the gap between HCN subsidiary managers and PCN managers at headquarters ( language barriers, conflicting national loyalties, cultural differences) HCN managers have limited opportunities to gain experience outside their own country PCN managers have limited opportunities to gain international experience Resource allocation and strategic decision making will be constrained when headquarter is filled only by PCNs who have limited exposure to international assignment
12
Geocentric Approach
Advantages:
? Ability of the firm to
Disadvantage:
Host government may use immigration controls in order to increase HCNs employment Expensive to implement due to increased training and relocation costs Large numbers of PCNs, HCNs, and TCNs need to be sent across borders Reduced independence of subsidiary management
develop an international executive team ? Overcomes the federation drawback of the polycentric approach ? Support cooperation and resource sharing across units
13
Regiocentric Approach
? Advantages: ? Disadvantages: Allow interaction between Produce federalism at a executives transferred to regional rather than a regional headquarters from country basis and subsidiaries in the region constrain the firm from and PCNs posted to the taking a global stance regional headquarters Staff’s career Provide some sensitivity to advancement still limited local conditions to regional headquarters, not the parent country Help the firm to move from a headquarters purely ethnocentric or polycentric approach to a geocentric approach
14
Parent-Country Nationals
Advantages
? Organizational control and
Disadvantages
? Promotional opportunities of
coordination is maintained. ? Rising stars are given international experience. ? PCNs may be the best people for the specific job due to special skills and experience. ? An assurance that the subsidiary will comply with company objectives & policies.
HCNs are limited. ? Time and performance costs associated with adaptation to the host country. ? PCNs may impose an inappropriate HQ style. ? Compensation for PCNs and HCNs may differ.
15
Host-Country Nationals
Advantages
? Language and other barrier
? ?
Disadvantages
? Hiring of HCNs may
?
?
eliminated Reduced hiring costs Continuity of management Government policy may require hiring HCNs Possible increased morale because of increased career potential
encourage a federation of national rather than global units ? HCNs have limited career opportunity outside the subsidiary ? Control and coordination of HQ may be impeded ? Hiring HCNs limits opportunities for PCNs to gain foreign experience
16
Third-Country Nationals
Advantages
? Salary and benefit
Disadvantages
? Transfers must consider
requirements may be lower than for PCNs. ? TCNs may be better informed than PCNs about host-country environment.
national animosities. ? Host government may resent hiring TCNs. ? TCNs may not want to return to their own countries after assignment.
17
Determinants of IHRM Approaches and Activities
18
Reasons for International Assignments
? Position filling, e.g.
? Skills gap, launch of new endeavor, technology
transfer
? Management development
? Training and development purposes, assisting in
developing common corporate values
? Organizational development
? Need for control, transfer of knowledge,
competence, procedures and practices
19
Types of International Assignments
? Short term: up to 3 months ? 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
20
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.
21
Factors Influencing Virtual Assignments
22
Roles of an Expatriate
? Agent of direct control ? Agent of socialization ? Network builder ? Boundary spanner ? Language node ? Transfer of competence
A Simple Management Network
B
G C
E
D F
and knowledge
A
Informal contacts between managers within a MNE
23
The Role of Non-expatriates
? People who travel internationally yet are
not considered expatriates as they do not relocate to another country
? Road warriors, globetrotters, frequent fliers
? Much of international business involves
visits to foreign locations, e.g.
? Sales staff attending trade fairs
? Periodic visits to foreign operations
24
A Glamorous Life
? International business travelers cite the
positives as:
? Excitement and thrills of conducting business
deals in foreign locations ? Life style (top hotels, duty-free shopping, business class travel) ? General exotic nature
25
But a High Level of Stress!
? Home and family issues
? Frequent absences
? Work arrangements
? Domestic side of position still has to be attended to
? Travel logistics
? waiting in airports, etc.
? Health concerns
? Poor diet, lack of sleep, etc.
? Host culture issues
? Limited cultural training
26
Various Roles of Corporate HR
Centralized HR Companies
? Large well-resourced
Decentralized HR Companies
? Small HR
Transition HR Companies
? Medium-sized HR
HR departments
? Key role: Managing all
departments
? Key role: Managing
departments
? Key role: Management
high-grade management positions worldwide
? Key activities:
elite corporate managers
? Key activities:
and development of senior managers and expatriates
? Key activities:
Planning international assignments and performance management globally, identifying high-potential staff
Influencing operating units to support international assignments, supporting decentralized HR
Persuading divisional managers to release key staff using informal and subtle methods, strategic staffing.
Source: Based on H. Scullion and K. Starkey, in Search of the Changing Role of the Corporate Human Resource Function in the International Firms, International Journal of Human Resource Management, V 11, N 6 (2000) pp. 1061-1081.
27
The Role of the Corporate HR Function
? Can we manage our people like a global
product, e.g., the feasibility of:
? The concept of a global internal labor
market ? Standardization of work practices and HR activities
? What HR matters require central control
and what can be decentralized?
28
Summary
This chapter has expanded on the role of IHRM in sustaining international business operations. We have:
? Looked at the various approaches to staffing
international operations – ethnocentric, polycentric, geocentric and regiocentric – examining their advantages and disadvantages and factors that may determine the choice of these options. ? Considered the reasons for using international assignments: position filling, management development and organization development.
(cont.)
29
Summary (cont.)
? Discussed the various types of international assignments:
short, extended and long-term (traditional); and nonstandard forms such as commuter, rotational, contractual and virtual assignments. ? Examined the various roles of the expatriate: as an agent for direct control, as an agent for socialization, as network builders, as boundary spanners and as language nodes. These various roles of the expatriate help to explain why expatriates are utilized and illustrates why international assignments continue to be an important aspect of international business from the organization’s perspective.
(cont.)
30
? Recognized that non-expatriates are also critical to
international business operations. International business travellers present their own challenges, such as the effect of frequent absences on family and home life, the possible negative health effects and other stress factors. The management of such individuals, however, does not appear to fall within the domain of the HR department. ? Looked at the role of the corporate HR function as the firm grows internationally
31
doc_334961536.pptx