MODULE-03

Recruitment, Selection & Staffing in the international context.

Introduction:
There are staffing issues that internationalizing firms confront that are either not present in the domestic environment or are complicated by the international context in which these activities take place. Eg: A US multinational wishes to appoint a finance director for its Irish subsidiary, it may decide to fill the position by selecting from finance staff available in its parent operation(PCN), to recruit locally(HCN) or seek candidate from its other foreign subsidiary(TCN)

There are four major approaches to international staffing: 1.Ethnocentric approach 2.Polycentric approach 3.Geocentric approach 4. Regiocentric approach

1.Ethnocentric approach
Few foreign countries have no autonomy & strategic decisions are made at the head quarters Key positions in domestic & foreign operations are held by HQ personnel Subsidiaries are managed by staff from the parent country itself.

Definition:
It is an approach of multinational staffing where in the personnel of the parent country holds the key position in the host country operations. The approach appears to be appropriate for small co just entering international operations or co with minimal international commitments over seas.

Reasons for pursuing an ethnocentric staffing policy:

Perceived lack of qualified host country nationals The need to maintain good communication, coordination & control links with corporate head quarters For firms at the early stages of internalization, an ethnocentric approach can reduce the perceived risk. When a multinational acquires a firm in another country ,the local manager is replaced by a parent country national to ensure that the subsidiary complies with overall corporate objectives.

An ethnocentric policy has a number of disadvantages:

It limits the promotion opportunities of HCNs, which may lead to reduced productivity & increased labor turnover. The adaptation of an expatriate manager to host countries often takes a long time, during which PCNs make mistake & poor decisions When PCNs & HCNs compensation packages are compared the considerable income is in favor of PCNs & HCNs view this as unjustified. Expatriates are also very expensive to maintain in overseas location, the average cost of expatriates was four times the normal salary .

2. Polycentric Approach:
The multinational environment treats each subsidiary as a distant national entity with some decision making autonomy. Subsidiaries are usually managed by local nationals (HCNs) HCNs are seldom transferred to the head quarters & PCNs are also rarely transferred to foreign subsidiary operations

Definition:
A polycentric approach of staffing refers to the staffing where in the host country national is placed in the key position of the subsidiary operations. This is because of the inherent differences in the overseas market. Local managers are recognized as being psychologically close to people & market

Advantages of Polycentric policy:

Employing HCNs eliminates language barrier Avoids the adjustment problems of expatriate manager & their families Removes the need for expensive cultural awareness training programmes. Allows a MNC to take a lower profile in sensitive political situations Employment of HCNs is less expensive even if a premium is paid to attract high quality applicants This approach assures the key positions & reduces turnover

Disadvantages of polycentric approach:

Bridging the gap between HCN subsidiary manager & PCN manager at corporate is difficult Language barriers, conflicting national loyalties & a range of cultural differences may isolate the corporate HQ This results in nominal links with corporate office. HC managers have limited opportunities to gain experience outside their own country & cannot progress beyond the senior position of the subsidiary unit PC managers also have limited opportunities to gain overseas experience

3. Geocentric Approach:
In this approach the multinational environment is taking a global approach to its global operations It recognizes that subsidiary & corporate makes unique contribution with its unique competency. It is accompanied by a worldwide integrated business & nationality is ignored in favor of ability.

E.g. The CEO of Swedish multinational Electrolux claims that within its company there is no tradition to hire Managing Director form Sweden or locally, but to find the person best suited for the job. i.e. The color of ones passport does not matter when it comes to rewards, promotion & development. PCNs, HCNs, & TCNs can be found in key positions anywhere, including those at senior management levels & on the board of directors

Advantages of Geocentric Approach:

It enables a multinational to develop an international executive team which assists in developing a global perspective An internal pool of labor is developed for deployment thought the global organization It does not isolate the corporate & subsidiary It supports co-operation & resource sharing across units.

Disadvantages of Geocentric Approach:

Host govt want a high number of their citizens employed & may utilize immigration controls in order to force host country employment even if enough people & adequate skills are unavailable Many western countries requires companies to provide extensive documentation if they wish to hire a foreign national instead of a local national. This documentation is time consuming, expensive & sometime futile. (Work permit)

 A geocentric approach may be expensive to implement because of the increased training & relocation costs Composition structure with international base pay is higher than national levels in many countries Large no of PCNs, HCNs, & TCNs need to be sent abroad in order to build & maintain the international team required to support staffing policy.

Top management commitment

Search for Global Operators Globalization momentum Geocentric Staffing Policy Momentum Maintained

Staff Transfer

International team

BARRIERS Staff Availability Time & Cost Constraints Host Govt Policy HRM Policy

4. Regiocentric Approach;
This approach reflects the geographic strategy & structure of the multinational. Similar to the geocentric approach, it utilizes a wider pool of managers but in a limited way. Staff may move outside their country but only within the particular geographic region. Regional managers may not be moved to the corporate but enjoys a greater degree of regional autonomy in decision making.

E.g. A US based firm could create three regions: EuropeAmericaAsia European staff would be transferred thought the European region ( Briton to Germany, a French to Belgium & a German to Spain) Staff transfer to Asia region from Europe would be rare.

Advantages of using Regiocentric Approach:

It allows interaction b/w executives transferred to regions It can be a way for multinational to move gradually from a purely ethnocentric or polycentric to regiocentric. Sensitivity to local conditions is present.

Disadvantages of Regiocentric approach:

There is no global stance Does not improve career prospective at the national level

Types of Staffing Policy

Ethnocentric Polycentric
Host-country nationals manage subsidiaries, parent company nationals hold key Headquarter positions

Geocentric

Key management positions filled by parent-country nationals

Seek best people, regardless of nationality

Comparison of Staffing Approaches

Staffing Approach Strategic Appropriateness Advantages Disadvantages
Produces resentment in host country Can lead to cultural myopia Higher cost Limits career mobility Isolates headquarters from foreign subsidiaries National immigration policies may limit implementation Expensive

Ethnocentric International

Overcomes lack of qualified managers in host nation Unified culture Helps transfer core competencies Alleviates cultural myopia Inexpensive to implement Uses human resources efficiently Helps build strong culture and informal management network

Polycentric

Multi-domestic

Geocentric

Global and Transnational

1. Position filling:
The organization has a need & depending on the type of position & level involved will either employ someone locally or transfer a suitable candidate to the vacant position

 Global Relocation Services conducted a survey & asked the respondents to indicate their primary objectives for international assignments

 The most common reason was to fill the skill gap, followed by the changing technology.

 Wongs study of two Japanese department stores in Hong Kong found that short-term job filling was the main reason for using expatriate staff rather than long term development.

2.Management Development
Staff can be moved into other parts of the organization for training & development purpose & to assist in the development of common corporate Values. Assignments may be for varying length of time The perceived link between international experience & career development can be a motivation for staff to agree to such transfer.

3. Organization Development
Here strategic objectives of the operation come into action The need for control, the transfer of knowledge, competence, procedures & practices followed in various locations & to exploit global market opportunities.

 Price Water house Coopers report found that:

The greatest staff mobility assisted in supporting a global culture & assisted cross fertilization of ideas & practices. International assignments allow staff to gain a broader perspectives they become familiar with more than one operation.

Types of International Assignment

1. 2. 3. 4. 5. 6. 7. Short Term Extended Long Term Commuter Assignments Rotational Assignments Contractual Assignments Virtual Assignments

1. Short Term
Up to thee months These are usually for trouble shooting or project supervision or are a stopgap measure until a more permanent arrangement can be found.

2.Extended:
Up to one year These may involve similar activities to those for short term assignments

3. Long Term
Varies from 1 to 5 years, involving a clearly defines role. Managing Director. The long term assignment has also been referred to as a traditional expatriate assignment.

4.Commuter Assignment
Special arrangements where the person concerned communicates from the home country on a weekly or bi-weekly basis to the place of work in another country E.g. the person lives in London but works in Moscow.

Issues in Staff Selection

The Myth of the Global Manager: Myth-1:There is a universal approach to management This myth prevails despite the evidence from cross cultural studies that many multinationals have blundered when trying to introduce trying to introduce home based work practices into foreign operations

Myth-2 : People can acquire multinational adaptability & behaviors.

Some people can adopt culturally appropriate behaviors but that does not apply at all the time in all cultural settings. It depends on the individuals reaction to a particular cultural environment. It is always easy to put into practice what one knows is the right way to behave. Some individuals have goo effectiveness & coping skills Effectiveness Skills are defined as the ability to translate successfully the managerial & technical skills into foreign environment

Myth-3 There are common characteristics shard by successful international managers:

There are common characteristics shared by successful international managers Expatriate selection tends to reflect this approach It is possible to identify predictors of success in a individual who has certain characterists, traits & experience so that he is more likely to perform effectively in foreign environment However this has to be supported by other factors involved not just in the selection process, but also in the way the person responds to the foreign location.

Myth-4: There is no impediments to mobility Large multinationals are developing an internal labor market Firms may have become more global in their operations but their people have not Cost constraints & host government requirements revel the multinationals ability to deploy best person into a particular position can be curtailed.

Recruitment

Recruitment Methods

Head Hunters Cross National Advertising E-recruitment

Headhunting
Headhunting is recruiting the top management executives ,who are highly skilled and resource full and whose contribution to the organization leads to success or these employees are the competitive advantage of the organization.eg, Those employees who are competitive advantage of some company is offered the fancy designations and high salary package and made to join their company this process is called headhunting. Headhunting can be done via ads, job portals referrals etc.

Cross National Advertising

Advertising for an international position in different national & international dailies so as to fill the vacancies & positions in different parts of the subsidiary countries

E-recruitment
Use of technology or the web based tools to assist the recruitment process. The tool can be either a job website like naukri.com, the organizations corporate web site or its own intranet. Companies advertise job vacancies through worldwide web. Job seekers place their CVs in worldwide web, which can be drawn by prospective employees depending upon their requirements.

Technical Ability
Indeed, the 2002 GMAC-GRS survey found that locating suitable candidates is the top relocation challenge facing companies. It should b noted that selection is a two-way process between the individual and the organization. A prospective candidate may reject the expatiate assignment, either for individual reasons, such as family considerations, or for situational factors, such as the perceived toughness of a particular culture. It is a challenge for those responsible for selecting staff for international assignments to determine appropriate selection criteria.

 Naturally, the persons ability to perform the required tasks is an important consideration Tec tal and managerial skills are therefore an essential criterion. Indeed, resrarcf in!ings consistendy indicate that multinationals place heavy reliance on relevant technical skifls during the expatriate selection process

Cross Cultural Sutiability Cultural Empathy Adaptability Diplomacy Language Ability Positive Attitude Emotional Stability Big 5 personality-EACEO

Family Requirements Dual Carrere Aged parents Children