Explain the three types of staffing policies available to the international business manager. In doing so, demonstrate an understanding as to when each would likely be applied. The three staffing policies to be discussed are ethnocentric, polycentric, and geocentric staffing
A business is an organization or an economic or commercial activity which produces goods or offers services to the consumers in exchange for money. The business may be privately owned, public or even owned by the government. The business deals with various processes such as the exchange of goods and services, dealing transactions, profit orientation, risks in investments, buying and selling and satisfying consumer needs. International business includes the business transactions that are conducted between different countries as imports and exports. Staffing is one of the most important parts of any business that can make or break the business’ profits. Effective people are to be hired in the company to maintain productivity and sustain the growth of the business. The staffing includes the selection and training of individuals through proper assessment for a company where they help in organizing, controlling and directing the major processes that happen within the organisation. Staffing acquires and retains a workforce of the required quantity who can work in such a way that the employees create a positive impact on the effectiveness of the organization. The staffing in the international scenario needs to be more careful and properly assessed than that for a local or a domestic business. International staffing reaches out to various parts of the world for highly qualified candidates who are best suited for an organisation’s needs. This is done after some clear processes of verifying the candidate’s qualifications, reference checking and proper evaluation of the potential candidates to ensure that hiring them would be best for the business. The company bears all the necessary arrangements needed for the hired employee such as accommodation, meal plans etc, This helps the migrant to have a convenient and comfortable environment to work in. This provision would make the employee work efficiently.
The development of business in terms of internationalization and globalization has been humongous over the past few years with the proliferation of e-commerce and consumer demands. The companies that do exports to different countries require a lot of complex business structures to retain their position in the business world among their competitors. The problems that an international business has to face are more complicated than what it faces at a domestic and a local level of its company’s reach. The HR department of any company has to take the issues seriously and work on them through proper staffing. The hiring of the right people for a job in the company is essential for the growth of a business in a foreign country. There are three different types of Human Resources Management in International business. They are as follows:
The company recruits people in three different ways. One is from its home country known as the expatriates. Secondly, the employees are hired from the host country in which the company is being operated. Thirdly, the company can also hire new employees from other than the home country or the host country. The international staffing policies of any multinational company can be categorised into three types namely ethnocentric staffing, polycentric staffing and geocentric staffing. The staffing processes are monitored to retain the smooth operation of the company without any hustles.
The concept of ethnocentric staffing policy is a strategy of any international business to employ the right managers for the company’s top-ranking positions in foreign operations. For example, an American company located in India would have the top executives from America. By having the company’s top positions occupied by the people of the company’s home country, there is a benefit of the staffing approach in monitoring the business by well-experienced employees of the firm. This may also be due to the reason not being able to select qualified people for the job from the host country. The expatriate’s expertise in the company in terms of skills and technique would be higher than that of any host country employee who in turn would be new to the company’s environment and may not be as skilled as a native employee. An employee from the native country means that every move made in the business would be passed on in a much more efficient way. There would be no language barriers when it comes to contacting an expatriate and getting information regarding the progress of the company. This strategy is being followed by many companies in the market in recent times.
The recruitment of the local staff in a global operation ensures the livelihood of the person. This is to ensure that the revenue is offered to the native employee and the career opportunities of the local staff are not depreciated. As good as this staffing policy works in favour of the company’s home country, there are several disadvantages to take into account also. There are always qualified individuals in the host country. The expatriates may find it difficult to get adapted to the different countries. The expatriates don’t have proper mentors when making important decisions for the company. The private life of the employees is also drastically affected as they leave their families for the job and don’t get enough time to spend with their families. Effective communication between the top officials and their subsidiaries becomes an issue sometimes. The location of the business at a different location from the headquarters provides a weak link and would not pave the way for having the freedom of shuffling through the federal regulations as the company would normally do in the native country. The restrictions in the host country might interrupt the flexibility of the company to operate the business.
The concept of the polycentric staffing policy is to have employees of the native country in the top-ranking positions in the headquarters in the home country but to hire the host country employees to take up the top executive positions in the host country branches in the overseas business operations. The managers and the employees are mostly hired from the host country to steer above the communication and cultural differences in the global market. The advantage of having an employee from the host country is that the individual would have a lot of experience of the country in terms of business. The individual would have a clear understanding of the target audience. This facilitates the company to channel their focus on the company in a much more efficient way than the host country official can drive the company’s growth at a faster pace as he is much aware of the audience in the market and also is a native who knows the market well enough. This would help the local people to be recruited into the company for the betterment of the company and the economical growth of the country through elevated revenue. The promotions for the subsidiaries are limited in the organisational hierarchy for the local staff and do not include the corporate top-ranking roles of the business. There may be knowledge and performance differences between the managers of the HQ and the overseas managers. The managers are familiar with the country’s culture so they would have the ability to translate the programs offered in the foreign countries in such a way that it is compatible with the culture of the employee. This staffing also gets the support of the local government as the top-ranking official is a local employee and the relationship would in turn be friendlier. This staffing, however, limits the exposure of the native offices to the business of the company in foreign countries.
In this policy, the employees are hired to the key roles of the business irrespective of their nationality, background and culture. With this policy of staffing, the company can be comparatively more flexible in hiring the managers since it provides a larger pool of senior internationally qualified officials from various parts of the world with more experience and much exposure to the international business. This allows the company to understand the cultural knowledge of various markets around the globe. This approach glues together the strong unifying culture that would be suitable for global marketing strategies. The international managers hired from neither the home country nor the host country would be better to reduce the nature of national identification with the lower-level employees of the organization. As much as this type of staffing is good for both the business and the working employees, there are certain disadvantages to which the staffing may cause distress in the profit of the organization. Many host countries use their immigration laws that require the Multi-National Companies to employ the local nationals when a company is established in an international market. The process itself is expensive as the individuals are to be taken care of with their visa process, travel expenses, accommodation and other miscellaneous expenses. The company has to mostly bear the expenses. This approach would pan out to be a much more tedious process of the provision of intense training and other costs for the employee. There should be a proper assessment in recruiting the individuals because the selection of the wrong person for the job would be a waste of time and lots of money. The selection procedure should be complex enough to hire the perfect person for the position. This staffing policy is the most expensive of all the policies.
The staffing policies are to be handled inefficient ways by the Human Resource Management without causing any liabilities to the business that they carry out in different geography away from the company’s headquarters. The expatriates who are sent to a different location to work for the company are to be pampered in the right way so that they can have enough work-life balance. This caution move may help in developing the productivity of the business. The ethnocentric staffing policy can help in keeping up with the company through good communication links with the headquarters but the officials would not have a proper understanding of their subsidiaries. This may be a flaw but is not as serious as it sounds. The polycentric staffing policy may not have a strong link like ethnocentric staffing yet the business’ profit would be higher comparatively since the managers would have a thorough understanding of the target audience and the market of the country.
The employees would have the opportunity to have the needed work-life balance and the productivity under their supervision would probably be the best for the company’s betterment. The local staff can be included in the organisation and thus would have a symbiotic relationship with the country in terms of revenue yield and friendly exchanges of goods and services in and out of the country. Geocentric staffing is the most expensive yet the most effective staffing policy when the quality of the company’s welfare is taken into account. As much as this is expensive and a tad bit risky, this still would pave way for the company’s growth towards higher profits. The parameters that should be followed in choosing the best policy depend upon the decision-making capacity of the team in the human resources department. This is to say that the right person for the right key roles would go a long way in making the business a successful venture. The international managers should be staffed according to the long-term vision of the business to take the company to bigger positions and ultimately become a successful company in the international market overcoming the powerful competitors.