Approaches to Global Staffing

 

1.1 Importance of Global Staffing Strategy

Due to the rapid growth in emerging global distant markets, the mobility of human resources increases obviously. To achieve competitive advantage internationally the recruitment and selection process has become pivotal factor. (Trent and Monczka, 2003). Allocating human beings for multi- national organization is different from staffing in local operations. The staffing issues different and complicated in global environment. (Torbiorn,1997 cited in Scullion and Collings, 2006) Compared to domestic business organizations, Multi-National Corporations have to face great variety of cultural and organizational differences.

To manage geographically dispersed workforce for a same direction of the organizational objectives, international human resource management is recognized as a key resource. (Dowling and Welch, 2004).But how to recruit suitable people for these markets became the challenge. Increasing high demand for managers with distinctive competencies and desire to work in these distant markets caused global corporations to implement sourcing strategies. (Scullion, 1994 cited in Scullion and Collings, 2006). As the results corporations who have abilities to create, transfer and integrate the across border talent become most competitive organizations in global recruiting context. To be more effective Multinational organizations have to shift from traditional hierarchical structure to more flexible staffing network. The growth in personal relationships and horizontal communication has become significant factors. (Boxall and Purcell, 2003; Marschan et al., 1997 cited in Scullion and Collings, 2006)

 

1.2 Global Staffing Approaches

Global staffing means recruiting and selection process which is done by multinational corporations to fill the key position in their headquarters or subsidiaries by home country, host country or third country people. There are 3 major available methods to recruit people for international business organizations

                                        

                                                            1.2. Figure1 Staffing Orientation (Author developed)

To overcome complexities of operating in different countries with multi national workers, different staffing models have been introduced to the world. Howard Perlmutter (1969) developed a staffing model assuming aspects of organizational way of making decisions, evaluation and control, information flow and complexity perpetuation. At first the model was included only 3 factors as ethnocentric, polycentric and geocentric and regiocentric included later. (Dowling, Festing and Engle, 2013)

1.2.1. Ethnocentric Approach:

In the organizations which follow ethnocentric staffing strategy, Key positions filled by the parent country nations (PCNs). When host country nationals are lack of competencies, high risk on international business activities ,requirement of  trustworthy control over foreign acquiring or the strong communication, coordination and control with head office are needed most business entities use this approach. Autonomy and strategic decisions making done by head quarters. The power of influences of parent country nationals  are quite visible in the subsidiaries. (Scullion and Collings, 2006; Dowling, Festing and Engle, 2013)

The poor performance of the employees, demotivation and dissatisfaction ,disputes with management can be seen in organizations. The feeling of injustice in HCNs due to rare opportunities for them to promote, Foreigners treated as second class citizens and higher gap between beneficial packages  between PCNs and HCNs can make employees demotivated and dissatisfied. The MNE  has to arrange cultural awareness training and provide life settlement arrangements for his family. The cost implicated by sending PCN to another country is very high. Therefore Ethnocentric staffing approach is most appropriate for the early stage of setting up new subsidiary because it is needed great trusted control over it. (Scullion and Collings, 2006; Dowling, Festing and Engle, 2013)

 

1.2.2. Polycentric Approach

            The polycentric approach is Host country orientated and staffed by HCNs. The subsidiaries are allowed to develop by their own and headquarters only control financial monitoring and procedures. The subsidiaries has decision making autonomy. No additional costs can be seen associated with expatriate assignments such as solving adjustment problem of expatriate and their families, cultural awareness programmes. By applying this approach, MNE easily can eliminate the communication and cultural barriers. Because there are ample opportunities of carrier growth and fair treatments motivated loyal employees can be seen. It improve the performance and productivity of the organization. (Scullion and Collings, 2006; Dowling, Festing and Engle, 2013)

            Limitation in global experiences of corporate management, incompatibility of  key person’s personal goals with organizational goals and objectives can create disputes in management.

 

1.2.3.Geocentric Approach

Regardless the nationality the most appropriate person is selected for key position in the organization. According to Evan et al.(2002) personal skills are more important than the superiority and nationality. The researchers found that Geocentric organizations have most complicated organizational structure, high level of communication and integration. It is said those organizations have flexible strategy  expertise neither centralized nor fully decentralized. Having ‘Global mindset’ managers and highly performing teams are significant (Scullion and Collings, 2006).

 Multi national enterprises need to maintain international executive team assist to develop their internal labor pool in global perspective.(Roberts et al.,1998 cited in Scullion and Collings, 2006) To overcome drawbacks in ethnocentric and polycentric approaches, geocentric approach is a better solution. It supports to share resources, knowledge, best practices, more career development opportunities. Host country’s government influences to recruit more from host country, extensive documentation and high cost for expatriate assignments, required long time period and more centralized control can be identified as disadvantages.(Dowling, Festing and Engle, 2013)

1.2.4. Regiocentric Approach

This approach has conceptualized on geographic strategy considering how Multi National Enterprises spreading over the different regions. International transfers are restricted to region and cost can be comparatively low. Regional headquarters do the integration in corporate objectives, policies, communication and  support services. (Scullion and Collings, 2006)

The employees can move outside but within the particular region. This can brings limitation in knowledge, best practices, innovations, corporate integration as well as career opportunities. But regional autonomy for decisions making can be seen. The managers can be only best in the region because they don’t have opportunity to work in headquarters. (Dowling, Festing and Engle, 2013)

                                                                 (IHRM, 2021)

Reference

Dowling, P.J., Festing, M., Engle, A.D. (2013) International human resource management, Cengage learning EMEA, India

IHRM, (2021) International Staffing approaches [online video] available from https://www.youtube.com/watch?v=onmtG7sfa-w  [Accessed on 30/04/2022]

Scullion, H. and Collings, D.G (eds.) (2006) Global staffing. [online] New York USA: Taylor & Francis e library available at https://ereader.perlego.com/1/book/1615588/11 accessed on 11th April 2022

Trent, R.J. and Monczka, R.M. (2003) Understanding integrated global sourcing, International journal of Physical Distribution  & Logistics Management, 33(7), pp607-629