This difficult task of recruiting international employees will be carried out by deployment of human resource capabilities within an international framework. Companies have immense resources that they can use when faced with employee decisions.
It is the personnel that a company employs that make the difference. Making the right selection and approach together with the most efficient use of them will provide the competitive advantage needed by today’s organisation.
The first approach is the ethnocentric approach. It is based on the occupation of a key position by employees from headquarters (i.e. expatriates or parent country nationals PCN). It is thought that subsidiaries can be managed more resourcefully by expatriates. This is because expatriates are more informed of the company’s goals and objectives, strategies and “know how” compared to local managers. This method is used when expanding globally and there is need of good communication, cooperation and control of activities. Subsequently, PCN’s are assigned to top management positions who implement strategic decisions from headquarters. Hence, the choice of expatriates will depend on the technical knowledge required or the type of international expansion a company is scheduling.
The ethnocentric approach provides the parent company with more control which is critical when expanding to a new country. Therefore, expatriates are seen as more proficient than host country nationals. At the recruitment process the MNC must decide whether the appointment is going to be external or internal, the importance of technological qualifications in regards to other selection factors. Research has shown that most MNCs depend mostly on internal recruitment for overseas management posts and those jobs tended to be senior management roles (Scullion, 1994).
Developing successful expatriate recruitment practices is crucial due to the complexity of this position but also due to ‘expat failure’ and should include recruitment criteria such as technological skills, cross-cultural ability, stability, ability to cope, and family background. Further factors such as emotional stability, initiative and personal motivation (Lucas et al., 2006) together with leadership are crucial in overseas assignments. Research has shown that MNCs depend upon technological abilities and a good career at home when deciding job offers (Anderson, 2005).
Unfortunately, this approach has its down side. For instance, host country nationals (HCN) are very limited in their career path since they will rarely reach senior management posts. In addition, they have limited control over activities which may cause dissatisfaction and disappointment leading to staff turnover and a decrease in productivity. The wage disparity is another disadvantage in this model since PCN’s collect higher salaries than HCN’s. There are some reports where expatriates had problems in settling in to the new environment and consequently have made bad choices.
Expat failure – early return of the expatriate manager to their own country – is an issue because the cost of such failure is paramount. According to one source, the cost is more than double the expatriate’s wage in addition to the cost of relocation ( compounded by currency exchange rates and location).
The expatriate problem can be best resolved by improving expatriate selection procedures. An executive’s domestic career does not necessarily indicate overseas success. Employees need to be selected not solely on technical know-how but also on cross-cultural confidence and their ability to adjust.
The second approach is known as polycentric. It relies on HCN’s being recruited to manage subsidiaries in their own country, while positions at headquarters are maintained by PCN’s. Under this situation each subsidiary is perceived as separate national entity with a degree of autonomy in decision-making and is mostly used when implementing a multinational approach. This would be the approach to recruit for subsidiaries in North America, Africa and the Arab region.
Polycentric recruitment can have certain rewards. By hiring HCN’s language barriers are overcome, there is perfect knowledge of the industry, legal and political structure and culture. Also there is no delay in the adjustment process when assigned to new posts compared to expatriates. By using HCN’s labour turnover can be decreased and productivity increases. In addition, HCN managers receive lower remuneration and benefit packages which have considerable effects in the decrease of management costs.
However, the polycentric approach has some disadvantages. This can be described as potentially problematic communication and control between the headquarters and the subsidiary. This is attributed to disparity in language, conflicts of interest and cultural differences. As a result, there is a discrepancy in the strategic management process and the quest for common objectives since each subsidiary will act as a separate business unit.
Another drawback is the conflicting career options that PCN’s and HCN’s face. Although, expatriates occupy prominent positions at the headquarters but are restricted from an international career which would give them extra feedback on how things work abroad. Likewise, HCN’s cannot occupy positions at headquarters or anywhere abroad, thus, restricting their career development.
The next recruitment approach is known as geocentric, in which there is no discrimination between PCN’s, HCN’s and third country nationals (TCN). This implies that employment decisions are solely made on who is the most suitable for the job. This approach reflects a more global view towards international growth. That is, candidates are selected either within or outside the organization and the selection guidelines is based on their abilities and not nationality. The idea that only PCN’s occupy headquarter positions is not valid in this case since HCN’s and TCN’s can be found in different positions. The position of the parent company is more of organising and coordinating type of management than strategic decision-making as mentioned earlier. Examples of such companies are General Motors and Xerox.
An important benefit is that the use of international employees create a workforce that is multi-diverse and multicultural which are needed in today’s competitive and diverse environment. Hence, activities between headquarters and subsidiaries are more incorporated and therefore more effective and efficient. The employees of the corporation are very competent, willing and skilled and all of these characteristics can be passed on to future candidates through knowledge management. This can be significant for the development of the company’s global activities.
The use of TCN’s in managing subsidiaries can be very useful in that language and cultural barriers are not an issue. Employing TCN’s involves multilingual individuals sharing similar backgrounds. In addition TCN’s receive low remuneration which makes it cost effective for companies to recruit them.
However, there are limits to this approach. For instance, there are considerable training and relocation costs to be taken into account. In addition, there are reports where host governments have implemented strict legal and trade regulations to prevent the competitive entry of expatriates in favour of the country’s home nationals.
Another issue that companies do not foresee is the deployment of PCN’s, HCN’s and TCN’s in different environments so as to enhance their international strategic management skills.
With regards to the regiocentric approach, recruitment decisions are based on geographic region. Unlike the geocentric approach, regiocentric recruitment is restricted to selecting or relocating around candidates within a certain region (i.e. for a job in Egypt staff can be selected from the Africa region).
While managers have more independence in investment and decision-making actions they can never achieve advancement to a position in headquarters.
This approach supports the promotion of the interaction of HCN’s and TCN’s with PCN’s which are assigned at the regional headquarter. This is achieved through transfers of staff. The majority of staff is HCN’s which benefits them in terms of future careers while keeping local agencies pleased.
One common problem is that regions can turn into discrete islands and thus become dissociated form the organisation’s business objectives and mission. Further limitations might be the restriction to advance beyond the national level, in view of the fact that employees are restricted to a regional level thus producing an increased job entry barrier.
It is noticeable that organisations can use a variety of solutions in their international employee recruitment drive. This endeavour will rely on several factors such as the dimension of the company, how successful it has been in an international context, what strategy it follows or the commitment of its staff. The most comprehensive and effective method to support a global strategy is the geocentric method.
If management policies in a MNC develop towards assimilation, there is a ‘country of origin effect’- whereby most MNCs start activities in a region and have a single headquarters . When an MNC comes into a new country, it may bring its own unique organisational culture or international HRM policies or adopt local employment laws. Many writers may stress that local or ‘host country’ effect is more compelling than the ‘country of origin’ effect with regards to HRM practices e.g., in the African system of work organisation, the head of the group is seen as the father and is expected to provide for the group members.
Management style is a variant of organisational culture and can be subjected to issues if taken from country of origin and applied elsewhere. Similarly, employment practices with regards to the development of human resources may become standardised to provide a consistent ‘high performance’ within the organisation. Employment terms such as wage levels, holidays, benefits or working hours are usually locally determined, even though there may be some international guidelines that will incorporate organisational employment principles.
Recruitment and international selection can be very expensive and the position of the organisation’s financial standing will determine the extent to which the company will extend resources and what selection approaches are adopted. The industry market and type of business, organisational culture and structure (centralisation, formalisation, standardisation and specialisation with respect to company size) will all have an effect (Lucas et al., 2006).
The governmental guidelines as seen in North America are not always relevant in international employment markets. The methodology used in employment in North America is founded on a personal foundation. This is a major difference between Arab and African countries and North America where laws in the latter have been legalised to promote equal opportunity to every person despite the individuals culture and race.
These issues can significantly affect the ability of an organisation to be effective. “Both the multinational and international models have the potential to cause problems in current increasingly complex international market developments.” (Bures and Vloeberghs, 2001) Thus it is crucial that each company develops objectives that incorporates its uniqueness and future issues that the international recruitment can bring
The selection policies will recruit persons who follow the cultural and legal guidelines of the business unit. Each country may need an individual who is favourable to the local culture. In some areas a “foreigner” will not be respected or highly regarded. On these grounds the recruitment process will call for a sensitive approach to the cultural requests.
During the selection process, the company will promote the use of incentives to enhance the employees job prospects by providing a number of rewards to appreciate the member of staff who accomplishes the organisation’s objectives. These rewards include employee of the month, gift vouchers, bonuses, and other company awards. The purpose of the reward is to distinguish staff actions that exceed the normal call of duty.
These rewards will motivate workforce to maintain high-performance that really benefits the organisation. Several rewards are set for contribution to the success of the company. The workers who perform in the best interest of the group are also compensated.
The business will not depend exclusively on money-orientated rewards. Personnel will supply positive support by recognising the activities of the workforce. Acknowledgment of employees’ accomplishments will be published in the organisation’s newsletter. The company’s human resource managerial staff will practice company values that every member of staff adheres to.
To sustain a moral attitude an organisation builds a culture that visibly draws up a code of conduct that is known to all staff. The organisation should demonstrate ethical work practices in their code of conduct so that each staff member realises the extent or consequence of their behaviour.
In the Middle East, religion can have a significant bearing on a person’s behaviour while in some countries the women staff are required to wear a veil. It is also crucial to regard the way in which the new worker in the new community communicates with other colleagues e.g. in Saudia Arabia, it is considered rude to stand more than a foot away from another person. whilst communicating with new cultures some behaviour may cause ineffective communication or difference of opinion.
To assist the workforce to become successful, the organisation’s human resource managers will support every member of staff in determining their career objectives. The managers will also support workers in creating an action plan setting goals and achieving them. In addition to promoting individual growth for its workforce, human resource management will support workers to practise further education and staff training. To assist workers, the member of staff benefit arrangement provides monetary support for training.
Organisational communication will be directed through official hierarchical channels and standardization. Although some business units will be given authority to every staff member in an attempt to drive work processes. every business unit’s in-house activities are standardized through job specifications developed by human resource management. Definite monitoring will be carried for the bulk of the daily routine schedule.
In conclusion, recruitment and selection require an HR model that is complements the culture and regulatory business setting. It is important to react to the various and growing demands of the international employment market. The demands of every industry has an impact on all sectors of the organisation. Human resource managers ought to regard the disparity of the culture, principles, code of conduct, motivation, employment laws, rewards, and requirements of every location.
Concluding, we can say that companies in the future should consider the HSBC axiom, that is, “act global, think local.”
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