Ethnocentric is a staffing policy that is used in companies that has primarily international strategic orientation. This policy is generally adopted by headquarters by sending employees from the home or parent countries to the host country. This approach is used best in some situations such as, a team is sent from the home country to help setting up a new plant as well as train subsidiary personnel to use new system. The benefit of having staffs from home country abroad is that employees may gain experiences worldwide in order to become higher level in management of their headquarters because international managers require broad perspective and international exposure.
For the example of Ethnocentric policies have McDonald’s.
McDonald’s follows the ethnocentric orientation model. This requires an American management culture in all world’s areas inside and outside the company (HRM, production method, training, motivation…) McDonald’s has created it own world center for training: The “Hamburger University”. Headquartered in Oak Brook, Illinois (USA).
It offers training programs exclusively for McDonald’s employees. These staff, coming from over 119 countries, represents the “McFamily”. The training program of the “Hamburger University” aims to develop the McDonald’s staff at all levels of the organization. it also aims to train people for a long career at McDonald’s, as the policy is based on long-term career’s concept and strong possibilities of change and development within the group. It promises simple teammate to move up the ranks quickly. This is a crucial point for McDonald’s HRM’s communication. In Europe and in spite of cultural diversity, this model demonstrates its large success.
Polycentric is the policy involved hiring and promoting employees who are citizens of the host countries that the subsidiary is operated. This policy is best used when companies want to keep hiring cost low. Moreover, employees who are hired at subsidiary level would not have any problem adapting to the culture. Communication is smooth within the operation.
For the example of Polycentric policy: Starbucks
Through a flat and flexible structure, Starbucks empowers employees to make decisions without management referral and are encouraged to consider themselves as a part of the business. This point is issued by company’s corporate culture and such work environment has positive ripples on employees’ motivation. This principle increases the involvement and the commitment of each employees from subsidiaries and makes them feel necessary for the company. This high level of autonomy allows workers to be more innovative and to take more initiatives.
Thanks to its structure and to the empowerment of its employees, the company has managed to facilitate the exchange and the transversal communication, which allows it to react rapidly to the customers’ needs or to cope with more effectively with problems.
Starbucks CEO and the board of directors wanted the mission statement to convey a strong sense of organizational purpose and to articulate the company’s fundamental beliefs and guiding principles.
They also pay attention to employees’ and customers’ concerns to make the mission statement evolve. Indeed, these mission statements are based on several principles that consider the interests of customers, communities, employees, shareholders, and ecological considerations in all aspects of their operations.
Geocentric staffing approach is used when companies adopt a transnational orientation. It is best used when companies need the best personnel to work at subsidiary. Employees are selected regardless where they come from. This staffing strategy is reliable for all subsidiaries because best employees are selected and sent from the company’s worldwide network.
For the example of Geocentric staffing have: Volkswagen
The challenge of this joint venture was in harmonizing the Czech culture with the Volkswagen’s (VW) culture. The formation of the new corporate culture has gone through three stages:
To install this VW culture in the Czech plant, policy measures varied. For example, information was disseminated concerning the activities in all sections of the company, including in the head office, training was implemented at VW and VW were assigned to the VW factory in the Czech Republic to spread the to VW company philosophy. The main problem centered on the difference between the socialist mind set and the VW culture. To resolve the problem, key positions were entrusted to employees from VW, trained in the dual system. The creation of a uniform corporate culture in a multicultural environment is a very important strategic task. The solution was to link the different work attitudes with different business structures for a new unit to be reborn. Then, all participants would be satisfied.
Overcomes lack of qualified managers in host nation
Helps transfer core competencies
Produces resentment in host country
Can lead to cultural myopia
Aleviates cultural myopia
Inexpensive to implement
Limits career mobility
Isolates headquarters from foreign subsidiaries
Global and translational
Uses human resources efficiently
Helps build strong cultre and informal management network