Fundamentals of international HR management. Leadership and motivation in international context.

78. What are the different approaches to international staffing? Outline their main characteristics.

Ethnocentric Approach. Strategic decisions are made at headquarters, and foreign subsidiaries have little autonomy. Key jobs at both domestic and foreign operations are held by headquarters management personnel and subsidiaries are managed by expatriates from the home country. Head office managers see expatriation as a way to accelerate the progression of their career, since the competence development of expatriates is preferred to that of local managers.

Polycentric Approach. In this case, expatriation is no longer at the center of the international development strategy. The MNC treats each subsidiary as a distinct national entity and empowers it with some decision-making autonomy. Subsidiaries are usually managed by local nationals (HCNs), who are seldom promoted to positions at headquarters. With this approach, the MNC avoids the difficulties associated with expatriation and cross-cultural adjustment. The control exercised by the head office is weak, and the diversity of the situations in which the subsidiaries find themselves complicates the process of integrating the organization’s international activities.

Geocentric Approach. With this approach, the MNC designs its strategy from an international standpoint right from the beginning. The organization favors ability and experience over nationality. Parent country nationals (PCNs), third country nationals (TCNs), and host country nationals (HCNs) are thus equally mobile internationally. In order to be successful, this approach to staffing without regard to nationality must be accompanied by a worldwide, integrated business strategy.

Regiocentric Approach. The MNC that favors a regiocentric approach adopts uniform practices for all managers within the same geographical zone. Like the MNC that functions with a geocentric approach, it utilizes a wider pool of managers but in a limited, regional way. Personnel may move outside of their countries, but only within their particular geographic region. For instance, European managers are mobile solely within Europe. Regional managers may not be promoted to headquarters positions but they enjoy considerable regional autonomy in decision-making

79. What are the functions of international assignments?

Fulfilling a Specific Need for Personnel and Know-how

The first role of international assignments is to fulfill the insufficient technical and managerial competencies in certain countries where the market structure is often characterized by a shortage of engineers, senior technicians, and trained managers.

Sharing and Transferring Knowledge

Another reason for using international assignments is to share and exchange information. A multinational organization can send an expatriate employee in order to better understand a subsidiary’s activities in a particular context, to share knowledge regarding a new type of equipment or a specific tool, or to communicate elements of its organizational culture, processes, or competencies. Expatriation allows for a rapid and efficient transfer of know-how. The need for such an assignment can arise, for instance, when setting up an activity that does not exist in the host country. Expatriation then plays a role in the training of the local personnel, until the subsidiaries enter a growing phase, who then replace the expatriate employees in management and supervision positions. It is important to note that the knowledge transfer does not only flow from the head office to the subsidiaries, but also between the subsidiaries and from the subsidiaries toward the head office. According to Black et al., 4 there are two unique aspects to expatriation with regard to information exchange. First, the duration of the assignments, between one and five years, allows the collection and transfer of complex information. Secondly, the information exchange takes place not only during the expatriation, but also afterward.

80. What are the reasons for using international assignments?

In the literature, four categories of international personnel have been identified, based on their country of origin and the location of their assignment. These categories are parent PCNs, HCNs, TCNs, and impatriates. The PCNs are employees from the multinational’s head-office (expatriate employees). For instance, a Japanese manager working in a Japanese multinational’s French subsidiary is an expatriate, or a PCN. The HCNs are employees from the host country (the subsidiary’s). For instance, a French manager working in a Japanese multinational’s French subsidiary is an HCN. The TCNs are employees from countries other than that of the multinational’s head office and that of the subsidiary. For instance, a Belgian manager working in a Japanese multinational’s French subsidiary is a TCN. An example of a multinational using these three types of international employees is Honda: working in Honda’s subsidiary in Dubai are one Japanese manager, an expatriate from Honda JAPAN, the international head office, one French expatriate from the European head office, and 35 HCNs (Indians and Philippinos). “Impatriates” (as opposed to expatriates) are HCNs sent to the head office. The reasons most frequently cited to justify hiring HCNs for transfer at the head office have to do with competence development of managers, knowledge transfer, and subsidiary integration. Moreover, generating a flow of impatriates toward the head office is an excellent way to trigger the process of socializing NPHs. Through impatriation, HCNs develop a sense of belonging to the global organization. The reasons for using impatriation determine the selection criteria for future impatriates. When the main goal is knowledge transfer and subsidiary integration, for example, communication skills in the multinational’s official language as well as in the subsidiary’s language are important criteria. Finally, it is worth noting that the duration of impatriations is generally shorter than that of expatriations. Many organizations use impatriates in order to reduce, in the end, the number of expatriates.

81. What are the positive and negative aspects of a Parent Country National?

• Control over the subsidiaries

• Share a common culture and educational background

• Facilitate communication and coordination with corporate headquarters

• Lack of knowledge regarding country’s economic development, culture, legal system, and political process

• Very expensive to both relocate and maintain (expatriates—people working and residing in their non-native countries)

• Legal restrictions imposed by many countries as to the number of foreign employees that can be employed