What type of staffing strategy hires host country nationals for positions in the company from mail room clerks all the way up to the executive suites?

Recruitment of Employees Locally - DrawbacksIt’s often more expensive to recruit and select with a localized strategy. You musttypically send company leaders into each new market to help develop the territory andhire managers and staff. Establishing a consistent global corporate culture is moredifficult when you have employees from varying national backgrounds working acrossthe company. You may be able to overcome this drawback by focusing on a few corevalues. Decide exactly what skills you are looking for in an employee and tailor yourinterviewing and selection process to hone in on people with those skills. Also, look atwhat strengths your current team is missing. If you have five people who are great atwritten communications but struggle presenting to a large audience, select a person whocan help fill that gap.

11310.3DIFFERENT APPROACHES TO MULTINATIONAL STAFFINGThere are three different sources of employees with whom an internationalcompany can be staffed.First, the company can send employees from its home country, which is referredto as expatriates, expats or home country nationals.Second, it can recruit host country nationals and third, it can hire third country nationalswho are natives of a country other than the home country or the host country.When international expansion of the company is in its infancy, management isheavily relying on local staff, as it is extremely respondent to local customs and concerns.As the company’s international presence grows, home-country managers are frequentlyexpatriated to stabilize operational activities. At later stages of internationalization,different companies use different staffing strategies; however, most employ somecombination of host-country, home-country, and third-country nationals in the topmanagement team. However, the staffing policies of multinational companies can bedivided into four categories.1.Ethnocentric StaffingThe ethnocentric staffing policy refers to the strategy of a multinational companyto employ managers for key positions from the parent headquarters instead of employinglocal staff. In other way it involves staffing the most important positions in foreignsubsidiaries with expatriates from the company’s home country. Expatriates are oftenbelieved to better represent the interests of the home office and ensure that the foreignoffices are aligned with home headquarters. In fact, many expatriates are selected fromthe company’s current employees and are simply transferred to a foreign subsidiary.Advantages disadvantages of ethnocentric staffingThe obvious advantage to ethnocentric staffing is the alignment of interests andperspective of the home office with all foreign subsidiaries abroad. Communication isalso easier because there should be no language and cultural barriers. The company mayalso be able to transfer employees with a clear performance record that will providesome level of predictability.

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ay 1.0 Introduction

Human Resource is an important key element to a successful organization. It can be defines as the employee that who operate or work in organization, same goes to other important element like financial and material resources.  Human Resources also the organizational function that deals with the staff and anything related to staffing such as human resource planning like recruiting, salary, compensation and benefits, legal and management advice, training and development also performance management. (Source from thebalance.com)

International Human Resource Management (IHRM) is a set of activities with objective managing organizational human resources at international level to achieve organizational objectives and achieve competitive advantage over competitors at national and international level. The typical IHRM functions works such as recruitment, selection, training and development, performance appraisal and dismissal done at international level and additional activities such as global skills management, expatriate management and so on.

Essentially, IHRM is focusing on managing human resources at corporate with multinational subsidiary. The three type of employees included home country employees, host country employees and third country employees. The employees work in home country under the home country employee where host country employees will be the employees been chooses and work in foreign subsidiary country. For third country employees were the employees hired who are not from home/ host country but work at subsidiary or corporate headquarters. As an example of third country employee, Bonia the Leatherwear distributor from Malaysia appointed a French person, Mr Geoffrey De Drouas as their Business Development General Manager to the subsidiary in Indonesia.

There are differences between human resource management and IHRM where domestic human resource management only done within national or home country and concentrated on managing one nation and usually not complicated. In another said, IHRM will dealing more complicating human resource practice like managing different nation employees, expatriate management and it is affected heavily by external factors such as cultural distance and institutional factors.

2.0 Question 1 – Human Resource Management is a critical and strategy component of an organization’s overall business strategy in international expansion. Explain with examples how and why this is so.

Effective human resource management enables employees to contribute effectively and productively to the overall company direction and the accomplishment of the organization's goals and objectives. It is responsible for organization development that generates the culture of the organization. They are charged with oversight responsibilities to ensure that their organization appropriately builds teams and inspires employee empowerment.  Additional activities by human resource management can include employee and community outreach. They are frequent mentors and members of employee teams that address philanthropic giving, employee engagement activities, and events that involve employee families.

Refer to Hofstede’s cultural dimension; power distance between the countries located which is extent to the power is distributed unequally among the employees in between the higher positions and the lower positions. For example, Isetan Japan is a high power distance culture; if their expansion move into Australia, they have to adapt the local culture when deal with the local employees. In contrast, when the individualistic country people like Australia which priorities themself where they prefer work alone compare to Asia country people would priorities to work in group. Asia people would try to minimize risk where some westerners have high uncertainty avoidance to take up risks. Other factors like masculinity and femininity may effects the organization culture and company’s goal.

When expanding a business in to another country IHRM would play a handle new key role. IHRM is concern with staffing policies, recruitment and selection, remuneration, motivation, training and development, performance appraisals, promotion, retirement, redundancy and lay off, industrial relations and foreign assignments. Expatriates are the employees who is working and temporarily residing in a foreign country. Due to the development of technologies such as telecommunication and computer technology and lower cost in going business globally has made the IHRM much more important and easy to manage when compared to the past. When the organization chooses to be global, they must understand the cultural difference among the countries and this is very essential key to be successful in the long run. If there are huge cultural differences among the parent and the subsidiary companies would face varies implications. (Source from ukessays.com)

When starting a subsidiary in a foreign country, there are many reasons why expatriates are needed like multinational company - Ikea. Knowledge transfer, new branch setting, assisting branch to implement a matrix integration is a must when comes to international expansion. Localization human resource practices would be the recruitments, holidays, leave procedures and so on. Developing staff members investing in human capital, career development, good working conditions and good management practice could help the organization to retain and attract skilled and qualified labor force in to the organizations. Ikea was one of the well-known employers who able retain multinational employees by adapting local culture and achieving company’s goal. (Source from ikea.com)   

3.0 Question 2 – What are the challenges faced by organizations in implementing HRM strategies in expatriation to a selected host country?

Organizations use expatriate for international assignment as position filling, management and development and for organizational development. They could be assigned for varies time periods and would have many roles to play as expatriate such as agent of control, socialization, network builder, country head, transfer of knowledge etc. Even expatriates would face lot of difficulties such as spouse and family problems, lack of cultural sensitivity, reluctant to change and adopt, them us mentality, home country mentality and etc. (Source from ukessays.com)

Important factor of survival of international companies in a global market is selecting and posting right personnel which will be successful in pursuing company’s goals. Success in the global market is considered to be highly dependent on the quality of international management. Therefore, appointing proper expatriates abroad is a challenge and a vital task for companies in order to meet the requirements of international operations and in order to avoid the cost of expatriate failure. This is because expatriate failure is extremely costly for an organization. Career advancements financial incentives, interest in countries, interest to travel are the factors that motivate the expatriates. Expatriate employees need to be selected not on technical expertise alone, but also on cross-cultural fluency in order to maximize the expatriate's effectiveness and efficiency working in a different culture. (Source from freepatentsonline.com)

For expatriate to be successful in a foreign assignment they have to have the job knowledge and motivation, job related skills, be flexible and adoptable, helpful family situations and extra cultural openness. Expatriate failure could be defined as premature return or under performance during the foreign assignment. There could be varies reasons for early return of an expatriate but direct cost of the failure is extremely high for the organization like salary and training cost, airfares, relocation expenses, exchange rates, replacing the failed manager etc. indirect costs would be the damagers to the relationship with stake holders, family relationships, and negative effects on the local staff members. It also direct affected the relationship with the host country and may destroy the future expansion plan. (Source from useas.us)

Adaption to working and living abroad in a foreign culture presents a process of expatriate manager adjustment. Expatriate adjustment as the degree of comfort or absence of stress associated with being an expatriate. There are three facets of expatriate adjustment: work adjustment which includes supervision, responsibilities and performances; general adjustment includes conditions in the foreign country and interaction adjustment which encompasses interaction with members of the host community. There is a high possibility of expatriate to exit during the cultural shock period. There for in this each stage organizations would have to take many steps to easy the situation, such as food, customs, cultural values (seniority), home sickness and etc. There for cultural differences and business out comes attitudes and how it affects the behavior, facts about the target country, skill building and language is some of the areas that organization should look in to. Another issue is organization has to keep up-to-date with ever-changing and complex labor laws in each country and region will continue to present a constant challenge beyond the traditional visa issues, local versus foreign worker regulations and migration laws.

Corporate social responsibility is among the top challenges companies face when expanding into new markets, especially in developing regions. This creates a tug-of-war between social responsibility and the need to be successful in those markets, which can turn into significant risk. The challenge for HR is to gain a detailed understanding of local environments and their accepted business practices. It then needs to establish protocols that are customized for each region and communicate these protocols throughout the organization and across its supply chain. When local labor laws or practices conflict with the organization’s CSR policies, HR needs to be the voice of the individual and ensure that the company maintains its integrity, even when this goes against the potential economic value. For example in Vietnam, the government required all companies allows 6 months maternity leave for female employees. Thus, expatriates who are new and assign to these countries will be facing more difficulties especially on staff management and human resource practices. (Source from futurehrtrends.eiu.com)

Other the other hand, multinational organizations would face lots of performance management issues and expatriate re-entering career issues. Performance management is also a way of controlling the subsidiaries. It also contributes shape the organizational culture. Re-entry of expatriate after completion of foreign assignment would also have to be given consideration. Preparation, physical relocation, transactional readjustments are the phases which have to go through again. To retain the staff in the organization and repatriation pre-departure career discussions, naming a contact person, succession planning could be done; but for many organizations may lose because of the failure to manage expatriate reentry successfully.

For a multinational organization to be successful they should have a good compensation package in place for their employees. This is because different countries different currencies, labor laws and customs are in place. There for expatriate pay should be determine according to cost of living, hardship, currency fluctuations, health care, housing, taxation and education expense of children. When an organization do business in another country to make this transactions successful knowing the business ethics and social customs are very essential. Different countries have different values, practices, and taboos which organizations have to understand and be respectful.

4.0 Question 3 – Discuss the advantages and disadvantages in the implementation of the HR policy from ethnocentric to polycentric.

There are many ways of staffing international operations. They are ethnocentric, polycentric, geocentric and region-centric. Each of this method has its own advantages and disadvantages. Most of the companies use ethnocentric approach at the initial stage and move to polycentric approach after some time. The ethnocentric staffing which involves staffing who is the most important positions in foreign subsidiaries with expatriates from the company's home country. Expatriates are often believed to better represent the interests of the home office and ensure that the foreign offices are aligned with home headquarters. In fact, many expatriates are selected from the company's current employees and are simply transferred to a foreign subsidiary. As an example, Parkson headquarter select and transfer whole operation team inclusive Country Manager, Head of Operation, Finance Manager and most required important position to start the business in Ho Chi Minh City, Vietnam. (Source from businessjargon.com)   

Ethnocentric staffing presents advantages and disadvantages. The obvious advantage to ethnocentric staffing is the alignment of interests and perspective of the home office with all foreign subsidiaries abroad. Communication is also easier because there should be no language and cultural barriers. The company may also be able to transfer employees with a clear performance record that will provide some level of predictability. The culture of the parent company can be easily transferred to the subsidiary company, thereby infusing beliefs and practices into the foreign country. The parent company will have better control over subsidiary and effective coordination with both host and parent country. Furthermore, selected skilled expatriates by parent company will be the best person to demonstrate and transfer of technical know-how. (Source from study.com)

However in this aspect, the company may lose local perspective and insights that local employees can provide that may help overcome unique hurdles in each foreign office. The cultural clashes will happen between the executives of parent country and the staff members of the host country. Moreover, hiring expatriates tends to be expensive compared to hiring locally. Additionally, a high ratio of expatriates may create local resentment at foreign subsidiaries, which may hurt morale. Also, there will a possibility to lose out opportunity to hire the best personnel from the host country. This approach is beneficial in a situation when a new subsidiary is set up in the host country; and the employees of the parent company visit there and initializes its operations.

In polycentric staffing, a company will hire host-country nationals for positions in the company from mail room clerks all the way up to the executive suites. Polycentric staffing is particularly feasible in developed countries, such as European countries, Canada, Australia and Japan, where highly educated and trained employees can be easily located. Polycentric staffing has advantages and disadvantages; the host-country nationals will be able to better guide the company on local market conditions, politics, laws and culture at each foreign location. Use of local employees also sends a message to the country and its consumers that the company is willing to make a commitment to the country and its people. Local employees are also cheaper, as there are no relocation expenses and premium compensation for working abroad. With the approach, the morale of the local staff increases and will gain better knowledge about the local market. (Source from study.com)

Of course, relying on local employee means there may be some disconnect in perspective and interests with the home country. Locals may put local interests above the company's broader interests. The conflict may arise between the managers of both the host and the parent company due to the different thinking processes. It may lead lack of effective communication and control between the staff members of both the host and the parent company, due to the language barrier. In addition, the host country may lack of knowledge about the market conditions of the host country.

More than ever in history, organizations usually uses ethnocentric approach when start their venture in foreign counter. As an example, Bonia, the parent company started their business in Indonesia since 2004. The company used ethnocentric approach, assigning and transferred a team included Country Manager to manage and establish Bonia Indonesia in all way. After 13 years efforts of gaining local experience and also hired experienced teams to manage the local market. The home country assigned team relocate back to headquarter and continue assists the host country or given new tasks.

In an international organization, the managing and staffing approach strongly affects the type of employee the company prefers. In a company with an ethnocentric approach, parent country nationals usually staff important positions at headquarters and subsidiaries. With a polycentric approach, host country nationals generally work in foreign subsidiaries while parent country nationals manage headquarters positions. An organization with a geocentric approach chooses the most suitable person for a position, regardless of type. (Souce from moj.efst.hr)

5.0 Conclusions

Human resource management professionals working for global organizations often have unique staffing choices. In choosing the right candidate, a balance between internal corporate consistency and sensitivity to local labor practices is a goal. Different cultures emphasize different attributes in the selection process depending on whether they use achievement or ascribable criteria. When making a hiring decision, people in an achievement-oriented country consider skills, knowledge, and talents. Although “connections” can help, companies generally only hire those with the required qualifications. In an ascribable culture, age, gender, and family background are important. An organization selects someone whose personal characteristics fit the job. (Souce from moj.efst.hr)

Cultural diversity is frequently seen as a challenge, but it also provides great advantages. For example, a culturally diverse workforce may come up with more creative and innovative solutions to problems, because each person brings more unique perspectives and experiences to the table. The challenge for HR is to educate managers on how to take advantage of the cultural differences while mitigating any friction. Developing practices for promoting collaboration among diverse workers and communicating values and policies across countries and ethnicities will be important to driving success within global organizations. (Source from futurehrtrends.eiu.com)

However, in any approach also relates to recruitment and selection, an organization considers both headquarters’ practices and those prevalent in the countries of its subsidiaries. Local culture  always influences recruitment and selection practices, and in some countries, local laws require a specific approach. For example, in international manufacturing  and processing facilities in Mexico, companies recruit with a sign announcing job openings outside the facility or by employees introducing family members who are looking for jobs. The adaption and adjustment has to be done by the home country in order ensure the expansion goes smooth.

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