PRESENTATION

ON

VARIOUS APPROACHES TO INTERNATIONAL HUMAN

RESOURCE MANAGEMENT

SYNOPSIS

• Introduction• Various approaches• Advantages • Disadvantages• Impact• Conclusion

INTRODUCTION

As with all other human resource management decisions and practices, global staffing should be linked to the overall strategy and objectives of the multinational enterprise.

These strategies and objectives are of course influenced by and must be set with in context of the overall global business environment.

The IHRM literature uses four terms to describe multinational enterprise approaches to managing and staffing their subsidies.   These terms are taken from the seminal work of perlmutter who claimed that it was possible to identify among international executives three primary attitudes are

Ethnocentric approachPolycentric approachGeocentric approachRegiocentric approach

Ethnocentric approach

• Under this, parent nation employees fill all key positions in a multinational. That is key positions in domestic and foreign operations are held by headquarters personnel. subsidiaries are managed by staff from the home country (PCN’s)

There are often sound business reasons for pursuing an ethnocentric staffing policy

• A perceived lack of qualified host country nationals (HCN’S)• A need to maintain good communication, co ordination and

control links with corporate headquarters.

 

This practice was widespread at one time firms such as Procter and gamble, Philips originally followed the ethnocentric approach.

Even today in most of the Japanese and south Korean companies such as toyato Samsung, key positions in international operations are still held by home country nationals.

Disadvantages of ethnocentric approach • It limits the promotion opportunities of host country nationals

which may lead to reduced productivity and increased turnover among that group.

• The parent country nationals being placed in the host country take lots of time in understanding the local dynamics leading to faulty decisions.

Impact of approach on Staffing: • Headquarters country personnel manage all operations.• Home Staffing policies are replicated in countries.• Talent skills transfer essentially one-way.

b)POLYCENTRIC APPROACH

• The multinational enterprise treats each subsidiary as a distinct national entity with some decision making autonomy. 

• Subsidiaries are usually managed by local nationals (HCN’s) and parent country nationals and are rarely transferred to foreign subsidiary nations. 

• For ex : Many US companies use home country managers to get the operations started, then hand them over to the host country managers Hindustan uniliver ltd, the Indian subsidiary of uniliver has locals has its chiefs.

The main advantages of a polycentric policy are

 Employing HCN’s eliminates language barriers avoids the adjustment problems of expatriate managers and their families and removes the need for expensive cultural awareness training programs.

Employment of HCN’s is less expensive.Gives continuity to the management of foreign subsidiaries and avoids the turnover of key managers.Managing local politics and administration will be very easier.

Disadvantages of polycentric approach• Bridging the gap between host country nationals managers and

parent country national managers becomes difficult.• It also becomes difficult to imbed the original cultural of company.

 • This will not provide the opportunity to the host country

employers to get exposure and experience outside their own country.

Impact of approach on Staffing:- • Headquarters country personnel have little impact on other

countries.• Talent acquisition policies are unique to each country.

C) GEOCENTRIC APPROACH

 Multinational enterprise is taking a global approach to its operations, recognizing that each part (subsidiaries and headquarters) makes a unique contribution with its unique competence.

This approach subscribes the view of employing the best people in key positions throughout the organization without the consideration of any nationality.

Moreover, it helps the organization to develop core competency taking the best talents in the core team.

Advantages of geocentric approach: It enables a firm to develop an international executive team which assists in developing a global perspective.It over comes the “federation” drawback of the polycentric approach.It promotes co operation and resource sharing across units.

Disadvantages of geocentric approach:

 Host governments want a high number of their citizens employed.

Many western countries require companies to provide extensive documentation.

• This is expensive in terms of the investment towards training and development of those individual.

• Benchmarking the salary with the international compensation package which is definitely more than the salary to be given to the individual in his home country.

Impact of approach on Staffing:- • Employees circulate throughout the global organization.• Talent acquisition policies maximize long-term strength of the

global organization.• Talent and skills are deployed globally to achieve global goals

while meeting local requirements.

D) REGIOCENTRIC APPROACH

• In regiocentric approach Operations managed regionally; communication and coordination high within the region. Like geocentric approach, it utilizes a wider pool of managers but in a limited way.

• This approach advocates the division of operations of the multinational company on the basis of some geographical regions and allows the transfer of employees with in a particular region.

Advantages of regiocentric approach• A major motive for using such an approach is that it allows the

interaction between executives transferred to regional areas.

• It can be a way for a multinational to move gradually from a purely ethnocentric or polycentric to a geocentric approach.

Disadvantages of regiocentric approach

• It can produce ‘‘federalism” at a regional rather than a country basis.• While this approach does improve career prospects at the national

level , it only moves the barrier to the regional level.

 

Impact of approach on Staffing• Employees circulate within regions, with a focus on regional business

results.• Talent acquisition policies are developed and coordinated within

regions.• Talent and skills are developed within regions, with minimal inter-

region transfer.

conclusion