Staffing Strategy in International Busines | From a Business Professor

Summary

This video explores three key staffing strategies in international business: ethnocentric, polycentric, and geocentric. It explains how these strategies shape staffing decisions in multinational companies, focusing on the selection of employees for key management roles in foreign subsidiaries. The ethnocentric approach places parent country nationals in top roles, while the polycentric approach favors local talent for subsidiary management. The geocentric approach prioritizes the best-suited individuals, regardless of nationality. Each approach has its advantages and challenges, which are crucial for a company's global operations, strategy, and success in diverse markets.

Takeaways

• 😀 Staffing strategy is crucial for a firm's success and involves selecting employees who possess the necessary skills and align with the desired corporate culture.
• 😀 There are three main types of staffing strategies in international business: ethnocentric, polycentric, and geocentric.
• 😀 The ethnocentric approach fills key management positions with parent country nationals (PCNs), often used when there are no qualified locals or to maintain a unified corporate culture.
• 😀 The ethnocentric approach can be problematic due to limited advancement opportunities for host country nationals, leading to resentment and lower productivity.
• 😀 One major disadvantage of the ethnocentric approach is cultural myopia, where expatriate managers fail to understand and adapt to host country cultural differences.
• 😀 The polycentric approach recruits host country nationals to manage subsidiaries while parent country nationals occupy key positions at corporate headquarters.
• 😀 A polycentric approach helps reduce cultural misunderstandings but may create resentment due to limited international career advancement for host country nationals.
• 😀 The geocentric approach hires the best person for the job regardless of nationality, promoting global experience and contacts while fostering a unified corporate culture.
• 😀 The geocentric approach is increasingly popular among multinational companies but faces challenges such as immigration restrictions and higher implementation costs.
• 😀 Each staffing strategy is suited to different business strategies: ethnocentric aligns with an international strategy, polycentric with a localization strategy, and geocentric with global standardization and transnational strategies.

Q & A

What is the main focus of a staffing strategy in international business?

A staffing strategy focuses on selecting employees for specific jobs, ensuring they have the necessary skills and can contribute to the firm's desired corporate culture. It is crucial for a company's survival and success.

What are the three types of staffing strategies in international business?

The three types of staffing strategies are the ethnocentric approach, the polycentric approach, and the geocentric approach.

What is the ethnocentric staffing policy?

The ethnocentric staffing policy involves filling key management positions in foreign subsidiaries with parent country nationals. This approach is often used by firms that believe host countries lack qualified individuals or want to maintain a unified corporate culture.

Why might a company choose an ethnocentric staffing policy?

A company might choose an ethnocentric staffing policy if it believes the host country lacks qualified individuals for senior positions, wants to maintain a unified corporate culture, or aims to transfer core competencies to foreign operations.

What are the main disadvantages of the ethnocentric approach?

The main disadvantages of the ethnocentric approach include limited advancement opportunities for host country nationals, which can lead to resentment, lower productivity, and increased turnover. It can also result in cultural myopia, where expatriate managers fail to understand cultural differences in the host country.

What is the polycentric staffing policy?

The polycentric staffing policy involves recruiting host country nationals to manage subsidiaries while parent country nationals occupy key positions at corporate headquarters. This approach is seen as a response to the shortcomings of the ethnocentric approach.

What are the advantages of a polycentric staffing policy?

The polycentric staffing policy helps avoid cultural myopia, as host country managers are familiar with local cultures and practices. It may also be less expensive to implement compared to the ethnocentric approach, as expatriate managers are typically more expensive.

What are the disadvantages of a polycentric staffing policy?

Disadvantages of the polycentric approach include local resentment due to limited opportunities for host country nationals to advance beyond senior positions, and a lack of cross-country cooperation, which may hinder integration between corporate headquarters and foreign subsidiaries.

What is the geocentric staffing policy?

The geocentric staffing policy assigns job positions based on the best person for the role, regardless of the employee's background, culture, or country of origin. It is commonly adopted by multinational companies aiming for global standardization.

What are the advantages of a geocentric staffing policy?

The geocentric staffing policy makes the best use of human resources, allowing firms to develop a pool of senior executives with international experience. It also helps build a unified corporate culture and informal management networks, which are crucial for global standardization and transnational strategies.

What are the challenges or limitations of the geocentric staffing policy?

Challenges of the geocentric staffing policy include immigration regulations, which may restrict the hiring of foreign nationals for top positions, and the high costs associated with training, relocation, and compensation for international staff.

How do the different staffing strategies align with various business strategies?

Broadly speaking, an ethnocentric approach aligns with an international strategy, a polycentric approach fits a localization strategy, and a geocentric approach is compatible with both global standardization and transnational strategies.