As a human resources executive,it is prudent to figure out the cost benefit analysis of placing expatriates, host-country nationals, and third-country nationals on the various positions spread out on the employee hierarchy. Expatriates would be employees who work in a foreign country but are citizens of the company’s home country, while host-country nationals would be employees working in their home country but are hired to work for a foreign company. Third-country nationals would then form the class of employees who are citizens of a certain country but work in another country for a company that has its headquarters in a third country(Scullion & Collings, 2006).
Ethnocentric staffing Model
For top-level management, ethnocentric staffing would be the most appropriate staffing model as it ensures that foreign subsidiaries have their most important positions filled with expatriates from the company’s headquarters and home country(Scullion & Collings, 2006). This placement ensures that the company’s home office interests are better represented and aligned with those of the foreign offices.Since my MNC is in the process of expanding to South America, it is imperative that the key positions in foreign operations be filled by personnel from the headquarters especially since strategic decisions will still be made at the headquarters. Expatriates can be selected and transferred to the foreign subsidiary from the company’s current employees.This makes the staffing process a lot simpler since the employees to be transferred will be sourced in-house, removing the challenges involved with finding suitable employees externally who would then require training and absorbing before being sent over to head the management of a new subsidiary.
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This staffing model has the great advantage of ensuring that the home office perspective and interests are aligned from the top management level in all foreign subsidiaries abroad. This model of staffing also ensures that communication channels are clear and in optimal functioning since there is unlikely to be any cultural or language barrier.The selection of expatriates to fill top-level management positions in foreign subsidiaries can also be performance-based since their performance record provides the much-needed predictability during the expansion of a company’s operations in foreign territories. Ultimately, the individuals selected to fill these positions ought to be able to make the necessary adjustments in culture, personality and family in order to avoid failure and should be able communicate and develop relationships with the locals in order to ensure successful integration.
Despite the appropriateness of the ethnocentric staffing model for top-level management in foreign subsidiaries, this model has a number of disadvantages, the most apparentbeing the potential loss of local insights and local perspective. Each country has a set of unique hurdles and challenges associated with the operations of the various business sectors and industries that would require the insight and perspective brought on by local employees, such insight is equally important even at top-level management. Another evident disadvantage of this model is the fact that, the hiring and maintenance of expatriates isa lot more expensive as opposed to making local hires since working abroad comes with premium compensation, living expenses, air fare, local transportation and relocation expenses are often involved. In addition to these costs, to be factored in is the cost of training incurred when bringing expatriates in to the international operation to ensure that they get acquainted with the expectations, language, culture, laws and rules of the host country. Hiring of expatriates is also likely to breed other problems, for instance if the ratio of expatriates to locals is high, a situation of local resentment at the foreign subsidiary may be created causing a decrease in morale.
Polycentric Staffing Model
Polycentric staffing model is more appropriate to filling middle-level management positions in a foreign subsidiary, as it involves the hiring of host-country nationals(Scullion & Collings, 2006). The placement of host-country nationals at middle-level management compliments the placement of expatriates at top-level management. This is especially so since they offer invaluable insight that helps guide the company on local politics, culture, laws, and market conditions that are unique to each foreign location. A healthy balance between top and middle-level managers is crucial since at the unit level, a strong operational leadership will be required to ensure seamless global consolidation of the foreign offices and the home office.
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One of the great advantages of the polycentric staffing model is the fact that in itself it sends a message of commitment to the country and its people, a public image that works well to improve the company’s public relations and that sits well with the consumers in that country. This further reduces the likelihood of hostile treatment from the host government, allowing for smoother operations and a potentially successful subsidiary. As expected, the hiring of local employees comes at a cheaper cost as there is no premium compensation for working abroad or relocation expenses involved.
Among the disadvantages associated with the polycentric model of staffing is the prominent issue of some level of disconnect between the interests and the perspective of the company and that of the foreign offices, since local employees may be inclined towards prioritizing local interests over the broader interests of the company. Where developing countries are involved, polycentric staffing may face challenges especially if the countries in question have a shortage of highly educated and trained employees that fit the vacancy profiles the company is seeking to fill.
Geocentric Staffing Model
Staffing of the rest of the employees for the company’s foreign subsidiaries will be based on a geocentric staffing model, where employees will be mixed from all over the world and from other locations of our MNC. This model will ignore nationality in favor of ability allowing the company to get the best person for the job (Scullion & Collings, 2006). The processes of development, promotion, and systems of reward will also be based on merit as opposed to citizenship. This staffing model will help to diffuse the tensions that occur between local responsiveness and global integration, further providing the company with the opportunity to conduct business with not only a local perspective but also a worldview based on communication methods common the world over.
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The application of this staffing model draws authority from the fact the world is increasingly becoming a global village and for a company to be continually competitive in whichever markets it decides to venture in, a geocentric approach would be best placed.As an MNC, this company has the advantage of being able to build an extensive global infrastructure that allows for the true leveraging of a geocentric staffing model. This approach will further enable the company to continue building a culture of business that is sensitive to varying communication styles. The challenges to be expected in the use of this model revolves around the recruitment process that would be best suited to finding employees that possess the ability to immediately adopt multiple communication and business styles.
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