Literature review of Recruitment and Selection in International Human Resource Management Introduction Staffing is one of the main functions on Human Resource Management, refer to International Human Resource Management perspective, staffing will be more important on the managing by the headquartered company to their subsidiaries in order to gain more competitive advantage for them. As a company want to achieve the mind of globalization, they must choose a suitable staffing approach in order to doing business successfully not only in the domestic also in the international environment.
Maral Muratbekova-Touron (2008) stated that “One of the main issues facing the development of the global companies has always been to find the right balance between the local autonomy between subsidiaries and the control of the corporate headquarters. ”, it related to how the company recruit and select their staffs in their subsidiaries. In the present paper will concentrate on the international staffing approaches in global companies, and there has four different approaches to managing and staffing their international subsidiaries.
The following literature reviews will attempt to explain that four approaches and point out what is the advantage and disadvantage of each approach in the internationalization process of the company. Approaches to Managing and Staffing Global Subsidiaries In research text book by Ball, et al. (2008), it was explained these four approaches in detail, they are Ethnocentric approach, Polycentric approach, Geocentric approach and Regiocentric Approach.
Ethnocentric approach is related to the company employing and promoting the Parent-country nationals (PCNs) in their subsidiaries which the employee are the citizen of the nation in the parent company; Polycentric approach is related to employing and promoting the Host-country nationals (HCNs) in their subsidiaries which the employees are the citizen of the nation in the operating subsidiaries; Geocentric approach is related to the company employing and promoting the employees base on their ability and experience, this approach can refer the ompany select the best person for the job without any consideration of the citizenship; and Regiocentric approach is related to the company employing and promoting the employees which they are the citizen on the basis of the specific region in the operating subsidiaries, it can be HCNs or Third-country nationals (TCNs) which the employees are the citizen of neither the parent company nation nor the host country. Ball, et al. 2008) Ethnocentric approach refer to the staffing policy base on the PCNs, therefore the clear advantages come up immediately for the headquarters are the communication and control, the PCNs are familiar the policies and practices or working-style of the headquarters, or the PCN staff was training in the headquarters already. (Ball, et al. 2008)
As Kathy Monks, et al. 2001) stated “In the very early stages of internationalization, the staffing policies of the majority were largely ethnocentric in character, an approach which is relatively common at this stage in the internationalization process where a company is setting up a new business process or product in another country, and knowledge of the company’s culture and reporting systems is considered essential”, it shows the Ethnocentric approach are common at the early stage of internationalization process in the multinational or transnational companies, because the controlling and communicating is very important at that stage, therefore, the companies would like to employ the PCNs in order to fully control their subsidiaries at the early stage of internationalization process. Another reason also make Ethnocentric approach are common at the internationalization process is the cost of the company. As Brewster (1988, pg. 18 ) noted, “Despite the importance of expatriate positions, the high costs associated with expatriation and the extensive and largely non-productive “running-in” periods, it is still the case that most organizations provide no formal training for expatriation”.
Overall Ethnocentric approach implies a centralized system with authority high at headquarters with much communication in the form of orders, commands, and advice. Standards for evaluation and control will also be determined centrally and with low pressures for cost reduction and low pressure for local (subsidiary) responsiveness. But the disadvantages of Ethnocentric approach such as the PCNs have language barriers or they have different culture background with the local (subsidiary) customer, it may result a high cost training in long term or the PCNs may not familiar the positions or demands of the local (subsidiary) marketplace. (Ball, et al. 2008; Norma D’Annunzio-Green, 1997)
Polycentric approach refer to the staffing policy base on the HCNs, as Christoph Dorrenbacher, et al. (2010) stated “HCNs on the other hand are seen as basically having a local (subsidiary) orientation, due to their socialization in the host country and their familiarity with the social, political and economic environment of the host country” It can show Polycentric approach provide a high level of local responsiveness in the subsidiaries. It can be prove by another research article, Norma D’Annunzio-Green (1997) also stated “Polycentric approach implies a widely dispersed authority, little communication between headquarters and subsidiary, and standards for evaluation and control mostly determined locally. There for the less control and order from the headquarters to the subsidiary will be made, the subsidiary also start to be independent in their local area, that mean the company start to doing well and the business is stable in the local (subsidiary) area. The Polycentric approach also has other advantages such as reduce the cost of the local (subsidiary) training programs, and the headquarters will get more information or hints of the local (subsidiary) market development or competition. But according to the non-close relationships between the headquarters and subsidiaries, the subsidiaries are often unfamiliar with the headquarters’ corporate culture, policies and practices. (Ball, et al. 2008)
Geocentric approach refer to the staffing policy base on the ability of the staffs, no matter where are they come from, Banai (1999) stated ”The geocentric staffing policy seeks the best people for key jobs throughout the organization regardless of their nationality” And Norma D’Annunzio-Green (1997) also stated “The geocentric ideal involves more integration between centre and subsidiaries to ensure close co-operation between the different parts of the organization, and implementing both universal and local standards for evaluation and control. ”It point out the Geocentric approach can bring a lots of different experience and different corporation practices rom the staffs, through these different experience and corporation, the firm can has a better performance in the international co-operation of the company and it also facilitates the development of an international team, and the international team can fully managing the local subsidiary, and they can managing the other subsidiary in different area. But Geocentric approach may cost more (both on money and time) on the training or other issue such as working permit. (Ball, et al. 2008) Timothy Dean Keeley (2001) gave a very good conclusion of the Geocentric approach, he noted “Geocentric firms seek to co-ordinate decision-making among the subsidiaries and headquarters. The organization is balanced between centralized and decentralized in order to effectively and efficiently employ all types of resources on a global basis. ” Therefore the subsidiary can be considered as more independent in the international market which managing by the international team.
Regiocentric approach refer to the staffing policy base on the region of the subsidiaries, it is without consideration of the nations of citizenship. Therefore it can be HCNs or TCNs and it has similar function of the Geocentric approach. Farrokh Safavi (1991) stated “A regiocentric orientation has assumed that management development needs within a geographic region are sufficiently similar for application of a unified approach, but different from the needs of other regions. ” And the Ball, et al. (2008) point out a disadvantage of the regiocentric, he stated “The disadvantages often encountered when using employees from the home or host country can sometimes be avoided by sending third country nationals (TCNs) to fill management posts.
In the International Human Resource Management, Regiocentric approach is slightly similar with the Geocentric approach, but the Regiocentric approach is limit to consider on the local region and the Geocentric approach is more consider on the global basis. Conclusion Overall the literature reviews above, the different staffing approach was give different effect in the internationalization process of the company, but we can find out, the different approach can apply in the different stage of the company. The Ethnocentric approach refer to the early stage of the internationalization process, because during the early stage, the company need a fully control of the subsidiaries, and they need the subsidiaries fully achieve the order from the headquarters, therefore, the ethnocentric approach will suitable in the early stage of the internationalization process.
After the early stage, the company want to increase the competitive advantage of the subsidiaries, therefore, the polycentric approach can increase the local responsiveness and they need to have better knowledge of the local marketplace, so the polycentric approach will suitable in this middle stage; In the finally stage, the company want to have both function from the ethnocentric approach and the polycentric, they need to complete the internationalization process in order to become a global company, therefore the geocentric approach and regiocentric approach will apply in this stage, it can help to company to develop an international team to manage all the subsidiaries of the company. It can prove by James Kelly, as she stated in the article “companies become more international they usually develop from ethnocentric to polycentric and finally geocentric or regiocentric staffing and development policy”. Therefore the geocentric and Regiocentric can be consider as a expansion of the polycentric approach.