Chapter 5

Sourcing Human Resources (Part-

1)
Planning for International
Placements
The Expatriate or the Host Country
Manager
• Multinationals must decide whether to use
expatriates or host country nationals
• Need to look at some questions
- Given the firm’s strategy, what is the
preference for the position?
The Expatriate or the Host Country
Manager
• Using expatriate managers
- Do parent country managers have the appropriate skills?
- Are they willing to take expatriate assignments?
- Do any laws affect the assignment of expatriate
managers?
• Using host country managers
- Do they have the expertise for the position?
- Can we recruit them from outside the company?
Is the Expatriate Worth It?
• Decisions must take into account costs of such
assignments
- High cost
- High failure rate
Decisions to be made about staffing choices
Before anyone is sent on an international placement and number of
decisions need to be made to ensure success:
• The classical approach used to be PCNs
• Now there are other concerns about how international enterprises
are staffed
• Social responsibility for employment conditions for local labor
• Sometimes labor law protection in developing countries is minimal
• The choice of approach is dependent on the organizational strategy, local
economic and political conditions,
Approaches to staffing
 Ethnocentric staffing?
 Approach to recruitment means that we hire people from our parent country to fill
positions all over the world.

 polycentric staffing?
 Approach to recruitment means that we hire locals to fill our positions in a host
country.

 Regiocentric staffing?
 Approach to recruitment means that we hire or transfer people within the same region
(like a group of countries) to fill our open positions.

 Geocentric staffing?
 Approach to recruitment is hiring the best people to fill our positions
without regard to where they come from or where they live.

Chapter 5
Corporate Approach or mindset

• Ethnocentric – PCNs are favored

• Polycentric – HCNs manage subsidiaries
• Geocentric – Ability is more important
than nationality
• Regiocentric – Similar to geocentric, but
limited to a given region
Advantages of using PCNs

• Organizational control and co-ordination is maintained and facilitated

• Promising managers are given international experience

• PCNs may be the best people for the job because of special skills and
experiences

• There is an assurance that the subsidiary will comply with MNE objectives,
policies, etc.
Disadvantages of using PCNs

• The promotional opportunities of HCNs are limited

• Adaptation to host country may take a long time

• PCNs may impose an inappropriate HQ style

• Compensation for PCNs and HCNs may differ

Advantages and disadvantages of using
TCNs
Advantages
• Salary and benefit requirements may be lower for PCNs
• TCNs may be better informed than PCNs about the host country environment
Disadvantages
• Transfers must consider national animosities between host country and TCN’s
home country.
• The host government may resent hiring of TCNs
• TCNS may not want to return to their home country after the assignment
Advantages of using HCNs

• Language and other barriers are eliminated

• Hiring costs are reduced and no work permit or visas are required

• Continuity of management improves since HCNs stay longer in their

positions

• Government policy may dictate hiring of HCNs

• Morale among HCNs may improve as they see future career potential
Disadvantages of HCNs

• Control and co-ordination of HQ may be impeded

• HCNs have limited career opportunity outside the subsidiary

• Hiring HCNs limits opportunities of PCNs to gain foreign experience

• Hiring HCNs could encourage a group of national rather than global

units
Local factors
• Legal frameworks and legislative cultures
• The level of adherence to equality and fair and equal treatment
• Attitudes towards applicant’s privacy – may prevent group selection
• The perceived relevance of different selection methods to different
jobs
• The Labor Market
Labor Markets
• The availability of skills – skill shortages can occur in large labor
markets with full employment
• Local education systems – have an influence on the skill sets that are
available to recruiters
• Wage levels and contemporary trends in wages and salary levels.
Rises in expectations and consumer spending power
• Population profiles – e.g. larger youth population or older workers
(baby boomers)
Reasons for International
Assignments
• Position filling
 Lack of available skills therefore PCN works abroad

• Management Development
 Training, career development, common corporate values

• Organizational development
• Transfer of knowledge, competence, practices

• Exploit global market opportunities

Types of International Assignments
• Short-term - up to 3 months
• Extended - up to I years
• Long-term - 1 to 5 years (traditional expatriate assignment)

Non-standard assignments
• Commuter - go home every 1 to 2 weeks
• Rotational - commute for a set period followed by break in home country
• Contractual – specific skills employees hired for 6-12 months on specific
projects (may not be firm employee – e.g. global nomads
• Virtual – employee manages international responsibilities from base in
home country
Differences between traditional & short-
term assignments
Traditional Short-term assignments
assignments
Purpose • Filling positions or skills • Skills transfers/problem solving
gaps • Management development
• Management • Managerial control
development
• Organizational
development

Duration Typically 12-36 months Typically up to 6 months or 12

months
Family’s Family joins the assignee Assignee in unaccompanied by
Position abroad family
Differences between traditional & short-
term assignments
Traditional Assignments Short-term Assignments

Selection Formal procedures Mostly informal, little

bureaucracy

Advantages • Good relationships with colleagues • Flexibility

• Constant monitoring • Simplicity
• Cost-effectiveness
Disadvantages • Dual career considerations • Taxation
• Expensive • Poor relationships with
• Less Flexibility local colleagues
• Work permit issues
Factors determining staffing strategies

Dowling et al IHRM