Importance of Staffing of Multi-National Corporations - Literature review Example

STАFFING ОF МULTI NАTIОNАL СОRРОRАTIОNS Name Course Instructor’s name Institution Date STАFFING ОF МULTI NАTIОNАL СОRРОRАTIОNS The diverse environment in multinational companies such as political, economic, legal, business, parent company’s needs for control makes staffing for these multinational complicated. Thus, the management, acceptability and effectiveness of the human resource of these multinational companies are greatly impacted by these mentioned factors. The nature of the environment around the international businesses is facing a sea change which is also impacted by geographical diversification, rapid expansion of global trade and business consolidation which are forcing multinational companies to change their managerial, staffing styles and structure. This paper, therefore, aims to review the importance of staffing of Multi-National Corporations while evaluating the merits and drawbacks of geocentric, ethnocentric and polycentric approach to staffing within an international organization. The main role of the Human Resource Management in a company is to deal with the recruitment, training and development of organization staffs as well as conducting; performance appraisal, communication and other labor relation tasks in the organization (Mead, 2007 n.d). In addition to this, the Human Resource Management is also in charge of coming up with Human Resource policies where the Human Resource Management functions are built around. In the international context, there is need for Multinational companies to choose the best type of Human Resource Management based on these multinational companies based on the need for standardization and adaptation (Liu et al. 2016, pp.147). Consequently, the distinct differences between these multinational companies’ headquarters and subsidiaries, in this case, the companies Human Resource policies in this foreign environment are built around the basis of various factors such as; castle, religion, gender, and nationality in order for them to fit in these new markets. Staffing is an important aspect of these multinational organizations’ HRM. In line with this, these organization globalization approaches have determined the staffing practice that they decide to go for. For instance, some Multinational Companies which decide to go with the ethnocentric approach means that their top managerial positions are filled with their home country’s nationals thus, ensuring that the multinational companies’ practices in the organization domestic market are reciprocated in its subsidiaries abroad. For the company adopting the polycentric approach in their globalization expansion, they fill all their senior managerial position in the company with local national ensuring that the company adapts to the local condition and standards (Du, Deloof and Jorissen 2013, pp.404). On the other hand, some of these multinational company’s might decide to go with the geocentric approach in their globalization initiative in the company where they identify the best qualified and capable managers to lead this multinational company’s top managerial position irrespective of nationalities. This particular approach guarantees that these Multinational companies ensure that the best practices for the company are identified and are also replicated in all the organizational units in its globalization initiative. In addition, the mangers or employees from a different country but working in a foreign country are regarded as expatriates. The selection of these expatriates, training, period of stay in these abroad countries, compensation and expatriates repatriation are some of the main issue which these Multinational company’s’ Human resource departments manage (Dörrenbächer and Geppert 2010, pp.616). In line with repatriation, these Multinational companies Human Resource department ensures that they provide suitable challenges which give these expatriates and the other organization employees aboard the autonomy that they later become accustomed to. However, maintaining expatriates’ management for these multinational companies is quite expensive therefore, it is better to develop local talent through in–house Management Development Programs (MDP) (Wimmer 2009, pp.734). This will help improve the coordination of these multinational companies’ employees with diverse culture, and the religious and education backgrounds ensuring that they are the best fit to adapt to these new working environments in these foreign countries. Hocking et al., 2004, claims that the shift to international staffing in Multinational Companies is influenced by a variety of motives which include; filling of the foreign units as a result of lack of skilled local personnel, using the global assignments for the multinational company’s development purposes and need for these multinational companies to establish control and controlling the geographically dispersed entities in these new foreign business environment (Shankar, Vijayaraghavan and Narendran 2006, p.299). On the other hand, Bonache et al., 2001, also claims that need for these Multination Companies to transfer knowledge is also another key motive for these organizations’ transferring staffs abroad. Harzing, 2001, vouches for the ethnocentric staffing policy claiming that it ensures that the expatriate’s technical and business expertise is transferred to these multinational operation in this foreign country. In this case, he claims that this is a key merit since it ensures that the company headquarters’ culture is transferred to its foreign operation (Selmer, 2011). He also claimed that this ensured that the central belief of the organization is infused in it as it sets up shop in a new environment hence, guaranteeing stability and ability to pick up its operation much quicker. Hofstede, 2001 also contributes to this argument claiming that the ethnocentric staffing policy is ideal because it ensures there is a political understanding of these subsidiaries and the Multinational organization ensuring that the overall running of the headquarters and its subsidiaries is done concurrently. In this case, he points out that this ensures that the performance of these subsidiaries can be monitored easily through the overall of how these subsidiaries are controlled. He also points out that this staffing policy also enhances the opportunity for career and promotion for the multinational company (Scullion 2006, pp.86-104). Gaur, Delios, & Singh, 2007, also contributed to this argument claiming that the ethnocentric staffing policy ensures that the multinational company is able to retain its company culture, therefore, ensuring the commitment level of its workforce in both its headquarters and subsidiaries operations is high. However, Marschan- Piekkari, Welch, & Welch, 1999, counter this argument by claiming that the adaptation of expatriates’ in these foreign markets is not certain thus a major drawback. In this case, they state that the expatriates’ are bound to experience difficulties in adjusting to these international environments and assignments (Rugman and Verbeke 2007, pp.237-250). In addition to this, they also claim that over time the company may face an increasing rate of turnover since these expatriates might find it hard in settling in these international environments which are quite new to them and require a lot of change and adoption. Belderbos & Heijltjes, 2005, also claim that the ethnocentric staffing policy is prone to face a number of legal regulations in the host country which are likely to disrupt the Multinational company’s smooth operations abroad (Richards 2007, pp.234). They emphasize that this would make life difficult for the expatriates. In addition to this, they also claim that these multination companies are also likely to face government restriction especially on the employment of more Host Country Nationals as opposed Parent Country Nationals which will interfere with the multinational ethnocentric staffing policy approach. On the other hand Black and Gregerson, 1992, advocate for the Polycentric Staffing Policy arguing that Host Country Nationals are stronger and the best-fitted candidates of the headquarters orientation due to their familiarity with the host country’s market therefore, they are in a better place to align them with the multinational company’s goals, policies and practices. In addition to these, they also claim that this is the most efficient means for the multinational companies to exercise their control over their subsidiaries as well as ensuring adoption of the company’s tactics and specific know-how to the subsidiaries (Mead, 2007 n.d). Reade, 2003, claims that the other benefit of the polycentric staffing policy is that the Host Country’s Nationals show a much higher level of initiative and effort for their local subsidiaries compared to the threat of the Parent County Nationals. Becker-Ritterspach and Dörrenbächer, 2011, tends not to agree with this claim by claiming that there are some demerits of the Polycentric staffing policy. In this case, he claims that in this particular staffing policy achieving effective communication between the Host Country Nationals at the subsidiary level and the Parent Country Nationals back in the company’s headquarters is quite difficult. Bartlett, 2005 has also contributed to this argument, in this case, claiming that it is more difficult for the headquarters to exercise effective control over the subsidiaries due to lack of "boundary persons" (Liu et al. 2016, pp.149). On the other hand, he argues that due to lack of experience by these Multinational companies in these particular new foreign markets results to a lot of liability due to the increasingly competitive environment (Lakshman, 2014). Giroud and Scott-Kennel, 2009 on the other hand, also claim that the polycentric staffing policy also has some demerit by pointing out that, communication difficulties are bound to occur due to the Multinational Company’s headquarters dealing with the home-office personnel who might not share the same organization culture, vision and goals. Additionally, Banai, 1999 vouches for the geocentric staffing policy by claiming that this is the best staffing policy since it is seeking the best-fit candidates for the managerial position in the multination company. Moreover, he claims that this staffing policy is the best since it is not limited by nationality barrier rather is only concentrates on the capability and qualification of the candidates (Hill, n.d.). Norma D’Annunzio-Green, 1997 also supports this claim and goes ahead to state that this particular staffing policy revolves around the integration between the multinational Company’s headquarters and the subsidiaries as well as a close co-operation of all the organization sections (Gong, 2008, pp.271). He also claims that this particular staffing policy fosters overall organizational control and also ensuring the implementation of both the international and local standards in these multinational subsidiaries. However, Ball, et al. 2008, cautions the geocentric staffing policy is quite costly in regards to time and finances. In this case, he emphasizes that this staffing policy requires a lot of training costs and time as well as time and cost for the attainment of work permits (Dörrenbächer and Geppert 2010, pp.621). After reviewing these three main staffing policies, it is evident that the geocentric approach is inclined globally, whereas ethnocentric and polycentric are more of local basic staffing approaches. Overall all these three reviewed staffing approaches have shown to have different significant effects on company’s internationalization process. In line with this, it is also notable that these three reviewed staffing approaches apply to different stages in the company. Thus, the ethnocentric approach is applicable to the early stages of the multinational company’s internationalization process (Du, Deloof and Jorissen 2013, pp.398). This is because in these early stages these multinational companies need to fully control their subsidiaries and they also need these subsidiaries to fully achieve the headquarters orders. This, therefore, means that the ethnocentric approach is best suited for the early stages of the multinational company’s internationalization process. On the other hand, the review of the polycentric approach has shown that this staffing approach is suited for increasing the subsidiaries competitive advantage. Evidently, the polycentric approach is suited to increase the local responsiveness. In addition to this, they also need to have better grasp of knowledge of the marketplace; hence, the polycentric approach is suitable for the middle stage of the multinational company’s internationalization process (colakoglu and Tarique 2006, pp.4). Consequently, in case the multinational company intends to have a functioning ethnocentric approach as well as the polycentric approach it has to ensure that it completes its internationalization process which attains it the global company status. On the other hand, the geocentric approach will apply after this stage (Bonagura, n.d.). The geocentric approach will also help the multinational companies develop their international teams for effective management of all its subsidiaries. We can, therefore, claim that in order for companies to become more profitable globally they should ensure that they develop and expand based on ethnocentric, polycentric and geocentric staffing policies. In conclusion, it is therefore recommended that these staffing policies should be adapted step by step from ethnocentric, polycentric to geocentric. Reason being, all these three staffing policies are applicable in the success of any multinational company’s internationalization process; therefore, none of these staffing policies should come ahead hence they should follow a chronologic order to guarantee the development of the best internationalization staffing process. This ensures that the company in the long end becomes a successful multinational company which is characterized by good leadership and smooth running of its operations. References Bonagura, R. (n.d.). Embrace makerspace. 1st ed. colakoglu, s. and tarique, I. 2006. subsidiary staffing and performance: a fit perspective. 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