Multinational Resourcing for Greenway Hotels - Case Study Example

MULTINATIONAL RESOURCING: GREENWAY HOTELS CASE STUDY NAME COURSE TUTOR INSTITUTION STATE DATE MULTINATIONAL RESOURCING: GREENWAY HOTELS CASE STUDY INTRODUCTION Company expansion comes with a need to establish a way to attract and retain the most appropriate human resources from the management level to the support staff. Greenway Hotel encounters exemplify the challenge encountered by expanding companies. The hotel may decide on their management appointment by bringing in expatriates based on parent country nationals (PNCs) option, recruit host country nationals (HCNs), or adopt a mixed approach. Each of these approaches present various advantages and disadvantages for the Hotel, which are important for Greeway Hotel to consider prior to deciding on a particular approach. The following report offers insight into each approach, drawing on different resourcing approaches and gives recommendations on the best approach based on identified advantages versus disadvantages. RESOURCING APPROACHES The international staffing approaches reflect ways of management appointment that consider pooling form PCNs, HCNs, or adopting a mixed approach. Among these are ethnocentric, polycentric, and geocentric approaches. Each represents a set of benefits that company accrues if recruiting based on their recommendations. Ethnocentric Approach The ethnocentric approach to international staffing is useful when a company is appointing form managers from the parent country, which means that by working with PCNskey decisions regarding the enterprise will be made at headquarters, with a few subsidiary autonomy as applicable (Thoo&Kaliannan 2013). If Greenway adopts this approach to appointment, it will mean that all the senior management in the Germany chain will be from the UK, with little possibility of bringing in HCNs whether by promoting them at a later date, or in phasing out the PCNs, and especially no possibility of bringing them into the headquarters. Recruitment using the ethnocentric approach will be internal, in which a manager is chosen based on their sound job knowledge and understanding of the parent company. A suitable candidate is a person that understands the history, structure, policies, and procedures of the company and can thus transfer the mindset of the company to the international arena or the subsidiary (Thoo&Kaliannan 2013). The company also knows the strengths and weaknesses of the potential manager, and can therefore work based on their awareness. A challenge in this approach is that it requires the company to release its best employers from the headquarters to take the international assignment. This signifies some level of gap created that the company will still need to fill at the headquarters. Nonetheless, using an ethnocentric approach is advantageous in that it ensures the company sends a person that understands the core aims of the company and its mission, which will be adopted into the new location. The person also is aware of the communication protocol of the home company and thus will not likely have communication barriers with headquarters, which may translate to easier decision making procedures based on how fast the communication goes through (Thoo&Kaliannan 2013). However, Greenway would then need to be able to deal with the challenge of having low local awareness as the expatriate does not have local knowledge, and this may lead to local isolation of the company. Company acceptance may come from how well the company relates to the people, which may best be represented by the local employees. Therefore, PCNsmay undermine this advantage. In Greenway, such a threat is real considering that the people the company is likely to consider do not speak German fluently, which may act as a barrier with local integration. Agreeably, ethnocentric approach presents a useful model for the employment of PCNsin the international business venture, but such a an approach may also be limiting for the company, based on how well the expatriate managers can interact with the local community, and begin to understand their operations. Presently, Greenway does not have a manager that fluently speaks German, which means the person they send to German may have difficulties finding out pertinent information about the operations. However, based on the established deadline of doing the renovations and opening the new chain, working with PCNsoffers a viable alternative as these are people that already understand the business and the company. This would mean they know the channels to follow in acquisition and procurement of what is needed for the renovations, know the image the company wants to portray and thus work toward fulfilling this model. Polycentric Approach The polycentric approach to international staffing suggests that the firm would prefer to work with local employees in management positions in both its home office and in overseas operations. In adopting a polycentric approach, the company will have the benefit of better local market understanding as well as consumer understanding as well as cultural intelligence. Employing HNCs also has the benefit of obtaining goodwill from the local community, media, and local authorities as well as having an improved local network. Notably, HNCs will also show higher commitment to the organization and motivation to work at the organization as they become part of the company. A challenge Greenway has is that the initial employees of the hotel chain decided to quit after the acquisition, meaning that it has to recruit almost all new employees. The company will benefit from this approach as it will help restore local faith in the company, by showing that although it has been acquired by a foreign company, it remains part of the community (Sparrow, Brewster, & Chung, 2017). The local employees will make the enterprise part of their society rather than view it as a foreign entity. Another advantage is that the enterprise of employing HNCs will be less expensive compared to expatriates. Employing PCNswill mean that the company will have to consider their relocation fees, and pay them at the expatriate cost, which may be a higher cost compared to local wages. The limitations associated with using a polycentric approach include language barrier with the head office, especially considering that Greenway current employees are not fluent in German. The company may therefore need to establish English as the primary language of communication, which may create a language problem in obtaining the best employees. Therefore, language will play a critical role in the approaches adopted, as the company will either need to consider ways to integrate the different languages ensuring ease of communication across the offices. Greenway use of a polycentric approach may be more advantageous compared to the use of PCNsbased on the need for a localized function. As mentioned by Sparrow et al. (2017) human resource function is the most localized function in a multinational company because of the influences of institutional and cultural factors of a host country, and thus adopting a polycentric approach ensures the company remains aware of local practices and norms within the industry and the labor market. However, by adopting this approach Greenway will need to understand the German labor laws and create a platform on how to compensate its employees based on the working rates. Having a management that is conversant with the local laws would ease this process, especially as the company will need to accommodate local employees in lower positions. Geocentric Approach The geocentric approach signifies the decision on employees based on geographical considerations, which may include using the PCNs, HCNs, or people from a third country, or having a mix of the different nationals (Wilks&Verbeke 2014). A company can for example mix PCNs with the HCNs, or mix them with a third country that does represent the host nor the home country. The advantage of using a geocentric approach is that the company seeks to hire the best person qualified for the job by looking at a global recruitment scale. The approach considers how the business can conduct activities anywhere rather than focusing only on Germany and the UK. Geocentricism recognizes that the world is increasing becoming integrated and thus companies need to consider how to become part of the global melting point. For example, more immigrants are moving to the European states ensuring an increase in the labor pool, and therefore, Greenways may need to consider how to employ from the different pools. The approach ensures best knowledge and skills among the staff, and creates a better working environment with minimal resentment as the approach does not show preference to either the host or the home countries. The challenge is that it can be a costly endeavor to attract international employees and the company may have to incur an additional costs in interviewing the candidates or in relocating them. Additionally, people get lonely which may decrease their effectiveness in the new country. While acknowledging the benefits of the geocentric approach, it does not fit the needs of the Greenway Hotel. The company is branching out into international business and thus has yet to acquire the knowledge that would support international recruitment drives. Another reason is the time frame established for the opening of the new chain. The company then has four weeks to have in place a management team that is already working with the other employees. A globalcandidate recruitment may thus curtail the probability of such the company opening up within the established time. The approach further translates into additional costs. The organization may therefore choose between the ethnocentric and the polycentric approaches, but the choice will be influenced by the benefits accrued in employment of PCNS versus HCNs, or in identifying a mixed approach. The subsequent section highlights the employee considerations among the PCNs and HCNs to facilitate decision making in Greenway. RECRUITMENT BASED ON COUNTRY OF ORIGIN Greenway decision on whether to recruit from PCNs or HCNswill be influenced by the consideration of country effect, which includes the country of origin effect and the country of operation effect. According to Sparrowet al. (2016), the country of origin effect refer to whether companies would want to transfer their practices to a foreign subsidiary, while the country of operation effect refers to the context of the host country including labor laws, regulatory systems, and particular types of local practices and national cultural practices. The country of operations effect would mean that the company needs to consider how it will affect the transfer of practices from the home country. Employment of Expatriate Management Hiring of PCNs will require the company to ask a number of questions. Gasper, Kolari, Hise, Bierman and Smith (2016) suggest that companies consider factors driving them to hire PCNS for foreign country assignments, the potential risks involved in this hiring, the potential benefits, and the length of the assignment. The responses to these questions help the company decide on the willingness to invest into the relocation of an expatriate whether a PCNs or one from a third country. For example, bringing in someone from the UK will require Greenways to facilitate the relocation, help the person adjust to the new culture, and given them time to learn the labor market, culture, values, operations, and other things associated with hotel management in Germany. The company may not adequately provide that time based on its timeline. However, it has the advantage that the current employees are willing to move to the new country. The employment would also facilitate continuation with the company vision and strategy. The workers bring in the skills set unavailable within the local workforce or acts as a complementary to what the local staff is able to offer. The advantages associated with hiring expatriates includes choosing from an already available talent pool from the company as the executive chooses from the people that have already shown exceptional performance within the company (Sims 2009). Other advantages are greater control, company experience, mobility, and experience provided to corporate executives. However, the company will need to consider disadvantages such as culture shock that the employee may face considering they are entering into a new culture with new values, norms, and practices, and another is that the employee may choose to terminate the contract within a short period, which mean the company loses on the talent transfer (Paul &Kapoor 2008; Gasper et al. 2016). The probability exists that the expatriate may fail in working within the new environment, which is a credible concern for Greenway considering the short time frame that the employees require to meet the target for opening the hotels. Despite the challenges, if the employees succeed it will be highly beneficial for the company as it will not have to train someone to understand its mission and vision, which may take time. The opportunity will also be useful to Greenway in understanding how to structure future acquisitions and expansions. Successful employment of PCNs will mean the transferability of the model to other locations, in which the company will deploy people from the head officer. More so, the employee will benefit in career development by learning how to work within a global environment. Other employees will also have an opportunity for growth within the headquarters based on any gaps that may be left during the transfer. This creates an opportunity for knowledge transfer within the company and training others that could be sent to other places in the future. Host Country Nationals An alternative that Greenway may adopt is employment of HCNs. Obtaining the senior management of the hotels from Germany offers various advantages for Greenway, among these are less cots, preference by the German government, intimate knowledge of the environment and culture, and language facility (Sims 2007). Hiring local employees can serve to enhance the image of the company within the local community and give it bargaining power with the local government (Ahlstrom &Bruton 2010). To appreciate is that the local already understand and are familiar with different elements of conducting business including the local language, culture, and customers, and thus may not require training on language proficiency or acculturations. This could be beneficial for Greenway in two major ways. The company has set a short deadline for launching in the German market in which the renovations must take place in four weeks. This requires people that already understand the working of the German market, such as how to pursue renovations and establish the business. An alternative to this would be hiring a consultant which would have an added cost effect on the expansion plan. The locals are a better choice because they understand and know the government, the financial people, where to buy things, have contacts on the ground, and understand how to obtain things compared to expatriates. Therefore, the company would benefit from the local population in a much greater way in meeting its current deadline. However, the company will need to appreciate that it will need to train them about their system, including the mission and vision of Greenway, its strategic plans, goals and targets, history, evolution, and other elements associated with the company. The HCNs may also face the challenge of limited control and support with the head office. Despite the need for such training, their employment will be less costly compared to expatriates as they do not have additional expenses such as in relocation fees, and visa payments (Konyu-Fogel 2015). The HCNs may also contribute to an improved morale among the employees as they see opportunities for advancement. All these are different attributes the company will need to put into consideration. RECOMMENDATIONS ON STRATEGY: MIXED HCNS AND PCNS Reflecting on the conditions presents by Greenway Hotels and the advantages and disadvantages of appointing PCNs or HCNs in senior management, the recommendation is for a mixed methods approach that brings in the benefits of the two groups while minimizing their limitations. The reasons for suggesting a mixed approach is that the company will need both groups to meet its set goals for the expansion, and this being the first venture internationally, it does not have the option of failure. The first reason is that the company needs people in management that understand the core values of Greenway, its operations, mission, and vision, and second it requires the local connection to promote success of the venture. Therefore, merging the two groups will ensure the company is working within an environment that promotes success. This aligns to the geocentric approach that allows companies to select people based on their suitability in the venture, although the company will not be seeking third country nationals. Additionally, bringing in HCNs at the onset provides the possibility of pulling back the expatriates or sending them to another location without jeopardizing the new company. The PCNs in this regard will promote the role of knowledge transfer across the home and host offices, and act as a critical link between the two offices. This will ensure that the host office receives the control and support it needs from the headquarters in establishment of business activities. However, the company will need to facilitate cohesion among the employees to ensure that the HCNs and the PCNs can work within the same environment without biasness and suspicion. REFERENCES Ahlstrom, D &Bruton, DG 2010.International Management: Strategy and Culture in the Emerging World, South-WesternCengage Learning, Mason, OH. Gasper, J, Kolari, J., Hise, R., Bierman, L & Smith, LM 2016.Introduction to Global Business: Understanding the International Environment and Global Business Functions (2nd ed), Cengage Learning, Boston MA. Konyu-Fogel, G 2015. ‘Career Management and Human Resource Development of a Global, Diverse Workforce’, in C Hughes (ed), Impact of Diversity on Organization and Career Development,IGI Global, Hershey, PA. Paul, J &Kapoor, R 2008.International Marketing: Text and Cases, McGraw-Hill, New York. Sims, RR 2007. ‘Toward Successful International Human Resources Management,’ in RR Sims (ed), Human Resource Management: Contemporary Issues, Challenges, and Opportunities. Information Age Publishing, Charlotte, North Caroline. Sparrow, P, Brewster, C, & Chung, C 2017.Globalizing Human Resource Management (2nded),Routledge, LondoN. Thoo, L &Kaliannan, M 2013. ‘International HR Assignment in Recruiting and Selecting: Challenges, Failures and Best Practices’, International Journal of Human Resource Studies, vol. 3, no. 4. Wilks, L &Verbeke, A 2014. ‘Geocentric Staff’, in M Augier and DJ Teece (eds), The Palgrave Encyclopaedia of Strategic Management, Palgrave Macmillan. Read More