Geocentric Model, Ethnocentric Model of Managerial Staffing Policy - Coursework Example

In what ways can an ‘ethnocentric model’ of managerial staffing policy limit the globalization strategies of MNCs? What HR problems might they encounter? Ethnocentrism is the tendency to look at the world primarily from the perspective of one's own culture(As cited in http://en.wikipedia.org/wiki/Ethnocentrism). This is totally a sociological concept and this often arises from the idea that one’s own culture is superior over the other cultures. MNCs or Multi National Corporations have a great relation with the concept of ethnocentrism. They have always preferred staff from all over the world as the name MNC suggests. But at times, ethnocentrism has interrupted in the staffing and they tend to appoint the staff from the motherland of the organization. This has paved route to countless discussions and debates on the advantages and disadvantages of the same. Here, the discussion is all about the interruption created by ethnocentrism in the globalization strategies of MNCs. Each MNC is a uniform blend of resources from multiple nations. As known to all, each country has its own unique human resource depending upon the nature and culture of the nation. It is easy to understand that people from different nations can provide a totally different perspective of work and production. When the staff belongs to a single nationality or confining ourselves to the topic, when the staff of an MNC belongs to a single ethnocentric identity, it has a few advantages and countless disadvantages. It is nothing more than limiting the whole group of staff at the MNC to a very confined space of ideas and ideologies. They are indeed pulling themselves into the compound of self-centered customs, values and working style. There is a story of a frog born and living its life till death in a deep well. He believes that the well is the whole world. The very same thing is happening to the ethnocentric model adopted MNCs. If an animal from another habitat had come into the well to live with the frog, he would have known about a world outside the well and he could have made a life accordingly. Similarly, staff from abroad will not only bring in new ideas but also will increase a whole lot of productivity of the organization. Globalization strategies will be greatly limited with these MNCs. For instance, let us take the case of a cent percent US citizen filled MNC and an MNC with both US and an Asian say Indian group. As we know, the US group is that of people who is well qualified in a very developed nation. Talking about the staff of this MNC, they are those people who lack the practical knowledge of true development. They see developed full fledged structures right from the time they were born. They learn the theory of development having not seen what development process is. Here, they work in the usual fashion and earn for themselves. Now, let us see the US-Indian collaboration of staff in the second MNC. The US staff as we learned earlier has a greater experience of witnessing and living in the developed style. The Indian portion knows what the process of development and its steps are and they have the urge to develop. Here, it is practical knowledge that stands on the greater height. Now, when it comes to the process of work in this MNC, both the groups stand like the fingers of a hand held together filling the gaps and showing strength. This is the difference and this is the simplest illustration of the advantage of globalization strategy. There are more of disadvantages for the ethnocentrism in MNC staffing. Let us examine a few of them in the following segment. Section A- Advantages of Geocentric model/ Disadvantages of Ethnocentic model 1) Globalization phenomenon loses strength: Globalization in its literal sense is the process of transformation of local or regional phenomena into global ones(As cited in http://en.wikipedia.org/wiki/Globalization). It can be described as a process by which the people of the world are unified into a single society and function together. When an MNC functions as an ethnocentric or polycentric group of people, there is lack of genuine interest to internationalize the product of service as the case may be. If a person from another nation works for the firm, he has a special interest to globalize the product. He is interested to feel the pleasure of bringing up the taste for his product in another country which may even be his own mother nation. It is the human nature to be comfortable with things familiar and related to him. When a person works in his own place with his folks, he is comfortable there and to see the window out is nothing but a headache. When mother is aside nobody will wish to stay beneath the wings of step mother. Similarly, when an ethnocentric staff works for an MNC, he has an enviable salary, his family is near him and he has everything his mind seeks. Then, there is hardly any chance for this person to move abroad for promotion of his product or even for his own occupational promotion. Whereas, a person from another population can stand against all these restrictions. He has the urge to look over the window, to mobilize as he is already mobilized and he is more experienced as he has lived in two cultures and atmosphere. Let us consider an India software engineer working for an American company and an American software engineer working for the same firm. The American would hardly mobilize when his family is living next door. The Indian would keep moving and he would certainly prefer another branch of the firm which is closer or in his nation. This is a very common fact occurring around. A better example can be illustrated with a Chinese MNC. They are specialized in production of electronics. The Chinese electronics are believed to be of low quality and are low priced. But the fact is that not many of them are of low quality and they are very durable. If a Chinese group of people work for the firm and they move into some other country, their words won’t be seen trustworthy by others. They can’t put out the already inscribed image of the product. Instead, if a native staff of the country claims the quality of the product, his words will be taken more seriously and indeed he would be pleased to do so than an ethnocentric staff’s mechanical business talk. As known to us, human beings are emotionally ruled even in business. The above given example even gives us another advantage of geocentric model of managerial staffing in MNCs. The firm acquires respect worldwide with native staff round the globe. On the contrary, an ethnocentric group of people walking in and out of a huge building called an MNC will be obviously seen as an inaccessible place by the common public and they will be treated so. 2) Globalization is incomplete without geocentrism: Globalization is not only the universalization of products or services but it is also the universalization of the attitude and life style of people related to it. Consider the staff of an MNC from an ethnocentric atmosphere. For easy understanding, let us consider American ethnicity oriented MNC and Indo-American collaboration MNC. Let both of them be high scale food manufacturers. Considering the first one, the whole staff is from US who are more or less the consumers of limited variety of food. The American living on cereals and bread know very little about the spicy variety of dishes all over the world. On the other hand, in the second firm where the collaboration is present, the Indian staff can suggest a wide variety of food which can be manufactured and marketed well to make a new hit in the market. India when compared to US is a land of countless cultures, traditions and life styles. It is well understood that none can assimilate a culture completely unless he is born and brought up in that culture. The wider the number of countries as suppliers of staff, the wider is the chance to globalize the ideas, attitude, thoughts and life. It may be seen insignificant. But the first mode of globalization required is right from the mind of each person in the stream of this particular phenomenon. 3) Ethnocentrism ceases the value of the MNC in global labour market Global workforce or global labour market is one of the greatest assets of the contemporary market scenario. Any MNC which is glued to the practice of ethnocentrism stands like oil on water in this context. It is a very well known fact that cheap labour from developing countries is available to the MNCs. From countries like India, many immigrants join the American and European firms. As per the present value of money, $1 is equal to 50 INR. So, when the salary is paid in dollars, the Indian is making a handsome sum of money and he has the responsibility to work more. But for the employer, the staff is doing more work for less money. In effect, more work for less money and greater productivity in global market. The product is introduced in a larger market and it gains a better face there. When ethnocentrisms interfere in this, the labour is expensive and work done is fixed and limited. Not only this, the ethnocentric system which approves the superiority to one particular group of people brings in a prejudice in other groups that this particular MNC is inaccessible to them and they are more or less isolated as one belonging to some as ‘an American’s company’ or ‘Japanese firm’. They are indeed isolated from the globalization arena with a different eye and they are seen as inaccessible to others. 4) Limited quality of managerial staff Any international staff who gets appointed in an MNC is well qualified for the position. This is assured as a job abroad means good qualification and experience. That is geocentrism assures better quality of staff and better outcome. This in turn supports globalization on a larger context. For instance, if a Middle East man gets appointed in a firm in his country, he is less interviewed and is easily placed. If an Indian applies for the same post, he is checked with each of his documents, certificates and such things. So, the quality of the staff can be assured. 5) Analyzing competitive advantage within an international context This is a very important strategy of globalization. To achieve competition in an international context indeed require staff from all over the world. Never can a people from same group form a healthy competition within the organization and further in the internal and international market. The advantage of competition is not to be mentioned. For instance, there are countless brands of mobile phones. Many of these are manufactured fully or partially in the Japanese market. When they are the only manufacturers, there is very less chance for development of the product as they are a monopoly whereas when competitors arrive in the market, the product is upgraded, their service is made better and greater variety is introduced. This competitive advantage is less in the ethnocentric staffing MNCs as they have lesser idea and familiarization of the local markets in other nations. An objective study won’t be equal to first hand knowledge. 6) The developed country staff gets older and the educated youngsters stay jobless: Providing more of job opportunities is yet another function of globalization. The developed nations have fewer birthrates and the experts in each respect of business keep growing older. When the employers stay stubborn regarding the ethnocentricity of the staff, the developed countries grow a group of elderly people as their staff while the educated dynamic youth from developed countries stay jobless staring at the global market. Let us have a look at the data. 1980: approx 960 million workers in advanced countries, parts of Africa and most of Latin America (1.46 billion by 2000) 1990/2000: workers from China, India and former Soviet bloc entered the global labour pool; added 1.47 billion workers The Great Doubling (Richard Freeman) The above given points alone cannot summarize the limitations brought to globalization strategies by the ‘ethnocentric model’ in MNCs. But once we go through the good side of ‘geocentric model’ of MNC staffing, we have to go through its disadvantages as well. Only then will we be able to analyze the proper solution to the question asked. Section B- Advantages of Ethnocentric model/ Disadvantages of Geocentric model 1) Resistance to mobility Not all are ready to move into another place for a job irrespective of talent. Only the cream of the society gets chance to mobilize and they may not be the best out of the required personnel. So, the intention to get the best may simply result in getting the wrong person and the wrong resource result in lesser productivity. In this case, the ethnocentric personnel who stay closer to the firm are reliable. Reasons like mobilization of family, dual career (career of spouse) etc are the main reasons for this situation. 2)Getting talented people off the local management leash How to enlist cooperation of local managers in identifying and releasing persons with potentials is yet another question faced by the employer. Many of the skilled people get engaged in local jobs and their hesitation to move on to the international market limits global economic growth. Even if they mobilize, they get little incentive to do so 3)Failures on international assignments Pressure to keep moving increase pressure on the managers. Most often the reason to do so is the difficulty to adapt family to the situation. They happen to move out of this pressure seeking refuge of family at their home place. 4)Global expansion and need to enlarge managerial candidate pool: This applies mainly to HCNs and TCNs. The managers should be the best out of the skimmed out efficient population to make out the best possible results. This is a very big challenge to the employer. 5)Maintaining an appropriate distribution or composition of various employee groups: What is the optimal staffing composition? In many of the MNCs, the optimal staffing ratio is a big confusion. This same matter can bring in internal conflicts within the firm. This particular issue can bring in unexpected situations in MNCs. 6)Training and socialisation HCNs and TCNs to think and behave like PCNs(IKEA): Training ans socialisation of HCNs and TCNs is yet another problem faced by the Human Resource Managers. As mentioned earlier, these personnels are difficult to be managed in a high grade society. They may face various emotional and psychological problems in a totally alien culture. This can certainly affect their performance. 7) Developing the capability of HCNs and TCNs to work in emerging markets The development of capability of HCNs and TCNs to work in emerging markets like China, India and Eastern Europe is again a difficult task. They may require extra training to cope up with the situation in developing economies and bring them into the stream of global trade. Now, to bring in some other aspects which are not mentioned within the topic and yet have a contemporary relevance, let us consider the following points: 1) Recession scenario and globalisation Recession has been a hit on the face of globalisation and MNCs. Many of the MNCs had to expel their skilled staff as they were compelled to do so. In this context, the firms which adopted ethnocentric model had a greater chance to reassign their staff to other jobs. The staff get chance for other jobs in their country as their previous firm and work is known to the new employer. Many people who got expelled from international firms had to move back to their home country jobless. 2) Interruption of global market in the local sales The recession has let MNCs do all the possible methods to fix root in the economy. Most of their strategies have appeared to be a hit from back to the local sellers. Here, the cream of the society, the professionals keep getting their remuneration which is often dreamt by the local sellers and the MNC staff lives a great life while the lower layer stay on gravels. That is, the rich grow richer and poor grow poorer. Everyone is trying to skip out of the lava of recession and MNC staff is not an exception. Even MNCs have lost their glitter in this trend. Globalisation strategies have lost their significance to an extend in the present day world. Ethnocentrism, geocentrism and polycentrism are just three aspects of Human Resource Management. Today, as the financial crisis grows, the chance for the increase of the trend of ethnocentrism is more as it is more economical. So, the advantages and disadvantages are to be accepted to make the best possible result although it will be much lesser that when a geocentric model is followed. Analysis: From the above text, we can read how an ‘ethnocentric model’ of managerial staffing policy limits the globalization strategies of MNCs. We have also had a glance through the major HR problems they might encounter. The limitations that ethnocentric model carry are more when compared to its advantages. But in the recession context, ‘ethnocentric model’ of managerial staffing can be seen as a comparatively good solution to save the hectic formalities and monetary responsibilities on an immigrated staff member. Reference: Ethnocentrism.Accessed on 22nd March,2009 http://www.encyclo.co.uk/search.php http://en.wikipedia.org/wiki/Ethnocentrism Ethnocentrism.Accessed on 22nd March 2009. http://en.wikipedia.org/wiki/Ethnocentrism Globalization. Accessed on 22nd March,2009. http://en.wikipedia.org/wiki/Globalization James W.Neuliep , Stephanie M. Hintz, James C.mcCroskey. ‘The Influence of Ethnocentrism in Organizational Contexts: Perceptions of Interviewee and Managerial Attractiveness, Credibility, and Effectiveness .Commercial Quarterly.vol.53.No 1, February 2005,pp 41-56 Mark Lorenzon, Volker Mahnke. ‘Global strategy and the acquisition of local knowledge: How MNCs enter regional knowledge clusters’ 6-June,2002 Read More