In MNCs, the Type of Employee

 

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In light of today's shifting organizational boundaries and structures, it is crucial to talk about the new aspect of human resource management as well as the dissemination of HR practices across cultural barriers. Human resource management is a branch of management that deals with people and their interactions with one another at work in order to enable them to contribute both individually and collectively to the success of an organization (Wright, 1997).

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Employing host country nationals (HCNs), parent country nationals (PCNs), or third country nationals (TCNs) are the three options available to a corporation for managing its human resource policies and procedures (Scullion,1995).

The business can choose between the three strategies. Employing locals from the home country is ethnocentric, employing locals from the host country is polycentric, and selecting management from third-country citizens is geocentric (Redman & Wilkinson, 2006).

Managing the human resources of multinational corporations (MNCs) across international borders is the focus of the field of international human resource management (IHRM). Parent Country Nationals (PCNs), Host Country Nationals (HCNs), and Third Country Nationals (TCNs) are the three categories of employees that IHRM involves managing (Dowling et al., 2017).

PCNs are employees who are citizens of the country where the MNC is headquartered, but work in a foreign subsidiary of the company. They are typically expatriates who are sent abroad to manage operations in a foreign country. PCNs may face cultural and language barriers in the host country, which can make their job challenging.

HCNs, are staff members who are nationals of the nation in which the MNC conducts business. To work for the MNC subsidiary in their own nation, they are hired domestically. HCNs can have an advantage in understanding local customers and suppliers because they are linguistically and locally savvy.

TCNs are nationals of nations other than the MNC's home country or the host nation where they are employed. They can offer a unique viewpoint on the local market and culture, but may run into problems due to linguistic and cultural barriers.

Do you know how to effect?

If PCNs, HCNs, and TCNs are not managed properly in IHRM, it can result in a number of problems that could harm the MNC's operations and reputation. Numerous possible problems that might develop in these circumstances have been discovered through research.

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It is crucial to weigh the possible advantages and disadvantages of each strategy when analyzing the problem of managing PCNs, TCNs, and HCNs in IHRM.

On the one hand, utilizing PCNs can provide the MNC a high degree of control over its overseas subsidiaries and guarantee the transfer of knowledge and skills from the parent firm to the host nation (Collings & Scullion, 2006).

However, depending too much on PCNs may result in a lack of local responsiveness and a failure to adjust to the particular cultural and commercial climate of the host nation. This might make it more difficult for the MNC to successfully compete in the local market and accomplish its goals.

Advantages of Type of Employee.

HCNs are essential for expatriates on global assignments, providing socializers, facilitators, companionship, and social assistance to help them adjust to local culture, business practices, and make contacts. They can also provide companionship and social assistance (Bonache et al. (2009).

PCN expatriates can increase the productivity of a subsidiary workforce, especially in culturally diverse regions (Gong 2003).

TCNs are a great way to hire the best candidate regardless of connections to the head office or their country of origin. They are more impartial than head office employees sent to branches, and because there are three rather than two cultures at play, they find it easier to develop a global mind-set.

Here are some well-known instances of PCN, HCN, and TCN use in global corporations:

Parent Country Nationals (PCNs): The multinational fast food business McDonald's frequently employs PCNs to manage its global operations. For instance, McDonald's selected an Australian PCN to oversee its operations in China in 2019.

HCNs: The German carmaker BMW has received accolades for employing HCNs in its Chinese operations. BMW has been able to accommodate regional tastes and preferences while preserving its worldwide brand identity by employing Chinese management.

Third Country Nationals (TCNs): To oversee its business activities in Asia, the Swiss pharmaceutical corporation Novartis has employed TCNs. For instance, Novartis chose a French TCN to lead the company in Japan in 2016.

In conclusion

MNCs should carefully weigh the advantages and disadvantages of each employee type when designing an IHRM strategy. PCNs may provide high levels of control and knowledge transfer, but local response may be hampered. HCNs and TCNs may offer local expertise and cultural sensitivity, but they may also provide difficulty. Effective IHRM requires a balanced strategy that considers the particular requirements and difficulties of each type of employee.

References

Bonache, J., Sanchez, J. I., & Zarraga-Oberty, C. (2009). The interaction of expatriate pay differential and expatriate inputs on host country nationals’ pay unfairness. International Journal of Human Resource Management, 20(10), 2135-2149. doi: 10.1080/09585190903178062. Available from https://nibmehub.com/opac-service/pdf/read/International%20human%20resource%20management%20%20globalization-%20Ress.pdf [Accessed 14 April 2023].

Collings, D. G., & Scullion, H. (2006). Global staffing: A review and thematic research agenda. The International Journal of Human Resource Management, 17(4), 559-580. Available from https://www.researchgate.net/publication/238318967_Global_staffing_A_review_and_thematic_research_agenda [Accesed 14 April 2023].

Dowling, P. J., Festing, M., & Engle, A. D. (2017). International human resource management (7th ed.). Cengage Learning. Available from https://www.google.lk/books/edition/International_Business_Strategy_and_Cros/b61jEAAAQBAJ?hl=en&gbpv=1&dq=Dowling,+P.+J.,+Festing,+M.,+%26+Engle,+A.+D.+(2017).+International+human+resource+management+(7th+ed.).+Cengage+Learning.&pg=PA315&printsec=frontcover [Accessed 14 April 2023].

Gong, Y. (2003) Toward a Dynamic Process Model of Staffing Composition and Subsidiary Outcomes in Multinational Enterprises. Journal of Management, 29: 259–80. Available from  https://nibmehub.com/opac-service/pdf/read/International%20human%20resource%20management%20%20globalization-%20Ress.pdf [Accessed 14 April 2023].

Redman, T. and Wilkinson, A. (2006) Contemporary Human Resource Management: Text and Cases, 2nd ed. Harlow: Financial Times Prentice Hall. Available from https://www.researchgate.net/publication/286190478_Transfer_of_Hr_Practices_across_Different_Cultures [Accessed 14 April 2023].

Scullion, H. (1995) ‘International Human Resource Management’, in Storey, J.  (ed.)  Human  Resource Management: A Critical Text. London: Routledge. Available from https://www.researchgate.net/publication/286190478_Transfer_of_Hr_Practices_across_Different_Cultures [Accessed 14 April 2023].

Wright, C. (1997) Business Basics, A study guide for degree students, 2nd ed. London: BPP Publishing Ltd. Available from https://www.researchgate.net/publication/286190478_Transfer_of_Hr_Practices_across_Different_Cultures [Accessed 14 April 2023].

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Video – Available from https://www.youtube.com/watch?v=9m7ABriBKTU [Accessed 14 April 2023].