The Staffing Policies in IHRM work with Type of Employee

             Image 1 – Source: Workable resources

 In international human resource management (IHRM), staffing policies relate to the choices and plans made by a company to find, choose, develop, and keep workers for its international operations.

These rules are crucial since hiring and managing staff in a foreign nation can be difficult owing to cultural, legal, and regulatory, as well as labor market, circumstances, variations.

Perlmutter (1969) outlined three ways that multinational firms are staffed in relation to their staffing strategies. The ethnocentric, polycentric, geocentric, and regiocentric approaches. A few years later, the fourth staffing approach was introduced.

These four strategies are helpful for MNCs and they may select one of them to manage the global staffing policy; nevertheless, there are no restrictions on staffing management. The hiring include the choice of HCNs and TCNs  on the global labor market, equitable employment opportunities, legal concerns, indicators of expatriate success, the failure rate of expatriates, etc. are some significant difficulties that MNCs still need to address.

        Image 2 – Source: Geektonight

Typical IHRM staffing policies include:

Ethnocentric Staffing: Employers from the parent nation are hired to oversee overseas activities, assuming they have the necessary skills and expertise.

Polycentric Staffing: Employers from the host nation are hired to work in overseas subsidiaries due to their familiarity with local markets, cultures, and practices.

Geocentric Staffing: Personnel should be hired based on their qualifications and expertise, as it is beneficial to have a diverse staff.

Regiocentric Staffing: Workers from a certain region will be hired to work in international companies, as it will be easier to manage operations if they have similar cultural and corporate values.

Reiche (2007) examined international staffing-related retention strategies by analysing complex and novel situations between headquarters and subsidiaries. A pluralistic and consensus-driven approach to international employment improves the business' ability to retain employees by fostering greater local unit engagement and responsiveness. This strategy may lower risk and cultural bounds in the local market, increase local staff loyalty, and help them build personal career plans. PCNs continue to play a crucial role in multinational corporations. Local worker expatriation can help MNCs retain employees.

Evidence of Ethnocentric Staffing policy in MNCs.

Prior to very recently, American MNCs hired parent country nationals (PCNS), who were really HQ transferees, to occupy the majority of important management positions in their subsidiaries and affiliates (Tung. 1981, 1982). According to one estimate (Root, 1986), there were around 100,000 American managers working for American multinational corporations' subsidiaries in 1978. However, American multinational corporations (MNCs) have a propensity to hire  HCNs for important positions in their affiliates and subsidiaries abroad (Faycrweather, 1982; Kobrin, 1984;Harris and Moran, 1987; Root, 1986).In addition to being less expensive, this approach is typically seen favorably by host governments and HCNs have less difficulty bonding to their native cultures (Harris and Moran, 1987). Additionally, it lessens some employee morale issues that were found in MNC affiliates (Zeira, Harari, and Izraeli, 1975) that had adopted the ethnocentric staffing policy (specifically, the policy of filling key positions with parent country transferees), and, generally speaking, it satisfies the expectations of host country organizations (HCOS) and other MNC constituencies that interact with the subsidiaries (Zeira and Harari, 1979).

MNCs with an ethnocentric staffing policy tend to hire nationals of parent countries, while those with a polycentric staffing policy favour citizens of the host country. Companies with a geocentric employment policy often hire the best candidate regardless of nationality, including citizens of third countries, subsidiaries' home countries, and MNCs' home countries (see Table 5.1).

Heenan and Perlmutter (1979), dubbed regiocentric hiring as a halfway point between a polycentric/ethnocentric and geocentric strategy. It applies to critical roles in MNC subsidiaries, but some PCNS or TCNs may still be present in middle management.

    Figure - 1

Benefits and drawbacks of PCNs, HCNs, and TCNs

The relevance of the various staffing strategies mentioned above will be made clear by looking at the benefits and drawbacks of hiring these various types of workers. Table 5.2 lists some of the benefits and drawbacks that are most commonly cited (Dowling et al., 2013).It will be obvious that each of these solutions has not drawbacks. It is remarkable that there is so little study on the relative use of PCNs, HCNS, and TCNS given that personnel policies might have a significant influence on the subsidiary's operation. At first, just two research had been carried out that offered any information on this matter (Tung, 1982; Kopp, 1994). Kopp did not explore the usage of PCNS in diverse industries and his findings were restricted to MNCs from various home countries. Furthermore, in terms of both home and host countries, both studies conceived Europe as a single, presumably homogenous group.

      Figure - 2

The main benefits when proper management of staffing policy in IHRM:

Reduced labor costs: The Company may hire workers who are not qualified for their roles, leading to cheaper labor expenditures.

Increased flexibility: Organizations can quickly respond to changing business demands by hiring temporary workers instead of going through a lengthy hiring process.

 

What difficulties we have face because of poor IHRM staffing policy management:

Poor caliber of employees: A lack of a clear staffing policy can lead to reduced productivity, higher turnover rates, and higher expenses due to the need to acquire and educate new staff.

Legal issues: Organizations may face legal repercussions if they violate recruitment and selection regulations.

Adverse effects on organizational culture: Employees may feel undervalued or ignored if a business does not have a clear personnel policy in place, leading to lower morale and production.

 

You can learn more in this video

    Source: You Tube

Conclusion

The paragraphs discuss a variety of IHRM staffing policies, including ethnocentric, polycentric, geocentric, and regiocentric. They also discuss the benefits and drawbacks of hiring other employee groupings, such as Third Country Nationals (TCNs), Parent Country Nationals (PCNs), and Host Country Nationals (HCNs). Each strategy has advantages and downsides, but the decision of a staffing policy ultimately depends on the unique requirements and circumstances of each MNC.

 

References

Perlmutter, H.V. (1969). The Tortuous Evolution of the Multinational Corporation. Columbia Journal of World Business, 4 (January-February 1969), 9-18.[Online]. Available from  https://books.google.lk/books?hl=zh-TW&lr=&id=hbSzv5HVYLoC&oi=fnd&pg=PA295&dq=Perlmutter+(%E2%80%9CThe+Tortuous+Evolution+of+the+Multinational+Corporation,%E2%80%9D+1969)&ots=FmDdeYofzp&sig=5dHlOVDgrbywTE78hYZ7FxyAfwQ&redir_esc=y#v=onepage&q=Perlmutter%20%20(www.scholar.google.com.hk).%20Retrieved%20January%2018%2C%202009.&f=false [Accessed 15 April 2023].

Reiche, B.S. (2007). The Effect Of International Staffing Practices On Subsidiary Staff Retention In Multinational Corporations. The International Journal of Human Resource Management, 18(4), 523-536. Retrieved January 14, 2010 DOI: 10.1080/09585190601178711[Online].Available from https://ukdiss.com/litreview/the-importance-of-staffing-management-in-ihrm-management.php [Accessed 15 April 2023].

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Heenan, D.A. and Perlmutter, H.V. (1979) Multinational Organization Development. Reading, MA: Addison-Wesley.[Online]. Available from https://www.google.lk/books/edition/International_Human_Resource_Management/WkBvDwAAQBAJ?hl=en&gbpv=1 [Accessed 16 April 2023].

Dowling, P.J., Festing, M. and Engle, A.D. (2013) International Human Resource Management: Managing People in a Multinational Context, 6th edn. London: Cengage Learning. [Online].Available from https://www.google.lk/books/edition/International_Human_Resource_Management/WkBvDwAAQBAJ?hl=en&gbpv=1 [Accessed 16 April 2023].

Kopp, R. (1994) 'International human resource policies and practices in Japanese, European and United States multinationals', Human Resource Management, 33(4): 581–599.[Online]. Available from https://www.google.lk/books/edition/International_Human_Resource_Management/WkBvDwAAQBAJ?hl=en&gbpv=1 [Acceed 16 April 2023].

Figure – 1 - [Online].Available from https://www.google.lk/books/edition/International_Human_Resource_Management/WkBvDwAAQBAJ?hl=en&gbpv=1 [Accessed 16 April 2023].

Figure – 2 - [Online].Available from https://www.google.lk/books/edition/International_Human_Resource_Management/WkBvDwAAQBAJ?hl=en&gbpv=1 [Accessed 16 April 2023].

Image 1 – Available from https://resources.workable.com/international-recruitment-policy [Accessed 16 April 2023].

Image 2 – Available from https://www.geektonight.com/international-human-resource-management/ [Accessed 16 April 2023].

Video – Available from https://www.youtube.com/watch?v=6lRJPG4c8lE [Accessed 16 April 2023].