Advantage and disadvantages of using parent country nationals, host country nationals and third country nationals as employees

a German citizen working for a German company in India.Meaning of Parent country nationals(PCN) • The employee’s nationality is the same as the organization’s. . For example.

Meaning of Host country National(HCN) • The employee’s nationality is the same as the location of the subsidiary. . a Indian citizen working for a German company in India. For example.

. an Sri Lankan citizen working for a German company in India.Meaning of Third country nationals(TCN) • The employee’s nationality is neither that of the organization nor that of the location of the subsidiary. For example.

PCN advantages: • • • • • • • Knowledge of Firms culture and products Loyalty Influence at headquarters Easier to access Foreign Image Groom executives for top management International exposure to promising managers. .

training and maintaining expatriates.PCN disadvantages • Difficulty in adapting to foreign country • Excessive cost of selecting. • Promotional opportunities less for HCNs • Compensation difference for HCNs and PCNs • Communication problems abroad • Low productivity in early part of tenure • Family adjustment problems .

HCN advantages • • • • • • Familiar with local environment Goodwill Less expensive than hiring a PCN Knows local business Can be productive right away Locals motivated due to promotional opportunities • No language barrier .

HCN disadvantages • Loyalty maybe to country not company • Limited familiarity with firms own operation and culture • PCN at headquarters may lack sufficient understanding of the subsidiary’s needs and corporate strategy for the subsidiary may suffer as a result. • Communication problem with parent company personnel. .

TCN advantages • Knowledge of specific cultures and languages • Greater familiarity with host country culture than PCN. but loyalty will be to the firm • Relocation costs lower that the PCNs • Salary and benefits lower than PCNs • Truly International managers .

TCN disadvantages • May have a ulterior motive • Locals may prefer their own citizens for managerial positions • Some cross-cultural preparation may still be required • Potentially suffering from a lack of knowledge of the corporate culture • Using TCN’s to the exclusion of HCNs may create the same problem or blocked career advancement that occurs when PCNs are used in this manner. .

Thank You By Anand Parameshwaran MBA – B section .

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