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Polycentric: A polycentric staffing approach is when the host country nationals (HCNs) are recruited to manage subsidiaries in their own country. This approach is usually adopted by organizations which are less concerned about maintaining a common corporate culture. Local managers are used to fill key managerial positions and correspondingly, these subsidiaries are usually managed by local nationals (with mere guidance from headquarters) who are seldom promoted to positions at the headquarters. Likewise, PCNs are rarely ever transferred to these foreign subsidiary operations. Organizational headquarters give more control to subsidiary organizations thus managers in these organizations are given the autonomy in determining the most suitable strategy and practices for the subsidiary and as a result, the standards for evaluation and control of employment and performance are determined locally. Influences on HRM Strategies: As a HR Manager, one would choose this approach when recruiting if I know very well that my local staff knows the local environment, local market demands and is well equipped with firm-specific knowledge and skills sufficient enough to run the subsidiary. Additionally, if retaining key managers/personnel is amongst my main concerns and notably if the firm does not want to allocate a substantial amount of money for extensive cultural awareness training. This approach will also definitely influence the firm·s HR staffing approach if maintaining a common corporate culture is not amongst its main priority. Advantages and Disadvantages: The advantages of the polycentric approach include the absence of problems associated with expatriate managers, chiefly cultural myopia. The elimination of language barriers and being able to avoid adjustment problems of expatriate
managers (and their families) removes the need for expensive cultural awareness training programs. Also, hiring costs are reduced. Employing HCNs is less expensive, even if a premium is paid to extract a high-quality applicant. Moreover, work permits are not required as there are no (personnel) movements between international borders. However, local responsiveness and sensitivity to issues like host government policies exists. Polycentrism also allows for a lower organizational profile in sensitive political situations. Additionally, there may be a ´motivation effectµ and morale improvement because HCNs can see a career potential. Consequently, the continuity of management improves because the HCNs stay longer in the organization (and foreign subsidiaries too), reducing the turnover of key managers and ultimately promoting company loyalty. More importantly, this approach gives hope for profit maximization through flexibility because local managers can react quickly to market needs in the areas of pricing, production, product life cycle and political activity. Amid the good, there·s also the not-so-good part about implementing polycentrism. Polycentrism makes it more difficult in bridging the gap (objectives, communication, standards, control, coordination, policies, attitudes and culture) between the HCN unit and the firm·s parent headquarters. There will also be no synergy because there is little communication between national units. Polycentrism also tends to encourage too much decentralization; corporate headquarters may become isolated from national units, which leads to lack of integration. God forbid, this in turn may lead to ´corporate inertiaµ. On top of that, HCN managers have limited career opportunities outside the subsidiary/unit as they are not given the opportunity of international experience and thus are indirectly hindered the chance for career expansions/advancements. What's more, this approach limits opportunities for PCN Expatriate managers to gain foreign experience, adversely affecting their insight, strategic decision-making and resource allocation. Accordingly, this limits the experience of host nationals to their own country.
Ethnocentric: An ethnocentric staffing approach is generally the result of a ´home country attitudeµ ² when employees from company headquarters fill key managerial positions and power and decision making are centralized at the head office. When a company uses an ethnocentric approach, power and decision making is centralized at the head office. Key management positions both at home and in overseas subsidiaries are filled by people from organizational headquarters and headquarter standards are applied in evaluation and control of employees and performance. Influences on HRM Strategies: As a HR Manager, one would choose this approach when recruiting if one believes that the staff (as parent-country nationals (PCNs)) are better qualified and more trustworthy as compared to the host-country nationals (HCNs) and if the staff are well-trained in cultural awareness. Advantages and Disadvantages: Many advantages come with implementing an ethnocentric approach in an organization. For instance, there is the assurance that the foreign subsidiary or unit will comply with corporate objectives, policies and standards. This is because the firm (which was initially produced in the home country) transfers its core competencies to the host country under the guidance, care, concern and support of expatriate managers. Consequently, these managers have the (essential) knowledge to create value through the core competencies shared. In addition, PCNs have the requisite firm-specific knowledge, skills and experience to accomplish tasks in line with the vision and mission of the organization; achieving higher/more favorable experience curve effects (which are derived from standardization of production). Also, ethnocentricity promotes career expansion and advancement (globally). Promising managers are given the opportunity of ´international
experienceµ. Furthermore, ethnocentrism also contributes to the maintenance of the corporate culture, ensuring that it does not falter and that certain things are done in a certain manner. Additionally, ethnocentricity would be a good approach especially when there is the necessity to maintain and consolidate good communication, coordination and control links with the organization·s headquarters. A strong network/relationship between the headquarters and subsidiary will make sharing (and receiving) information/messages across borders much easier and smoother. However, there are also disadvantages when taking on this approach. Ethnocentrism limits the promotional opportunities of HCNs, denying career advancements to them. Moreover, PCN expatriate managers may experience adjustment problems. They may become insular in their attitudes and be prone to cultural myopia which may result in management overlooking market niche opportunities. Also, PCN expatriate managers may attempt to impose styles which are appropriate at the organization·s headquarters but may be deemed inappropriate in the host country. Besides, the compensation packages of PCN expatriate managers may be at a level considered unjustified by the HCNs which may breed resentment and tarnish the firm's public image. Lastly, PCN expatriate managers are expensive to maintain (in overseas location) particularly because they are accustomed to a higher standard of living and thus have ´expectationsµ when living abroad. Geocentric: Geocentricity (geocentrism) is the notion that the best people should be employed, regardless of their nationality. Enables the firm to make best use of its human resources and builds a cadre of executives who feel comfortable working in any culture.
Advantages: Ethnocentric and polycentric pressures are balanced in favor of optimizing the company's operations. The ethnocentric pressure for low cost standardized operations is satisfied because enough of the right kinds of products exist in the global customer base to permit scale economies and experience curve effects. The polycentric pressure for local responsiveness is satisfied because of the need to meet the distinctive characteristics which remain in every market. Disadvantages: May be contrary to host countries' desire for the MNE to employ local citizens. Expensive to implement because of the need for considerable cross-cultural training and development. Reginocentric: Regiocentricity is the variation of staffing policy to suit particular geographic areas. Advantages: Policy varied to suit the nature of the firm's business and product strategy. Allows interaction between executives because of inter-regional transfers. Shows some sensitivity to local conditions. Provides a 'stepping stone' for a firm wishing to move from an ethnocentric or polycentric approach to a geocentric approach. Disadvantages: May produce federalism at a regional (rather than a country) basis and constrains the firm from taking a global stance. May improve career prospects at the national level, but only to the regional level: staff may never attain positions at corporation headquarters. By: Abhishek Mishra ISBE-A//SS//10-12 (SB4-HR)