Globalization has changed the way businesses are operating today. Globalization has allowed organizations to cross borders and expand their operations in other parts of the world. At the same time it has created several issues that human resource management has to deal with. Several authors have claimed that managing human resource strategically can lead to higher profitability. One of the major functions of human resource management is staffing or recruitment and this essay would discuss the staffing strategies that organizations adapt as they expand their operations to another country (Farndale, Scullion, and Sparrow, 2010).
Businesses that expand their operations to other countries have three types of staffing strategies: ethnocentric, polycentric, geocentric or regiocentric. These three strategies will be discussed one by one along with advantages and challenges that organizations have to face as they adapt these strategies.
The ethnocentric strategy that firms adapt as they expand to other countries refers to filling of all the most important management positions by employees from the parent country. There are different reasons for using such strategy and one of them is that the host country does not have sufficient skills of labors to take the important management positions (Karadjova-Stoev, and Mujtaba, 2009). The other reason could be that the company would like to have a unified corporate culture even in other countries.
There are challenges faced by organizations as they adapt ethnocentric strategy. The most important challenges are the following: the company might not be able to understand the national culture and it might suffer from cultural myopia (Zaj%u0105c, 2011). The other important challenge that such a firm would face is that national employees would not be able to take on the management positions in the organization and thus they would be demoralized and it would lead to lower productivity and organization might face issues in the long run to hire and retain the quality and skilled labors.
Polycentric strategy is another strategy that is adapted by organizations as they expand their operations to other countries. Organizations that adapt this strategy recruit the host country nationals to manage the operations of the company (Karadjova-Stoev, and Mujtaba, 2009). One major advantage of this approach is that the firm would not suffer from problems like cultural myopia as the employees are aware of the local culture and take decisions considering the national culture. Another advantage of this strategy is that it would be less costly to the firm as expatriate managers are very expensive for organizations.
However, firms that adapt polycentric approach face several challenges. One of the major challenges that the firm would face is the cultural gap between the host country nationals and the parent country nationals. Such gaps are hard to reduce and they will lead to less cooperation between the corporate headquarters and foreign subsidiaries. Also with such a strategy, the managers from parent country would not be transferring to the foreign country, thus it could lead to the incompatible management skills and even the management of the host country could feel as working in isolation. All these challenges can result in lower productivity and problems.
Geocentric or Regiocentric Strategy
Geocentric strategy refers to a strategy where organizations look to fill the jobs by finding the best possible person regardless of his or her nationality. This allows the organization to have the right person at the right place and thus it leads to higher productivity. There are several other advantages like making the best use of human resource of the company, allowing the organization to deal with issues like cultural myopia and allowing the organization to understand the national culture and formulate strategies accordingly.
However, there are challenges for organizations that adapt a geocentric strategy and one of the most important challenges is that firms need to face several migration laws to employee people from other countries and this process is time-consuming and expensive. Implementation of geocentric approach can be expensive as the expatriates would charge for relocation cost. Also the company needs to pay expatriates a compensation package that meets the international standard in order to attract and retain them and thus this would lead to lower profitabilit).
Approach the company uses in a foreign country that makes it successful or fail
Lemma group, a French company, has expanded its operations globally over the last few years. The company previously used to follow an ethnocentric approach however as this French company expanded into different countries. It realized that ethnocentric approach would be ineffective. The French culture is different from culture of the United States of America and therefore the management realized that if the company does not change its approach it would suffer from cultural myopia. Therefore the company had changed its organizational culture to International Human Resource Management or an approach similar to geocentric i.e. hiring employees regardless of their national locations (Muratbekova-Touron, 2008). Therefore the company changed its recruitment strategy to become successful. Â
Right fit for a global company
Right staffing strategies can lead to success of the firm. Global organizations that are operating in different parts of the world need to have appropriate staffing strategies to make sure that they adapt the right strategy that fits with their organizational culture as well as national culture and facilitates the organization to achieve success rather than becoming a barrier for the organization in achieving success. Considering the challenges the organization faces, the geocentric strategy can be the best fit for a global organization. The reason why geocentric strategy could be the right fit is that it would allow the company to understand the local culture as well as makes the most of the global trends and thus, the organization would be able to find the midway between the local and global trends. In recent years a new term â€˜Glocalization’ has emerged which means to think globally but act locally and geocentric strategy supports the concept of glocalization.