PRESENTATION

ON

VARIOUS APPROACHES TO
INTERNATIONAL HUMAN
RESOURCE MANAGEMENT
SYNOPSIS

• Introduction
• Various approaches
• Advantages
• Disadvantages
• Impact
• Conclusion
 INTRODUCTION
As with all other human resource management decisions and
practices, global staffing should be linked to the overall strategy
and objectives of the multinational enterprise.

These strategies and objectives are of course influenced by and

must be set with in context of the overall global business
environment.
The IHRM literature uses four terms to describe multinational
enterprise approaches to managing and staffing their subsidies.
  
These terms are taken from the seminal work of perlmutter who
claimed that it was possible to identify among international
executives three primary attitudes are

Ethnocentric approach
Polycentric approach
Geocentric approach
Regiocentric approach
Ethnocentric approach

• Under this, parent nation employees fill all key

positions in a multinational. That is key positions in domestic
and foreign operations are held by headquarters personnel.
subsidiaries are managed by staff from the home country
(PCN’s)

There are often sound business reasons for pursuing an

ethnocentric staffing policy

• A perceived lack of qualified host country nationals (HCN’S)

• A need to maintain good communication, co ordination and
control links with corporate headquarters.
 
 This practice was widespread at one time firms such as Procter
and gamble, Philips originally followed the ethnocentric
approach.
 Even today in most of the Japanese and south Korean
companies such as toyato Samsung, key positions in
international operations are still held by home country
nationals.
Disadvantages of ethnocentric approach 
• It limits the promotion opportunities of host country nationals
which may lead to reduced productivity and increased turnover
among that group.
• The parent country nationals being placed in the host country
take lots of time in understanding the local dynamics leading to
faulty decisions.

Impact of approach on Staffing:

• Headquarters country personnel manage all operations.
• Home Staffing policies are replicated in countries.
• Talent skills transfer essentially one-way.
b)POLYCENTRIC APPROACH

• The multinational enterprise treats each subsidiary as a distinct

national entity with some decision making autonomy. 
• Subsidiaries are usually managed by local nationals (HCN’s) and
parent country nationals and are rarely transferred to foreign
subsidiary nations. 

• For ex : Many US companies use home country managers to get

the operations started, then hand them over to the host country
managers Hindustan uniliver ltd, the Indian subsidiary of
uniliver has locals has its chiefs.
The main advantages of a polycentric policy are
 
Employing HCN’s eliminates language barriers avoids the
adjustment problems of expatriate managers and their families and
removes the need for expensive cultural awareness training
programs.

Employment of HCN’s is less expensive.

Gives continuity to the management of foreign subsidiaries and
avoids the turnover of key managers.
Managing local politics and administration will be very easier.
Disadvantages of polycentric approach
• Bridging the gap between host country nationals managers and
parent country national managers becomes difficult.
• It also becomes difficult to imbed the original cultural of company.
 
• This will not provide the opportunity to the host country
employers to get exposure and experience outside their own
country.

Impact of approach on Staffing:-

• Headquarters country personnel have little impact on other
countries.
• Talent acquisition policies are unique to each country.
C) GEOCENTRIC APPROACH
 
Multinational enterprise is taking a global approach to its
operations, recognizing that each part (subsidiaries and
headquarters) makes a unique contribution with its unique
competence.

This approach subscribes the view of employing the best

people in key positions throughout the organization without
the consideration of any nationality.

Moreover, it helps the organization to develop core

competency taking the best talents in the core team.
Advantages of geocentric approach:
It enables a firm to develop an international executive team which
assists in developing a global perspective.
It over comes the “federation” drawback of the polycentric
approach.
It promotes co operation and resource sharing across units.

Disadvantages of geocentric approach:

 
Host governments want a high number of their citizens employed.

Many western countries require companies to provide extensive

documentation.
• This is expensive in terms of the investment towards training
and development of those individual.
• Benchmarking the salary with the international compensation
package which is definitely more than the salary to be given to
the individual in his home country.

Impact of approach on Staffing:-

• Employees circulate throughout the global organization.
• Talent acquisition policies maximize long-term strength of the
global organization.
• Talent and skills are deployed globally to achieve global goals
while meeting local requirements.
D) REGIOCENTRIC APPROACH

• In regiocentric approach Operations managed regionally;

communication and coordination high within the region. Like
geocentric approach, it utilizes a wider pool of managers but in
a limited way.
• This approach advocates the division of operations of the
multinational company on the basis of some geographical
regions and allows the transfer of employees with in a particular
region.
Advantages of regiocentric approach
• A major motive for using such an approach is that it allows the
interaction between executives transferred to regional areas.
• It can be a way for a multinational to move gradually from a purely
ethnocentric or polycentric to a geocentric approach.

Disadvantages of regiocentric approach

• It can produce ‘‘federalism” at a regional rather than a country basis.

• While this approach does improve career prospects at the national
level , it only moves the barrier to the regional level.
 
Impact of approach on Staffing
• Employees circulate within regions, with a focus on regional business
results.
• Talent acquisition policies are developed and coordinated within
regions.
• Talent and skills are developed within regions, with minimal inter-
region transfer.
conclusion