Question

Answer the following question in short essay form. What are the different types of expatriate employees? What are the different approaches to global staffing? What would be examples of staffing practices that foster the global integration process of a company?

Answer 1

• An expatriate is an employee sent by his or her employer to work in a foreign country. The firm is normally referred to as the parent company, while the country of employment is known as the host country. If General Motors sent one of its U.S. executives to oversee a new development in Brazil, the executive would be an expatriate, General Motors would be the parent company, and Brazil would be the host country.
• Expatriates provide a number of benefits for companies, including greater parent control and particular expertise. International experience is also seen as providing opportunities for personal and professional development and career advancement.
• Expatriates are very expensive, however, and this can discourage extensive use of expatriates. Many companies have also experienced relatively high failure rates, with failure often being attributed to the family's inability to adapt.
• An expatriate is expected to relocate abroad, with or without family, for as short a period as six months to a year; typical expat assignments, however, are from two to five years long.
• Many companies are turning to short term expatriate assignments as an answer to cost and family issues. Employees work overseas for a fixed term, usually for a period of three months to one year, on an unaccompanied basis.
• Home leave allowances are an integral part of the assignment to enable regular trips back to the home country, or family visits to the host country.
• The benefit for the employee is that there is no need to uproot the entire family and relocate them overseas. The company makes considerable savings from the absence of costs associated with relocation like school fees, shipping of goods, vehicle transportation and furniture storage.
• Typically overseas for three to five years, long term expatriate assignments are the traditional form of overseas placements. An employee and family members relocate to a host country for the duration of the assignment.
• This requires company support and payments for the housing situation in the host and home countries, school allowances, dual career support or spousal assistance, shipment of goods, storage of belongings, pet relocation, relocation service provisions, tax assistance, cost-of-living adjustment and expatriate allowances.
• Whilst there are many justifiable and cost effective business reasons for sending staff on long-term expat assignments, particularly in situations requiring continuity and a transfer of skills, family issues can make these types of assignments notoriously harder to manage than other forms of expatriate postings.
• There are four primary approaches that multinational companies use in staffing decisions, including ethnocentric, polycentric, geocentric, and regiocentric approaches.
• The ethnocentric staffing approach heavily focuses on the norms and practices of the parent company where upper management positions are typically held by corporate personnel from the home country. These managers are considered parent company nationals, or PCNs. Japanese and Korean firms follow this approach quite often.  
• Ethnocentric staffing presents advantages and disadvantages. The obvious advantage to ethnocentric staffing is the alignment of interests and perspective of the home office with all foreign subsidiaries abroad.
• Communication is also easier because there should be no language and cultural barriers. The company may also be able to transfer employees with a clear performance record that will provide some level of predictability.
• On the other hand, you can lose local perspective and insights that local employees can provide that may help overcome unique hurdles in each foreign office. Moreover, hiring expatriates tends to be expensive compared to hiring locally.
• Additionally, a high ratio of expatriates may create local resentment at foreign subsidiaries, which may hurt morale.
• The polycentric staffing approach heavily focuses on the norms and practices of the host company where upper management positions are typically held by corporate personnel from the local country. These managers are considered host country nationals, or HCNs. European firms often follow this approach.  
• Polycentric staffing has advantages and disadvantages. Host-country nationals will be able to better guide the company on local market conditions, politics, laws and culture at each foreign location.
• Use of local employees also sends a message to the country and its consumers that the company is willing to make a commitment to the country and its people. Local employees are also cheaper, as there are no relocation expenses and premium compensation for working abroad.
• Of course, relying on locals means there may be some disconnect in perspective and interests with the home country. Locals may put local interests above the company's broader interests.
• The geocentric staffing approach does not focus on one nationality over the other. Instead, upper level management positions are held by the most qualified employees selected form a global pool of candidates. These managers are considered third country nationals, or TCNs The most qualified candidates are selected, but no single nationality is stressed.  
• The regiocentric staffing approach, a more recently identified approach, is where upper level management positions are held by employees from a particular region (North American region, European Region, Asian region, etc.). This approach is similar to the polycentric approach, but it reflects a specific region rather than a specific country. For instance, a U.S. company in Mexico may consider hiring an employee from Canada to fill a management role.  
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