Question

What roles does HRM perform relative to each international business strategy of ethnocentric, geocentric and polycentric staffing models?

Answer 1

Human Resource Management in international business is far more complicated in nature than in domestic or local businesses. International business is a melting pot of innumerable cultures of diverse backgrounds and ethnicity. Hence, the staffing models need to account for such diversity in multinational corporations. In order to deal with such a staffing policy, three approaches have been devised, which are as follows:

i) Ethnocentric staffing: In the ethnocentric policy approach, the top-ranking officials or managers for their offices abroad are of the same nationality as that of the company's home country. This kind of hiring approach is adopted in order to better represent the interests of the home office and have a unified management structure and cultural approach across all offices around the globe. The flip side of such an approach is that it hinders the transfer of local knowledge to the company and may create language and cultural barriers while dealing with the local staff.

ii) Geocentric staffing: In geocentric policy approach, recruitment is done on the basis of suitably of the position without giving any importance to the person's cultural background or nationality. This ensures that the best talent is hired for the position based on their qualifications. The advantage of such a hiring policy is that it builds a talent pool for the company across borders and ensures better cultural integration.

iii) Polycentric staffing: In polycentric policy approach, all the managerial positions are recruited from people where the offices are located in. The primary advantage of such an approach is that it ensure a great understanding of the local markets when local people are managing the offices. Such approach also eliminated the lack of coordination while dealing with the local staffs and workers.