4. The use of third-country nationals (TCNs) provides a number of advantages. Which of the following is NOT one of these advantages? Show
Answer: d. They have an adequate knowledge of home office goals and procedures 5. In international human resource management, communication in polycentric organisations is:
Answer: b. Little among subsidiaries and little between the subsidiaries and headquarters 6. In international human resource management, communication in regio-centric organisations is:
Answer: d. Little between the subsidiaries and headquarters, medium to high among subsidiaries in regions 7. Which of the following factors is NOT related directly to the success of expatriate assignments?
Answer: d. The nature of products produced by the company 8. Which of the following is NOT an advantage of a geocentric approach to staffing for international businesses?
Answer: c. It is inexpensive to implement 9. In international human resource management, communication in ethnocentric organisations is:
Answer: c. From headquarters to local subsidiaries 10. Which of the following perspectives views the exchanges of resources between an organisation and its constituencies as the main feature of the relationship? Your company, Fish to Go, is a quick service restaurant specializing in fish tacos. Your success in the United States has been excellent, and your company has decided to develop an international strategy to further develop your market share. As the vice president for human resources, you have been asked to develop an international staffing strategy. The organization has decided that it makes the most sense to hire host-country nationals to manage the restaurants. Your current Fish to Go managers earn upwards of $45,000 per year, plus 2 percent profit sharing. The organization is also looking to you to determine and develop a comprehensive training program for your host-country managers. A training program is also needed for employees, but you have decided to wait and develop this with input from the host-country managers. Fish to Go has identified Mexico and the UK as the first two countries that will be entered. Perform the necessary research to prepare a PowerPoint presentation to the board of directors. One of the major decisions for HRM when a company decides to operate overseas is how the overseas operation will be staffed. This is the focus of this section. Types of Staffing StrategyThere are three main staffing strategies a company can implement when entering an overseas market, with each having its advantages and disadvantages. The first strategy is a home-country national strategy. This staffing strategy uses employees from the home country to live and work in the country. These individuals are called expatriates. The second staffing strategy is a host-country national strategy, which means to employ people who were born in the country in which the business is operating. Finally, a third-country national strategy means to employee people from an entirely different country from the home country and host country. lists advantages and disadvantages of each type of staffing strategy. Whichever strategy is chosen, communication with the home office and strategic alignment with overseas operations need to occur for a successful venture. Table 14.4 Advantages and Disadvantages of the Three Staffing Strategies Home-Country NationalHost-Country NationalThird-Country NationalAdvantagesGreater control of organizationLanguage barrier is eliminatedThe third-country national may be better equipped to bring the international perspective to the businessManagers gain experience in local marketsPossible better understanding of local rules and lawsCosts associated with hiring such as visas may be less expensive than with home-country nationalsPossible greater understanding and implementation of business strategyHiring costs such as visas are eliminatedCultural understandingMorale builder for employees of host countryDisadvantagesAdapting to foreign environment may be difficult for manager and family, and result in less productivityHost-country manager may not understand business objectives as well without proper trainingMust consider traditional national hostilitiesExpatriate may not have cultural sensitivityMay create a perception of “us” versus “them”The host government and/or local business may resent hiring a third-country nationalLanguage barriersCan affect motivation of local workersCost of visa and hiring factorsHuman Resource RecallCompare and contrast a home-country versus a host-country staffing strategy. ExpatriatesAccording to Simcha Ronen, a researcher on international assignments, there are five categories that determine expatriate success. They include job factors, relational dimensions, motivational state, family situation, and language skills. The likelihood the assignment will be a success depends on the attributes listed in . As a result, the appropriate selection process and training can prevent some of these failings. Family stress, cultural inflexibility, emotional immaturity, too much responsibility, and longer work hours (which draw the expatriate away from family, who could also be experiencing culture shock) are some of the reasons cited for expatriate failure. Table 14.5 Categories of Expatriate Success Predictors with Examples Job FactorsRelational DimensionsMotivational StateFamily SituationLanguage SkillsTechnical skillsTolerance for ambiguityBelief in the missionWillingness of spouse to live abroadHost-country languageFamiliarity with host country and headquarters operationsBehavioral flexibilityCongruence with career pathAdaptive and supportive spouseNonverbal communicationManagerial skillsNonjudgmentalismInterest in overseas experienceStable marriageAdministrative competenceCultural empathy and low ethnocentrismInterest in specific host-country cultureInterpersonal skillsWillingness to acquire new patterns of behavior and attitudesSource: Adapted from Simcha Ronen, Training the International Assignee (San Francisco: Jossey-Bass, 1989), 426–40. Most expatriates go through four phases of adjustment when they move overseas for an assignment. They include elation/honeymoon, resistance, adaption, and biculturalism. In the elation phase, the employee is excited about the new surroundings and finds the culture exotic and stimulating. In the resistance phase, the employee may start to make frequent comparisons between home and host country and may seek out reminders of home. Frustration may occur because of everyday living, such as language and cultural differences. During the adaptation phase, the employee gains language skills and starts to adjust to life overseas. Sometimes during this phase, expatriates may even tend to reject their own culture. In this phase, the expatriate is embracing life overseas. In the last phase, biculturalism, the expatriate embraces the new culture and begins to appreciate his old life at home equally as much as his new life overseas. Many of the problems associated with expatriate failures, such as family life and cultural stress, have diminished. Figure 14.2 Phases of Expatriate Adjustment Host-Country NationalThe advantage, as shown in , of hiring a host-country national can be an important consideration when designing the staffing strategy. First, it is less costly in both moving expenses and training to hire a local person. Some of the less obvious expenses, however, may be the fact that a host-country national may be more productive from the start, as he or she does not have many of the cultural challenges associated with an overseas assignment. The host-country national already knows the culture and laws, for example. In Russia, 42 percent of respondents in an expatriate survey said that companies operating there are starting to replace expatriates with local specialists. In fact, many of the respondents want the Russian government to limit the number of expatriates working for a company to 10 percent1. When globalization first occurred, it was more likely that expatriates would be sent to host countries, but in 2011, many global companies are comfortable that the skills, knowledge, and abilities of managers exist in the countries in which they operate, making the hiring of a host-country national a favorable choice. Also important are the connections the host-country nationals may have. For example, Shiv Argawal, CEO of ABC Consultants in India, says, “An Indian CEO helps influence policy and regulations in the host country, and this is the factor that would make a global company consider hiring local talent as opposed to foreign talent” (Rajagorpal, 2011). Third-Country NationalsOne of the best examples of third-country nationals is the US military. The US military has more than seventy thousand third-country nationals working for the military in places such as Iraq and Afghanistan. For example, a recruitment firm hired by the US military called Meridian Services Agency recruits hairstylists, construction workers, and electricians from all over the world to fill positions on military bases (Stillman, 2011). Most companies who utilize third-country national labor are not new to multinational businesses. The majority of companies who use third-country national staffing have many operations already overseas. One example is a multinational company based in the United States that also has operations in Spain and transfers a Spanish manager to set up new operations in Argentina. This would be opposed to the company in the United States sending an American (expatriate) manager to Argentina. In this case, the third-country national approach might be the better approach because of the language aspect (both Spain and Argentina speak Spanish), which can create fewer costs in the long run. In fact, many American companies are seeing the value in hiring third-country nationals for overseas assignments. In an International Assignments Survey2, 61 percent of United States–based companies surveyed increased the use of third-country nationals by 61 percent, and of that number, 35 percent have increased the use of third-country nationals to 50 percent of their workforce. The main reason why companies use third-country nationals as a staffing strategy is the ability of a candidate to represent the company’s interests and transfer corporate technology and competencies. Sometimes the best person to do this isn’t based in the United States or in the host country. Key Takeaways
Exercises
1“Russia Starts to Abolish Expat jobs,” Expat Daily, April 27, 2011, accessed August 11, 2011, http://www.expat-daily.com/news/russia-starts-to-abolish-expat-jobs/. 2“More Third Country Nationals Being Used,” n.d., SHRM India, accessed August 11, 2011, http://www.shrmindia.org/more-third-country-nationals-being-used. ReferencesRajagorpal, D., and MC Govardhanna Rangan, “Global Firms Prefer Local Executives to Expats to Run Indian Operation,” Economic Times, April 20, 2011, accessed September 15, 2011, http://articles.economictimes.indiatimes.com/2011-04-20/news/29450955_1_global-firms-joint-ventures-investment-banking. Stillman, S., “The Invisible Army,” New Yorker, June 6, 2011, accessed August 11, 2011, http://www.newyorker.com/reporting/2011/06/06/110606fa_fact_stillman. What is a home country national?Parent Country National or Home Country National– Permanent resident of the country where the firm is headquartered. Host Country National – Permanent resident of the country where the operations of the company are located.
What is an advantage of hiring host country nationals as local managers?In a HOST-COUNTRY STRATEGY, workers are employed within that country to manage the operations of the business. Visas and language barriers are advantages of this type of hiring strategy.
What is the other term for home country nationals?Home country nationals are also known as parent country nationals. They are citizens of the country in which the multinational company has its headquarters (so an American working for OM's subsidiary in China is a home-country national, as well as an expat).
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Which of the following is an advantage of the home-country national strategy?
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