Describe about the Human Resource Management for The Domestic Issues.
The human resource management has various issues in the international business that are different from the domestic issues. This is due to the fact that international business is more complicated than the domestic business. So it becomes important to decide the more suitable staffing policy approach in the international business. There are basically three types of staffing policies in the international HRM; the ethnocentric approach, the polycentric approach and the geocentric approach.
Ethnocentric approach: Under the ethnocentric approach the home country nationals are kept at the top ranking employees while operating globally. For example in the American company that is located in Indonesia the executive positions there would be given to the Americans. Here the HR practices remain same and the same procedures that the parent company follows are followed in the host country.
Polycentric Approach: Under this approach the top positions are assigned to the workers of the home country in the headquarters or the central offices and the local workers are assigned various other positions. This policy provides different opportunities to the local people for improving their careers through promotion and other techniques.
Geocentric Approach: Under this approach the position is assigned to a person who is best suited for that position no matter what the background , culture or country origin is there of the employee. It helps in increasing the cultural knowledge of the firm about the various countries and the markets(Whitehead 2015).
There are various advantages and disadvantages of all the above mentioned approaches which have been discussed in detail below:
|
Staffing Method |
Advantages |
Disadvantages |
|
Ethnocentric Approach |
· There might be well trained and well qualified employees of the parent company that might prove a great choice for the job overseas. · It helps in transferring the culture of headquarters to foreign operations. · It is promotion and career advancement opportunity for the parent company nationals. |
· There are less chances of the host country nationals’ promotion. · The personal planning procedures under this approach are very complicated. · It may be possible that the nationals of the parent company take more time to adjust according to the culture of the host country. |
|
Polycentric Approach |
· The language barriers and the adjustment problems are eliminated with this approach · This approach is supported by the government of the host country. · There is a lot of improvement in the morale and self esteem of the local people as they have more career prospects (Mindtools 2015). |
· The career prospects get limited outside the divisions. · There might be a problem in today’s competitive world due to the shortage of experience of the local people. · It becomes difficult to coordinate the activities between the subsidiaries and the headquarters. |
|
Geocentric Approach |
· There is effective utilization of the human resources. · The tendency of the national identification of the managers gets reduced. · There is a great deal of sharing of the resources all over the company. · The informal and cultural management gets stronger. |
· There needs to be more training provided to the employees which increases the costs and is very expensive. · There is too much of documentation involved in this approach. · There is a great need of the personnel that is highly sophisticated that helps in matching the processes all over the world. |
Marks and Spencer and Coca- Cola are the two companies that follow the ethnocentric, polycentric and geocentric Approaches of staffing.
Marks and Spencer is a company that was established in the year 1884 and has grown from a single market stall to an international business. It is one of the leading retail businesses of UK. It takes all its decisions very carefully (Sharan 2008). It uses the polycentric and the geocentric approach to select its low level staff whereas it uses the ethnocentric approach for appointing the high level management people.
Ethnocentric Approach: The companies like Marks and Spencer when decide to start their operations in other countries often send their knowledgeable and skilled workers to work in the host country. As it is estimated that they have good experience about the working of the organization and the top positions shall be filled with the experience of these people. The benefit is that there is less cost involved in this approach with more experience (Mindtools 2015).
Polycentric approach: This approach cannot be followed at all the levels of hiring because this approach has its disadvantages as well (Aswathapa. 2005). The company prefer to hire its sale staff by following the polycentric approach as this requires the knowledge of the culture of the host country and the host country’s locals are the best for filling the sales position as they are very well aware of the host country culture. The benefit of this approach would be that the communication barriers would be reduced while selling the products.
Geocentric approach: The Company cannot always rely on the single approach. The company after being running smoothly decides to hire the professionals by using the geocentric approach. It helps in developing a good pool of international managers.
The second company that follows the above approaches for hiring the personnel is a very well known soft drink company named Coca-Cola (Anfuso 2000). The company was established in the year 1892. The company has been carrying on its operations in more than hundred countries presently. The staffing procedure that is followed by Coca-Cola makes it sure that the right individuals are hired to fill in the positions. The company follows the mixture of all the three approaches of staffing.
Ethnocentric approach: The Company uses the ethnocentric approach for filling the important senior management positions.
Polycentric approach: It is believed by the company that the local environment is better understood by the local people so the sales staff is normally hired by following the polycentric approach.
Geocentric approach: it also uses the geocentric approach for hiring the professional staff and sends the experts to the various countries where it decides to carry on its operations.
Outsourcing means that when any company decides to give its operations and functions to any other company. There are various reasons for choosing outsourcing as a technique for the company.
Etisalat is one of the leading telecommunication operators in UAE. The headquarters of the company is located in Abu Dhabi. The company is currently serving about 11 million customers in UAE. The company has made various improvements in its operations since it started functioning. There are advanced mobile technologies provided by the company to its customers (Mossler 2003).
Services offered by the company: Following are the services that are provided by the company to its customers:
The company decided to outsource its customer services operations in Egypt like many other companies do. The step that is initiated by the company to outsource its operations would help in saving the cost of the company for both the in-house and outsource customer service (Datamark. 2015). There are various reasons as to why the well established company like Etisalat chose Egypt for outsourcing its operations. Some of the reasons for selecting the Egypt for the outsourcing are as mentioned below:
Increase in Expertise: It is seen mostly that the outsourcing is mainly done to the staff that possess expertise so it leads to the completion of the tasks in the effective manner.
Reduction in the work load: The work load that is on the full time staff gets reduced due to the outsourcing of the operations.
Reduction in the costs involved: One of another advantage is that there is a reduction in the hiring and operational costs as if the local people will be hired than it would definitely increase the expenses on the company.
Low cost labor available: There are chances that better individuals are available in the outsourced companies than the local people and that too at a very low cost.
Sharing or mitigating of the risks involved: There is a good sharing of the risk mitigation elements by the outsourcing vendor.
Concentration on core areas: The Company can further concentrate on various other important elements rather than spending all their time in the support of the various processes which can be handled by the outsourced staff very easily.
Availability of more staff in case of urgency: In case there is a requirement of more staff at any time than it is possible that the outsourcing company can manage that by providing extra workers to the company.
Access to skilled Labor: The outsourcing vendors can have an access to the skilled resources and the training and recruiting expenses can be reduced due to outsourcing its operations.
Time Zone advantage: The advantage is the Time Zone advantage in which the company can get its work done even when it is closed in its country.
Faster and better services: There is increase in the pace of services along with good and improved quality by outsourcing the operations of the company.
Expert management and support staff: the outsourcers are basically very specialized service providers and they can attract the best managers as compared to the local staff(Tian 2016).
Quality monitoring and control: It helps in monitoring the quality of the work and taking the control measures as and when they are required.
Access to latest technology: There will be investment in the best technologies by the outsourcers. As there are various software tools available these days that includes: email, web chat, cloud based platforms , social media marketing and SMS text(Bucki 2016).
Anfuso, D 2000, workforce-cocacola, viewed 10 December 2016, <https://www.workforce.com/articles/coca-cola-s-staffing-philosophy-supports-its-global-strategy>.
Annoynomous 2015, Flatworld, viewed 10 December 2016, <https://www.flatworldsolutions.com/articles/benefits-of-outsourcing.php>.
Aswathapa. 2005, Human Resource And Personnel Management – Page 646, 4th edn, McGraw Hill., New DElhi.
Bucki, J 2016, Thebalance.com, viewed 10 December 2016, <https://www.thebalance.com/top-outsourcing-advantages-2533765>.
Datamark. 2015, DATAMARK, viewed 10 December 2016, <https://www.datamark.net/call-centers/blog/reasons-to-outsource-your-call-center/>.
Etisalat. 2015, , viewed 10 December 2016, <https://www.etisalat.ae/en/aboutus/etisalatcorporation/corporation/profile/company-profile.jsp>.
Mindtools 2015, transformational leadership, viewed 10 December 2016, <https://www.mindtools.com/pages/article/transformational-leadership.htm>.
Mossler, K 2003, The Pros and Cons of International Staffing Policies.
Sharan, V 2008, International Business 2/e , Concepts, Environment And Strategy, 2nd edn, Pearson Education, Sinagapore.
Tian, X 2016, Managing International Business in China – Page 271.
Whitehead, S 2015, panmore institute., viewed 10 December 2016, <https://panmore.com/staffing-policy-hrm-issues-in-international-business>.
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