International Recruitement Approaches
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The document discusses different approaches that multinational companies (MNCs) use for international recruitment. It describes four main approaches: ethnocentric, polycentric, region-centric, and geocentric. The ethnocentric approach involves recruiting from the parent country. The polycentric approach focuses on recruiting locally from host countries. The region-centric approach recruits from the region where subsidiaries are located. Finally, the geocentric approach recruits the most suitable candidates globally regardless of nationality. The document provides details on when each approach may be preferred.
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International Recruitement Approaches
- 1. International Recruitment -Prof. Nishikant C. Warbhuwan Research Scholar, S.R.T.M. University Nanded, S.R.T.M. University, Sub centre, Latur, India. Email: nishikant.warbhuwan@srtmun.ac.in
- 2. International Recruitment While recruiting people for international operations, the international HR managers must identify the global competitiveness of the potential applicants at the time of the recruiting process. Approaches to Recruitment in IHRM Though the general aim of any recruitment policy is to select the right people for the right task at the right time, the HR department of international companies may adopt one of the following three specific approaches available for recruiting employees for global operations. nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 3. International Recruitment Approaches /Sources 1. Ethnocentric Approach 2. Polycentric Approach 3. Region-centric Approach 4. Geocentric Approach nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 4. 1. Ethnocentric Approach Under this approach MNC’s at their headquarters formulate mission, objectives, important decisions for the subsidiaries and expect the subsidiaries to implement them and report back to all functional managers at headquarters level Therefore it sources HR for subsidiaries from its own countries or the country where headquarters are situated When a company follows the strategy of choosing only from the citizens of the parent country to work in host nations, it is called anethnocentric approach. Normally, higher- level foreign positions are filled with expatriate employees from the parent country. The general rationale behind the ethnocentric approach is that the staff from the parent country would represent the interests of the headquarters effectively and link well with the parent country. nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 5. 1. Ethnocentric Approach Ex- Procter & Gamble, Philips, Samsung Philips filled important vacancies by Dutch nationals before 1990s as it was a Dutch Company In 1996, 71% of subsidiaries of Japanese MNC’s were headed by Japanese nationals Toyota, Samsung follow this approach even today Why do MNC’s Prefer Ethnocentric Approach : 1. Non availability of qualified HR in Host country 2. High cost of host country nationals 3. Parent country nationals when work in foreign they are more committed 4. Parent country nationals when work in foreign shows highest belongingness nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 7. 1. Ethnocentric Approach When Should MNC’s Prefer Parent Country Nationals: 1. During early stage of establishment of subsidiary 2. Inadequacy of managerial and technical skills in host country 3. Grater need for maintaining close communication and coordination with headquarters 4. . Grater need for maintaining uniform corporate culture 5. When the headquarters has core competencies 6. when home country nationals are less costly than HCN nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 8. 1. Ethnocentric Approach Advantages: 1. Parent country nationals are familiar with headquarters, policies, systems 2. maintain close communication network 3. maintain close coordination Disadvantages: 1. reduction in catching opportunities for host country 2. Decline in morale 3. Fails to get talent worldwide Cross cultural management nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 9. 2. Polycentric Approach MNCs under this approach treats each subsidiary as an independent company and decentralizes almost all the operations and delegates decision making authority to its executives These executives formulate the strategies based on the mission and vision of subsidiary, design product based on host country's environment MNC sources perspective employees including senior managers for the subsidiary from the host country nationals or local nationals When a company adopts the strategy of limiting recruitment to the nationals of the host country (local people), it is called a polycentric approach Ex- Coca Cola nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 11. 2. Polycentric Approach Why do MNC’s Prefer Polycentric Approach Policy of developing HCN’s Social Responsibility High cost of Expatriates Cultural fit for MNCs Global Approach of MNCs nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 12. 2. Polycentric Approach When Should MNC’s Prefer Host Country Nationals During Growth Stage of subsidiary HR of Host Country is developed and fully qualified Distinctive in way of serving customers and mode business Cost of expatriates is High Host govt. conditions When Head quarters do not have any competency nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 13. 2. Polycentric Approach Advantages Less Cost of HR Cultural fit Employee retention Employee job satisfaction Appreciation by people nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 14. 2. Polycentric Approach Disadvantages Coordination becomes complex Less promotional opportunities No hands on experience both in head quarters and subsidiaries Limits mobility Different cultures at head quarters and subsidiaries nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 15. 3. Region centric Approach MNCs after operating successfully in a foreign country, think of exporting to the neighboring countries of the host country Ex- Hindustan Lever exports to Sri Lanka, Nepal, Bangladesh At this stage foreign subsidiary considers the regional environment (Asian or European) for formulating common strategies like pricing for that region Similarly MNCs sources the prospective employees within the region in which subsidiary is located Ex- Bata (India) Ltd sources its employees from south east Asian regions Ex- LG sources its employees from Asian regions nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 16. 3. Region centric Approach Why do MNC’s Prefer Region centric Approach : Non availability of qualified personnel from host country Neighboring nationals possess more similar cultural values availability of qualified personnel at neighboring countries at low cost nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 17. 3. Region centric Approach When Should MNC’s Prefer Region centric Approach : During transition between growth and maturity stages When subsidiaries expand operations in neighboring countries Inadequacy of managerial & technical skills host country nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 18. 3. Region centric Approach Advantages: Culture fit Comparatively less HR Cost Meets expansion needs of HR Perform better in neighboring countries nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 19. 4. Geocentric Approach/ Global Approach Under this approach the entire world is just like a single country for MNCs They source all kinds of resources from all countries of world Each subsidiary functions independently and autonomously MNCs source for the best prospective employees in terms of suitability from entire world When a company adopts the strategy of recruiting the most suitable persons for the positions available in it, irrespective of their nationalities, it is called a geocentric approach. Ex – Ms. Indra Nooyi, the Indian national appointed as a CEO of Pepsi Cola Ltd, Many European MNCs follow this approach nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 21. 4. Geocentric Approach/ Global Approach Why do MNCs prefer Geocentric Approach Global Business Policy Intensifying Competition Technological Revolution Innovative Practices in Functional Areas Increasing Migration nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 22. 4. Geocentric Approach/ Global Approach When Should MNCs prefer Geocentric Approach Maturity Stage Customer Awareness Non availability of Talent in Home and Host Country Absence of Restrictions of Host Government nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in
- 23. 4. Geocentric Approach/ Global Approach Advatages Competent Pool Shared Learning Core Competencies Flexibility and Adaptability Reduction in Resentment Best Talent at Less Cost Transpatriates nishikant.warbhuwan@srtmun.ac.in nishikant.warbhuwan@srtmun.ac.in