Once an organizational structure has been constructed, management must fill the various positions of the organizational chart with the appropriate people. Staffing is the process of attracting and selecting job candidates and placing them in positions.
As we have seen, the staffing process begins with a review of the firm's human resource requirements. This review is essentially a headquarters activity. Subsidiaries are surveyed about their human resource needs, but ultimately the headquarters staff has the responsibility of putting it all together. Subsidiaries are brought into the staffing process as the specifics of job analysis, job design, work schedules, and career management are further scrutinized. The ultimate objective is, of course, a perfect match between job requirements and applicants.
Recruiting is the process of identifying people who will fit the requirements of a job. The first step in the recruiting process is job analysis and design identifying the nature of the job and the factors crucial to success. Hays classifies overseas jobs into four major categories: 1
Category 1: Chief executive officer (CEO), whose responsibility is to oversee and direct the entire operation
Category 2: Structure reproducer or functional head (FH), whose job is to establish functional departments in a foreign affiliate
Category 3: Troubleshooter (TS), whose function is to analyze and solve specific cooperational problems
Category 4: Element or rank-and-file members (operative).
Unfortunately, there is no general consensus on the variables that contribute to the success or failure of an executive's operations abroad. Some studies identify technical competence as the universal characteristic of a promising manager; others emphasize personality traits, such as the ability to adapt to cultural differences. An IBM World Trade study summarized the necessary qualities of successful executives as follows: 2
(1) Self-confidence to manage change
(2) Organization to think clearly
(3) High activity or energy level
(4) Ability to influence or persuade
(5) Communication abilities
(6) Interpersonal sensitivity, ability to develop the confidence of subordinates while exercising authority
The survey results in Figure 15.2 show that the characteristics MNC personnel managers look for in job applicants are different for each of the four major job categories. Attributes like "adaptability, flexibility in new environment" and "communicative ability" are more frequently considered "very important" for jobs that require extensive contact with the local community (for example, CEO and FH) than for technical or short-term jobs.
Once the jobs have been analyzed and the qualities desired in an applicant have been pinpointed, the human resource manager can begin to assemble a pool of candidates. At this point, the MNC must decide on the "mix" it wishes to achieve in its management team. In other words, the company must decide whether it should staff key management positions with individuals from the home country, host-country nationals, or some combination of the two.
The choice of the nationality of the management team is a function of both the host country's and the MNC's policies. Some countries, such as the United States, are fairly liberal in their immigration, naturalization, and employment laws. Other countries maintain some rudimentary restrictions. The United Kingdom, for example, stamps on the passport of every new arrival that employment is prohibited. Still other countries are more restrictive, requiring, for example, that the head of a subsidiary of a foreign enterprise be a citizen of the host country. Canada, Mexico, the USSR, and most developing countries fall into the latter category.
There are basically four different philosophies with respect to staffing overseas subsidiaries:
(1) The ethnocentric view is that the primary positions in the subsidiary should be held by citizens of the parent (home) country.
(2) The polycentric view is that the primary positions in the subsidiary should be filled by nationals (of the host country).
(3) The regiocentric view is that the primary positions in the subsidiary should be staffed by regional citizens.
(4) The geocentric view is that competence rather than nationality should be the determining factor in staffing subsidiary positions. 3
SOURCE: Rosalie L. Tung, "Selection and Training for Overseas ASSignments , " Columbia Journal of World Business, Spring 1 981 . Reprinted in Phillip D. Grub, F. G hadar, and D. Khambata (eds.), The Multinational Enterprise in Transition (Princeton , NJ: The Darwin Press, 1 986) , 221 . Reprinted with permission.
Most personnel managers would like to follow an ethnocentric policy, employing home-country nationals (expatriates) to manage foreign subsidiaries. The reason, of course, is that both the personnel managers (who are charged with selection) and the line executives (who will work with and supervise the new managers) are better able to judge the technical, human, and conceptual skills of the home-country recruits, since they are familiar with the educational institutions and the culture that formed them. Often the expatriate has had experience with the company's philosophy and procedures, in which case there may be no need for job-related training.
The rate of failure experienced by expatriates, however, is high. International business literature is filled with accounts of problems experienced by MNCs that staffed their affiliates with expatriates. This failure is often attributable to the expatriate's inability to adapt to the local culture. In addition, expatriate MNC managers have been the focus of attacks by nationalistic governments.
To minimize personnel problems and to shed their "foreign" image, some companies employ host-country nationals. This type of personnel policy can protect the MNC from hostile treatment by the government. More important, of course, is the fact that the host-country national brings to the job a knowledge of the local market, people, and government policies.
Recently more MNCs have been taking a geocentric approach-hiring third country nationals. A number of large MNCs use these "world professionals," or "international grade executives," extensively. For example, almost every major bank has some Dutch or Swiss personnel.
MNCs tend to move gradually toward internationalization in their staffing policies. Most MNCs will start their experience in a given country by transferring parent-country nationals to the foreign country. As the firm gains experience and becomes known in the country, it may begin to staff its positions with host-country nationals. Finally, as the firm's experience and presence in the world market widen, it may begin to adopt a more geocentric policy, staffing its operations with a mixture of nationalities. This evolutionary geocentrism is not confined to the staffing of foreign affiliates. Some MNCs (the more progressive ones) adopt the same hiring and staffing policies for the headquarters as well. Figure 15.3.
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