Ever since the globalization era began, companies have become more aware of the competitive environments they operate in. It is obvious that a competitive advantage such as technology, resources and quality can be imitated. It is the personnel that a company employs that makes the difference. Making the right selection and most efficient use of it will surely provide the advantage needed.
This difficult task is left in the hands of International Human Resource Management. The term IHRM refers to the development and deployment of human resource capabilities within an international framework. Companies have several techniques at their disposal when faced with staffing decisions.
The first approach is called ethnocentric. It is based on the occupation of a key position by employees from headquarters (i.e. expatriates or parent country nationals PCN). It is assumed that subsidiaries can be managed more efficiently by expatriates. This is because expatriates are more informed of the company's goals and objectives, strategies and "know how" compared to local managers.
This method is used when expanding globally and there is need of good communication, cooperation and control of activities. Consequently, PCN's are assigned to top management positions who implement strategic decisions coming from headquarters. Hence, the selection of expatriates will depend on the technical knowledge required or the type of international expansion a company is planning.
The ethnocentric approach provides the parent company with more control which is vital when expanding to a new country. Therefore, expatriates are seen as more able than host country nationals.
Unfortunately, this approach has its side-effects. For instance, host country nationals (HCN) are very restricted in their career progression since they will never occupy top management positions. In addition, the have limited autonomy and control over activities which may cause frustration and disappointment leading to labour turnover and a fall...