Impact Of Ethnocentric Staffing Practice Management Essay


Over the past decades, an inconsiderable amount of research has dealt in the field of managing and reducing employee turnover in international staffing practice. In this study, which appraise staffing policies in International Human Resource and issues relating to employee turnover of local manger in subsidiaries of Multi-national Corporations. This paper evaluates series of issue encountered by the local or subsidiary manager. Hereby consider the role and patterns of international staffing model, the advantages and disadvantages of Parent country national (PCN), Host country national (HCN), retention strategies and approach used in managing avoid staff turnover. in this regard, has examined possible way-out of the present dilemma encountered by the local or subsidiaries mangers and the way forward but might vary in different sectors and culture of a country or probable the culture of the Multi-National Corporation.

Function and Pattern of International Staffing Model

There are different reasons for international staff transfer which can be as a result of control, co-ordination, developing management, unskilled local personnel and organization development. Which will lead to the increase of company’s potential to succeed and compete in the international market (Edstrom and Galbraith, 1977; Harzing, 2001). However, Scholars have also pointed out that the success of knowledge sharing through international transfers is not automatic but rather depends on social processes. In recent it has been pointed out that key rationale for staff transfer is due to the transfer of advance and technical knowledge (Bonache et al., 2001; Hocking et al., 2004).

However, staff transfer is a two- sided magnitude, which is between the Head quarter and the subsidiaries and it also involve the process comprises parent-country nationals (PCNs), host-country nationals (HCNs) and third-country nationals (TCNs) (Harzing, 2001; Welch, 2003). In this regard, Head quarters organization that are sent to HCNs and TCNs they are commonly referred to as Expatriates and vice versa for the inpatriates.

Perlmutter and Heenan (1969; 1979) identified four different international staffing policies

(ethnocentric, polycentric, geocentric and regiocentric). MNCs following an ethnocentric staffing policy would appoint mostly parent country nationals to top positions at their subsidiaries, while MNCs following a polycentric staffing policy would prefer to appoint host country nationals (HCNs). Organisation with a geocentric staffing policy might simply pick the best person, regardless of his/her nationality and that could include third country nationals (TCNs), nationals of a country other than the MNC’s home country and the country of the subsidiary.

The Head quarter-centric nature of the staffing policies has been criticised by Novicevic and Harvey.H (2001) introduced a pluralistic orientation that enable a multiple, diverse and possibly competition which subsidiaries are given more orientations of subsidiary staffing that independent operation within the MNC context. The pluralistic orientation also brought about an alternative concept and a harmony orientation toward international staffing. Thereby indicated a tranquillity between subsidiaries and the Head quarters which is as result of integrative aspect.

Pro and Cons of PCNs, HCNs or TCNs

These are some of the advantages and disadvantages of employing these different groups of employees. It is shown that none of the options is without its disadvantages whereby will focus on some of the most frequently mentioned advantages and disadvantages (Negandhi, 1987; Phatak, 1989; Dowling, Festing, & Engle, 2008) are summarized as follows. In Table 7.1 below

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Source: Harzing and Reiche 2009.

Influences on Subsidiary Staff Turnover

Sebastian .R, (2007). Classified two major factors that lead to subsidiary staff turnover which is as a result of the effect of international staffing practices. He then conceptualise it has perceived career advancement opportunities and their organizational identification. Figure 1 shows the integration of all variables in a framework due to the effect of international staffing practices on subsidiary staff retention.

Career Opportunities of Subsidiaries Staff

These involves situation where the organisation seems to make global exposure and career advancement as part of the employment contract with the local national, but the organisation at the end of the day fail to fulfil their promise and with the design of international staffing practices that has an effect on subsidiary staff’s career perspective and also leads to employee turnover .which aligns with (Griffeth et al., 2000; Hom and Griffeth, 1995) turnover studies and (Birdseye and Hill, 1995; Feldman and Thomas, 1992; Naumann, 1992) expatriate turnover research. Recent literature has focused on the view that a huge number of foreign expatriates distorted HCNs’ career advancement opportunities and create sizeable income and status disparities, leading to frustration and dissatisfaction among locals. In regards, the ethnocentric staffing practices which is a one-sided approach that restrict career advancement of local staff to a mere lower manger position. Sebastian Reiche (2007).

Organizational Identification of Subsidiaries

This involves situation whereby the international staffing practices affects the subsidiary staff in relation to the identity of their organization (Dutton et al., (1994) The degree at which a member defines himself by the same feature that he or she believes defines the organization. This has been shown to exert a negative effect on turnover intentions (Koh and Goh, 1995; Van Dick et al., 2004).

The fulfilment of career aspirations is considered to serve as a key antecedent of organizational identification (Brown, 1969; Reade, 2001). In an organization which consist multiple relationship, each with unique set of values and objective operating from different sources of membership and identification, sustains the notion that individuals’ experience multiple commitments or identifications (March and Simon, 1958; Reichers, 1985).

The polycentric staffing practices mainly shows identification with the local unit. At the same time, might be identified with the global company and it more difficult to promote. As Lawler (1992) notes, identification tends to be more significant with regard to association in contrast to larger organisation and also in the case of a geocentric orientation international career progression may only involve a very small fraction of HCNs.

Finally, (Novicevic and Harvey, 2001) pluralistic orientation to international staffing serves as an additional source of identification of a harmonizing approach helps to constitute respective Head quarters policies and practices within it subsidiary which, in turn, facilitates HCNs’ approval and thus enhances their identification.

International Staffing-Related Retention Strategies

The staffing retention strategies are of two dimensions namely subsidiary management. Which will help minimize staff turnover in the subsidiaries such as managing subsidiaries through local staff and the expatriation of local staff may help to retain employees in MNCs’ worldwide operations. Hereby the strategies for the suitable scenario.

Subsidiary Management Through Local Staff

This involves pluralistic and harmony approach to international staffing that help to reconcile individual and organizational career plans, thereby tying individuals’ career commitment to the company and hence fostering long-term membership.

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Global assignments of PCNs which is to be maintained effectively by socializing. This becomes an essential instrument for clearing out dispute between local and foreign personnel (Lueke and Svyantek, 2000).

Also strategy challenges the preservation of MNC cohesion. There should be regular regional meetings as well as close communication and exchange of knowledge serve between local personnel to the Head quarter. As important measures to align HCNs to the overall corporate values that may foster locals’ identification with the global organization.

Expatriation and Impatriation of Local Staff

This involves establishment of a centralized and comprehensive schedule of all managerial employees, regardless of nationality, for those are readily available for international assignments. But along the line there might be a slight problem to the local staff loss of autonomy. (Kopp,1994). The central record of corporate talent has to be complemented by a regionally administered register of lower-level managers suitable for intra-regional transfers.

In the case of re-entry problem are associated with threat of turnover. Therefore, it can be effectively managed by establishing new repatriation policies and career projection from

onset, thereby indicating long term commitment to the respective individuals and thus enhancing their organizational identification (Gregersen and Black, 1992; Stroh, 1995).

Thus, provision made for international assignments for HCNs involves the concept inpatriation, entails the transfer of subsidiary manager to the Head quarter on a temporary to permanent basis (Harvey and Buckley, 1997; Harvey et al., 2000), that make the manger understand the culture of the Head quarter and build a network which will enhance reduction in employee turnover in MNC subsidiaries by feeling appreciated and fulfilled to an extend on foreign exposure. It also shows an appropriate mechanism to foster international assignments for local staff and to achieve the conflicting aim of share of foreign expatriates through a localization strategy.

The term inpatriation will be more productive in subsidiaries developing countries that exhibit institutional distance cultural difference. Contrarily PCNs are still to be expatriated, but mainly to countries where adjustment problems are less critical (Harvey et al., 2000).

Inpatriation is also important in the transfer of tactic knowledge from the subsidiaries to the Head quarter and it a plus on the parent company manager exposing them to an international perspective. for example in the case of use of inpatriates, especially in European and US multinationals, will increase in the future (see Box 7.2).

The above box illustrate the envisage population rate of inpatriate between European companies and US companies which might increase to this point in the nearest future.

Managing and Strategies for Prevent Manager Turnover

Maertz and Campion, (1998) explains that an organization manages to avoid turnover or not will be based on the availability of internal retention incentives and how well organization and appropriate the organisation can make it applicable to them.

This classification of retention practices is due to the HR policies that result into various outcomes in terms of organisational advancement employee perceived behaviour and exhibit synergies. Delery and Doty, (1996).

At this point, which deduce a typology of available HR practices that possess retention capacity. HR practices either have the capacity to control turnover on a short-term and responsive basis nature. Relational employment contract that will increase career development and job enrichment may be effective practices to keep core employees. While transactional relationships in short-term retention needs can be achieved through adequate remuneration, control and overseeing. Sebastian. R,(2008).

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Classification of Retention Practices

Source: Sebastian Reiche 2008.

The table above highlight four unique types of retention practices (see Table. 1 above), which is framed following difference between responsive versus preventive practices and practices in transactional versus relational employment relationships.

Responsive retention practices in transactional employment relationships

Transactional employment relationships are due to majorly time frame to respond and the scope of the retention needs are necessarily limited. It policies is in relation to pay and incentives which will help retain managers in HCN. Shaw et al., (1998).

Responsive retention practices in relational employment relationships

Relational employment contracts will include long term benefit for managers that are productive. For example

Preventive retention practices in transactional employment relationships

This is deals with managers that have been fulfilled, motivated, job satisfaction.

Thus, entails assigning supervisory role to such managers and in order to retain them managing employee’s job expectations right from the beginning. Cappelli, (2000); Glisson and Durick, (1988).

Preventive retention practices in relational employment relationships

This involves equality of the highest order, treating the PCNs, HCNs or TCNs managers equally, in fairness, procedural justice and transparency. Bloom and Michel, (2002); Shaw, Delery, Jenkins, & Gupta (1998) J.D. Shaw, J.E. Delery, G.D. Jenkins and N. Gupta, An organization-level analysis of voluntary and involuntary turnover, Academy of Management Journal 41 (5) (1998), pp. 511-525. Full Text via CrossRef | View Record in Scopus | Cited By in Scopus (120)Shaw et al., (1998).


This write up briefly emphasize the main characteristics of international staffing practices of IHRM. This provides an analysis of the various staffing policies, with a focus on the effect of the one-sided effect (ethnocentric staffing) and the deficit effect on the local subsidiaries, dealt with specific influence leading to staff turnover for local managers and also considered the advantages and the disadvantages of using the staffing model. Identifying the effect of international staffing practices on local staff turnover and ways to manage such turnover in order to retain also put into consideration mechanism put in place to reduce turnover and retain subsidiary staff and the management of such turnover.

However, local staff are usually the progenitor of tactic knowledge which is the key knowledge and also the linking source towards good social network which is evidence show in scholars research. Sebastian. R, (2007).

Therefore, this is an opportunity develop the capability of major local employee over a long period, improve their career and making them feel identified with the company because they serve as mechanism of gaining a competitive edge. A number of subsidiaries are fruitful and Multi- National Corporations are moving in that line for further investment. However, international staffing practice may take exception and might involve different structure, process and also different countries culture. (Porter, 1990 )

At this point, will say international organisation or Multi-National Corporation can adopt the pluralistic view and still need to enforce more attention in the management of the local managers.

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