 |
|
Choosing Host-Countries for Subsidiary/Headquarter Transfers
|
 |
Contents
1. Abstract
2. Introduction
3. Theoretical assumptions of selecting host-countries nationals
4. The peculiarities of the process of selecting host-countries
nationals
5. Conclusion
6. Bibliography
Abstract
The paper discusses the problem of selecting of host-countries
nationals for local subsidiaries and for transfers to headquarters.
In the first part of the paper the theoretical aspects of
the problem are discussed, namely the conditions of selecting
personnel in international arena, widely spread approaches
to the process are critically discussed and both advantages
and disadvantages are analyzed. In the second part of the
paper the practical side of the problem is emphasized, namely
the main steps of the selection process are critically evaluated.
Introduction
The contemporary economy forces many companies to change
the traditional ways of business and overcome existing stereotypes.
One of the reasons is the process of globalization that leads
to the internalization of economy and consequently leads to
the development of companies on the international basis.
Obviously for many companies it is a very difficult process
which engenders a number of problems but in the situation
when the international success of the company predetermine
the general positive development than such company have little
to choose from. This is why they have to solve such problems
as the promotion in foreign markets, which are often new for
companies, adoption of companies’ services or products
to the local markets, etc. But one of the main and first problems
is the problem of the selecting and recruiting of host-country
nationals for local subsidiaries and for transfers to headquarters.
Theoretical assumptions of selecting host-countries nationals
Naturally international business is a very complicated phenomenon
and it is particularly important to be very careful in choosing
employees when the company works in different countries of
the world. Traditionally it is highly recommended to pay a
particular attention to local conditions and not only economic
but cultural as well because culture is also of a paramount
importance for business success. For instance, Czincota defines
culture as “an integrated system of learned behavior
patterns that are the characteristics of all the members of
any given society” (1996, p.298). it is obvious that
the knowledge of society is absolutely essential for any company
that is operating in a definite market while culture is a
part of any society.
As a result, when the company is entering a new market in
a new country its managers and administration has clearly
understand the cultural specificity of the country or the
region since cultural differences may be absolutely contradictive
to each other even in neighboring countries. In fact there
have been developed several models explaining the difference
between cultures and their influence on business and one of
the most efficient is considered to be the model developed
by Sheth and Sethi, which has been developed on the premise
that “international business activity should be seen
as innovation and producing change within the organization,
both in the parent organization, the host country operations
and in the people within the organization” (1977, p.233).
According to this model, the change is determined by three
factors: the dominant cultural lifestyle of individuals in
the organization; change agents and strategic opinion leaders,
both institutions and individuals; and communication of innovation
whether this is from commercial organizations, government
or social interactions.
The researches of Hofstede seem to be worthy of a particular
attention since he attempts to define four factors that influences
the understanding of the local market and should be taken
into consideration when selecting employees for local subsidiaries.
He singles out four dimensions of culture differences: power
distance (the degree to which individuals within a society
accept differences in the distribution of power as reasonable
and normal, for instance the extent to which an unequal distribution
of power in society is accepted as legitimate); uncertainty
avoidance (the extent to which the members of a society feel
uncomfortable with and try to avoid the situations which they
perceive as unstructured, unclear or unpredictable, for instance
the degree to which society is threatened by uncertain situations);
individualism-collectivism (the extent to which individuals
concern themselves with their own interests and those of their
immediate families as opposed to the interests of a larger
group, for instance the loose- or tight-knit nature of society);
and finally masculinity-femininity (the extent to which a
society emphasizes traditional male values such as assertiveness,
competitiveness and material success rather than traditional
female values such as passivity, cooperation and feelings,
for instance dominance and submission) (Hofstede, 1986).
These four dimensions of culture are particularly important
and the company should take them into account because for
instance in western countries there is not so strong masculinity-femininity
difference as it is in eastern countries where the society
is as a rule has a well-structured gender hierarchy. Practically
the same may be said about individualism-collectivism because
oriental cultures always tend to collectivism while in the
west individualistic values have always been the priority.
So, these are basically the factors which influences the company’s
selecting policy and now it is necessary to dwell upon basic
approaches that are used by different companies on the basis
of these factors.
Basically there may be singled out several main approaches,
which are used by companies while selecting host-countries
nationals for subsidiaries or for transfers to headquarters.
One of the most efficient is polycentric approach, which “uses
natives of the host countries of a business to manage operations
within that country and natives of the parent country to manage
at headquarters” (Schroeder 1993, p.197). In such a
situation the managers of the host country rarely advance
to corporate headquarters because natives of the parent country
are proffered as managers of that level.
This approach has a number of advantages since locals manage
in the countries for which they are best prepared and it is
also cheaper for companies since locals, who requires few
incentives, are readily available and less expansive to hire.
This approach is particularly helpful in politically sensitive
situations because the managers are culturally sensitive locals,
not foreigners.
However, this approach has a number of disadvantages as well.
For instance there remain a cultural gap between subsidiaries
managers and headquarter managers that limits that opportunities
for advancement since “natives of the host countries
can only advance within their subsidiaries, and parent country
natives can only advance within the company headquarters”
(Womack 1990, p.245). As a result, the company decision makers
can have little or even not international experience but still
their decisions have a major effect on the subsidiaries.
The peculiarities of the process of selecting host-countries
nationals
Generally speaking it should be pointed out that nowadays
many companies prefer to higher host-countries nationals but
it is obvious that before taking such a decision it is necessary
to carefully and critically analyze the situation. As any
other selecting process the selecting of host-countries nationals
has its own advantages as well as disadvantages, which would
be discussed in this chapter.
First of all, speaking about the advantages it should be pointed
out that language barriers are eliminated. Furthermore, the
familiarity with socio-political, economic and legal environment
and with business practices in the host country is provided.
At the same time, hiring costs are reduced and no work permit
are required. Using host-countries nationals also provides
opportunities for advancement and promotion for local nationals,
and consequently, increases their commitment and motivation.
Finally, continuity of management increases since host-country
nationals stay longer.
As for disadvantages, difficulties in exercising effective
control over the subsidiary’s operation can appear.
Furthermore, still there may remain difficulties in communication
with home office personnel. And finally, as a rule there is
lack of opportunities for host-countries nationals to gain
international and cross-cultural experience.
Nonetheless, the employment of host-countries nationals is
quite popular and efficient nowadays. Naturally, on analyzing
the theoretical aspects, it would be logical to analyze in
details the main practical steps of this process.
Basically there may be singled out several steps: 1) determining
staffing needs, 2) recruiting potential employees, 3) selecting
qualified employees, 4) training and development of employees.
The first step, determining staffing needs, is the basis for
selecting process, since initially it is necessary to define
what specialists are needed, including both professional and
personal characteristics, and where the knowledge and experience
will be used as well as it is necessary to know the types
and number of employees needed. In such a situation “through
selection or hiring and reduction or terminating process,
companies balance the demand foe and supply of employees”
(Hendry 1992, p.210). Once the company assess its overall
staffing needs, managers begin to fill individual jobs. When
the information about the employee’s educational level,
personal characteristic and similar information is gathered,
specific job data are gathered, including “assigned
tasks, performance standards, responsibilities, knowledge,
skill and experience requirements” (Vernon 1981, p.365).
On analyzing this information, the job description is prepared,
including job identification, statement, duties and responsibilities,
requirements and specifications.
The second step is recruiting potential employees. As a rule
the company “officially announces a job by circulating
the job announcement and job description through appropriate
channels” (Heinz & Koontz 1993, p.328). In practice
it means that if an unskilled or semiskilled worker is needed,
then local public outlets such as Job Service orbits equivalent
may be used. If a skilled technical or managerial employee
is needed, then public or private outlets may be used. Finally
for unusual or high-ranking managerial employee specialized
recruitment firms may be used.
Next step is selecting qualified employees. When the company
recruited a sufficient number of candidates this step may
be started. Traditionally companies use a variety of method
to select the best applicant, which may be defined as “the
person with the highest potential to meet the job expectations”
(Torrington 1994, p.284). Among the most widely spread selection
methods that are currently used may be named careful examination
of the applicant’s past accomplishments, relevant tests,
and interviews. In the process of screening applicants, companies
are usually concerned about three broad factors, such as competence,
adaptability and personal characteristics.
Finally, when an appropriate employee is selected the last
but not the least step has to be undertaken, it is training
and development of the employees, especially when the company
deals with high technologies and is oriented on selecting
host-country nationals. Naturally in such a situation the
company has to be sure in its employees high qualification.
Furthermore, specialists indicate at the fact that “training
and development employees to work at their best maximum potential
are in the best interest of the company in the long run”
(Mendenhall and Oddou 1985, p.78). And in fact, in the world
where technologies permanently develop, it is necessary to
remain in the current of recent achievements that is practically
impossible without training and development of employees,
especially if they are host-countries nationals, which often
are less qualified and experienced than that of parent countries.
Conclusion
Thus, taking into account all above mentioned, it is possible
to conclude that the process of selecting host-countries nationals
is a very complicated phenomenon. In order to create a successful
team, it is necessary to take into consideration local settings,
including socio-political, economic and cultural situation.
The latter may be better understood only by local people.
This is why the choice in favor of host-countries nationals
is relevant since they are more experienced in local situation.
On the other hand, they may be less qualified than parent
countries nationals but this problem may be overcome through
trainings and development.
Bibliography:
1. Brewster, Chris & Tyson, Shaun. International Comparisons
In Human Resource Management, New York: New Publishers, 1991.
2. Czinkota, M. R. and al. International Business, London
Dryden Press,1996.
3. Flaherty, T. M. "Coordinating International Manufacturing
and Technology", in M. E. Porter (Ed.), Competition in
Global Industries, Harvard Business School Press, Boston MA,
1999.
4. Heinz, Weihrich & Koontz, Harold. Management: A Global
Perspective, New York: New Publishers, 1993.
5. Hendry, Chris. Human Resource Strategies for International
Growth, New York: Touchstone, 1992.
6. Hofstede, G. Culture's Consequences: International Differences
in Work-Related Values, CA: Sage, Beverly Hills, 1984.
7. Mendenhall, M. and Oddou, G. "The Dimensions of Expatriate
Acculturation: A Review", Academy of Management Review,
10(1), 1985.
8. Morrison, F. International Management. New York: McGraw
Hill, 1998.
9. Peterson, J. Innovations in International Management. New
York: Touchstone, 1999.
10. Schroeder, R. G. Operations Management: Decision Making
in the Operations Function, New York: McGraw-Hill, 1993.
11. Sheth, J. N. and Sethi, S. P. "A Theory of Cross-Cultural
Buying Behavior" in A. G. Woodside, J. N. Sheth and P.
D. Bennett (Ed) Consumer and Industrial Buying Behavior, New
York: Elsevier North-Holland, 1977.
12. Stevenson, G. International Business. LA: Routledge, 1999.
13. Torrington, Derek. International Human Resource Management,
LA: Routledge, 1994.
14. Vernon, R. Economics of International Business (3rd ed.),
Prentice-Hall, Hemel Hempstead UK, 1981.
15. Womack, J and al. The Machine that Changed the World,
Rawson Associates, London, 1990.
|
|
