Main characteristic of the 4 approaches to international staffing The Ethnocentric Approach • The polycentric Approach • The Geocentric Approach • The Regiocentric Approach. Advantages and Disadvantages

1. Welcome To My Presentation
Main characteristic of the 4 approaches to international staffing

2. Approaches to Staffing Decisions of MNCs
• The Ethnocentric Approach
• The Polycentric Approach
• The Geocentric Approach
• The Regiocentric Approach

3. Ethnocentric approach
• Parent -country nationals (PCNs) hold the key positions.
• This means that few subsidiaries have any autonomy and the strategic decisions are made at headquarters.
• Reasons for adopting this approach
• A perception that Qualified HCNs may not be available in the subsidiary
• To ensure coordination and communication with the HQs

4. Ethnocentric Approach Advantages and
Disadvantages
Advantages: Disadvantages:
• Building a common corporate culture •
Easy organizational control and
coordination
• Longer time for expatriate managers to
adapt to host countries
• Limits the promotion opportunities of
HCNs
• Huge differences in the compensation
package between PCN’s and HCN’s

5. Polycentric Approach
• Polycentric approach uses host-country nationals(HCNs) to staff the subsidiary while parent
country nationals hold positions at headquarters.
• In this context, the multinational enterprise treats each subsidiary as a distinct national
entity with some decision making autonomy.
• Local nationals who are seldom promoted to positions at headquarters manage subsidiaries.

6. Polycentric Approach
Advantages: Disadvantages:
• Familiarity with the socio economic,
political and legal environment and with
the business practices in host country
• Lower cost incurred in hiring compared
to PCNs and TCNs
• Responds effectively to host country’s
demand for localization
• Language and other barriers are
eliminated
• Continuity of management improves
since HCNs stay longer in positions
• Difficulty in exercising control over the
subsidiary’s operations
• Communication difficulties in dealing
with corporate headquarters.
• Lack of opportunities for PCNs to gain
international and cross cultural experience
• HCN’s have limited career opportunity
outside the subsidiary

7. Geocentric approach
• The subsidiary operations are managed by the best qualified individuals
regardless of their nationality
• Subsidiaries may choose managers from the host country, from the home
country or from a third country.

8. Geocentric Approach
Advantages Disadvantages
• Facilitates the development of an
international team
• Supports cooperation and resource
sharing across units.
• Immigration controls and work permits
for the foreign manager and his family
• High Training and relocation cost •
Devising an appropriate compensation
structure will be complex
• More centralized control over staffing
and loss of autonomy by the subsidiary in
HRM issues

9. Regiocentric approach
• Managers are transferred within the same region they work.
• In this approach, regional managers may not be promoted to Headquarters positions but
enjoy a degree of regional autonomy in decision making.
• Eg: for global firm having a number of subsidiaries in various regions like Asia-Pacific,
European and U.S, a manager working in Asia pacific region will be moving within the same
region only.

10. Regiocentric Approach Advantages and Disadvantages
Advantages Disadvantages
• More sensitivity to local conditions
• Allows interaction between executives
transferred to regional headquarters from
subsidiaries in the region and PCNs posted in the
regional headquarters.
• Paves the way for adoption of a geocentric
approach
• Improves career opportunities at the regional,
but not international level
• Factors such as political animosity (India and
Pakistan)between regional countries and work
permit requirements must be taken into
consideration