Management of Multinational Companies
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Published: Tue, 06 Mar 2018
Staffing management of multinational companies is a complex but crucial issue to the international human resource management (IHRM) research. Based on literature review, this article is to investigate the staffing management in the multinational companies. Firstly, the author will summarize the conceptual introduction, general challenges, culture distance, and new alternative in the expatriate assignments. Secondly, the author will discuss how to retain subsidiary staff retention in the whole HRM of multinationals. Thirdly, in order to complete the research successfully, the author will utilize the qualitative research method through literature study and one-to-one interview to figure out the puzzle about the staffing management in multinational and draw the conclusion.
The topic of this paper is the staffing management in the multinational companies by using qualitative research method. In this report, what kind of information is valued for this research? How to collect information? What kind of technology will be used and how to organize this research? All these questions will be described in the following parts.
First at all, the clear understanding about qualitative research is necessary and helpful. Qualitative research is a field of inquiry that crosscuts disciplines and subject matters. It involves an in-depth understanding of human behavior and the reasons that govern human behavior. Unlike quantitative research, qualitative research relies on reasons behind various aspects of behavior.
The objective of this article is to investigate the staffing management in the multinational companies. In the last decades, an extensive amount of articles on this topic have been published. Obviously, the staffing management is a critical issue in the human resource management for the multinational companies. How to balance the PCNs, HCNs, and TCNs? How to reconcile the individual career plan to the corporation scope? How to manage the multicultural team? All of these topics have been explored in conceptual theory and empirical analyses. At the same time, with the development of the world economic and political, some new trends have appeared in international business, for example, global virtual team, the e-business, etc. These new challenges bring new patterns for the staffing management. Thus, in this article, the author focuses on new changes, such as alternative for the conventional expatriate assignments and the retaining of the local staff retention.
In order to get the general knowledge about the staffing management in the multinational companies, six books have been chosen as the literature related to the topic. In those books, the authors claimed that people are the foundation in a multinationals; most of the attention of human resource management in multinationals is concerned with the staffing management, while the staffing management is the most difficult task for them. How to effectively manage people in various countries and cultures is a big issue in the staffing management in the multinational companies.
At the same time, in order to get the recent research topic in the multinational staffing management, some articles which were published in the academic journals have been chosen as well.
1. Conceptual Introduction
Staffing management deals with a comprehensive term for all operative functions namely recruiting, placing, appraisal, rewarding, assessing, developing performed in HR management. According to International HRM model created by Patrick V. Morgan and Peter J. Bottrall, three dimensions are involved :
- Human resource functions
- National or country functions
- The host country where a subsidiary may be located
- The home country where an international company is headquartered
- And “others” countries that may be the source of labor or finance
- Employees functions
- Local/ host-country nationals (HCNS¼‰
- Expatriates/parent-country nationals (PCNS)
- Third-country nationals (TCNS)
Face to those options and wide resource, the managers in global enterprises have particular concern about the employees’ ability to disseminate knowledge and innovation throughout their global operations . The use of expatriates has seemed to be a logical choice for staffing, while the use of parent-country nations seems to be most appropriate in some specific situation. Some other global enterprises also prefer integrate the expatriates and local human resource. Nevertheless, each procedure has both advantage and disadvantage.
With regard to executive nationality staffing policies, “There are major four categories on the HRM within Multinational corporations : the ethnocentric approach, the polycentric approach, the regioncentric approach, and the geocentric approach.
In summary, those four approaches are useful for multinationals, and the MNC can choice one of four approaches to manage its international staffing. However, there are no restricting rules for staffing management. The following questions for the multinationals must to face: Predictors of expatriate success, expatriate failure rate, repatriation, equal employment opportunity issues, and recruitment and selection of HCNs and TCNs.
2. Challenges in multinationals
The nature of international business is undergoing a sea change. The rapid expansion of global trade, business consolidation and geographical diversification are pushing companies for changes in their management structure and style. Multinationals now need to consider regional market conditions and develop strategies to cater to each of the regional markets.
Another factor driving the need for change is the global mergers and acquisitions. Companies acquire other companies’ abroad need to change their HR policies as it is not applicable on the acquired company. It is beneficial to invite top executives of the acquired firm to join the parent’s top management.
2.1 Career blockage
Lots of employees will be exciting to have the opportunity to work abroad. In fact, for host-country manager who always have limited opportunities to gain experience outside their own country and can not progress beyond the senior positions in their own subsidiary. While, the parent-country manager have limited too, and they will feel frustrate when they come back home to see their colleagues are promoted and their career have been sidetracked.
2.2 Culture shock
Culture shock is the big challenge for multinationals, the difference brings the different thinking ways and working ways, and it needs time to adjust it. In most cases the expatriate manager prefer to emphasize and require the home office or home country values on the host country’s employees instead of accepting and learning within the new culture.
2.3 Lack of cross cultural training
In fact, most multinationals ignore this training program during the staffing management. However, the better understanding about culture block can help managers to improve the effectiveness of staffing management. For example, The managers at Bell Canada were totally asked be training about Muslim laws of drinking and the treating of women there before he or she assigned a project for Saudi Arabia such like constructing the telephone system in there.
2.4 Family problems
Family problem for PNC manager is another challenge. The oversea employees always think of their family. Sometime, such emotion will effect the concentrations in their work. These difficulties are usually underestimated. What the organization should do is to assist expatriates’ family to adapt their new environment.
3. Managing multicultural team
Team members of multinational companies come from different countries with the different culture, economic, religions and habits. All of these differences bring the different thinking and working methods, thus, how to manage the multicultural team is a big challenge for the HRM in the multinationals. In the article “Managing multicultural team”, the author states that “Communication in Western cultures is typically direct and explicit. In many other cultures, meaning is embedded in the way the message is presented. The differences can cause serious damage to team relationships” (Jeanne Breeet , Kristin Behfar, and Mary C. Kern, 2007) . At the same time, the accent and the lack of fluent communication will affect the understanding and the integration between team numbers. The direct effect of misunderstanding can also be the barrier to constrain the team achieving the project common goal. Therefore, the scholar indicates the four strategies as following to manage the multicultural team (Jeanne Breeet, Kristin Behfar, and Mary C. Kern, 2007) :
- Adaptation: acknowledging cultural gaps openly and working around team
- Structural intervention: changing the shape of the team
- Managerial intervention: setting norms early or bringing in a higher-level manager
- Exit: removing a team member when other options have failed
Although those four strategies can be used to deal with some challenges in the multicultural team, the first step to manage the multicultural team for team manager is to identify what kind of challenge the team would face. Sometimes, we can advocate the post-modern thinking as a popular but unofficial thinking which can be used among the team numbers. We try to understand and think about questions from the other side without prejudice. However, the official team management needs some norms and rules to keep the right orientation. In my opinion, when facing the team troubles, we should see the troubles from the culture angle, through the social thinking ways instead of from the personality.
4. New alternative in the expatriate assignments
According to Edstorm and Galbraith(1977), there are three motives why MNCs use expatriates.
- As position fillers when suitably qualified host country nationals (HCNs) were not available.
- As a means of management development, aimed at developing the competence of the individual manager.
- As a means of organizational development, aimed at increasing knowledge transfer within the MNC and modifying and sustaining organizational structure and decision processes.
However, the high cost and the family problems are the evident shortcomings of the conventional expatriate assignments. Recently, more and more research begins to question the utility and viability of the conventional expatriate assignments. According to the “Changing patterns of global staffing in the multinational enterprise: challenges to the conventional expatriate assignment and emerging alternatives” (David G. Collings, Hugh Scullion and Michael J. Morley, 2007) , there are five aspects related to the debates: supply side issues, demand side issues, expatriate performance and expatriate “failure”, performance evaluation, cost and finally career dynamics. By reviewing the reasons of those challenges, the authors explore some alternative forms in the international assignments now:
- Short –term international assignments
- Frequent flyer assignments
- Commuter and rotational assignments
- Global virtual team
- The HR implications of managing alternative forms of international assignments
Although those new patters appeared in the international staging assignments, each alternative has both positive and negative influences. For example, as scholars mentioned that the short-term assignments are the most popular form of non-standard assignment. At the same time, they also identify the following situations in which short-term assignments are used in MNCs: (1) Problem solving or skills transfer; (2) for control purposes and; (3) for managerial development reasons. And the disadvantages: (1) taxation issues¸ particularly for assignments over six months duration, (2) the potential for side-effects such as alcoholism and marital problems (3) failure to build effective relationships with local colleagues and customers and (4) work visas and permits (Tahvanainen et al., 2005) . Eventually, the challenge for IHRM practitioners is to ensure that each international assignment has clearly defined goals and in this context to continue the advancement of techniques aimed at measuring the return of investment on international assignments.
5. Retaining subsidiary staff’s retention
It can be argued that the retention of staffing in the multinationals’ subsidiary conducts huge influence. The transfers between the PCNs, HCNs and the TCNs are the big issues in the staffing management strategy. Scolders identify that the HCNs and TCNs who are sent to the corporate headquarters (HQ) called inpatriates. As this article mentioned before, the ethnocentric approach, the polycentric approach, the regioncentric approach, and the geocentric approach are the four major nationality staffing policies in the international staffing, by analyzing the complex and the new situation appear in the relationships between the HQ and subsidiary, B. Sebastian Reiche (2007) explores the international stiffing-related retention strategies . Firstly, he claims that a pluralistic and consensus-driven approach to international staffing enhances the retention capacity of international staffing practices through increased responsiveness to and involvement of the respective local unit. He states that the knowledge and skill from the local staff can help multinationals to reduce the risk and culture-bound in the local market. He also believes that this approach can improve the loyalty of local staffs, and the local staff can achieve individual career plan to cohere the institutional development plan. At the same time, he states that the PCNs still act as the vital role for informal controlling and coordination in the multinational companies. Secondly, he indicates that expatriation of local staff can help to retain the MNCs’s retention. In this approach, he states that the “inpatriates can share their social and contextual knowledge of the subsidiary environment with managers at the HQ. And also inpatriates tend to be accepted by HCNs more willingly than foreign personnel.”
According to the literature review, we can see that the staffing management is the big and critical issue in the multinational human resource management. Although some models and some rules can be used in the staffing management in multinationals, there is no magic formula which we can follow, and there is no silver bullet that gives the kill. Simultaneity, I also find some challenges and some new patters of the staffing management in multinationals, in order to get the better understanding about the staffing management strategy in multinationals, and to prove some confused questions in my minds, like why are there so few women on international assignments? The designed qualitative research which addresses the staffing management in multinational companies will be presented as the following:
A successful qualitative research should have the clear introduction about the research methods, the detailed and scientific research, and the justice and related data analysis. In this part, how to develop and execute this qualitative research will be described:
1. Research methods
Research methods are the tools to be used in this qualitative research. It is the basic elements to do the research, and the better and clear understanding is helpful and necessary for the success of the research. In the following part, I will introduce some research methods which will be used in this qualitative research.
In-depth interview: are typically used in survey development. One-to-one interviews are conducted (with people meeting the criteria for completing a particular survey) when individuals complete the instrument. This method helps investigators understand how people perceive and interpret language and their own experiences as they refine the survey instruments.
Five persons (individual profiles as the following table) will be interviewed to talk about this project. The questions sheet was designed for the interview. The purpose of the interviews is to figure out the strategic about the staffing management in the multinational companies, especially the challenges in the multinational is the major issues in the interview.
Interviewees Age Gender Background Working experience
- 36 Male PHD Electric Engineer 7 years Engineer
- 33 Male Master engineer& MPM 5 years HR manager
- 32 Male Master MPM 4 years marketing manager
- 29 Female Master MBA 2 year HR
- 25 Female Master MBA 1 year HR
2. Research Procedure
In this research, the five persons who have the background with working in the multinational companies or who have the academic ideas about the human management will be involved in this research. This research have two parts, the first part will discuss about the important position for staffing management in one multinational company. The second part is about the challenges, and tries to find the solutions for those challenges.
3. Data collection and analyzing
In this stage, the enough and useful data is necessary for qualitative research. Collecting data is the key step to achieve the research goal after in-depth interview and case study.
Based on the four challenges about the human resource management in the multinational companies, through the in-depth interview with five persons and the case studies, the result about this research is to find the way how to solve those challenges.
4. Research Schedule
All the research development will follow the deliverables on the course outline.
Proposal: Deadline is February 20
Interview protocol: Deadline is March 12
Interview: Deadline is April 10
Oral presentation: Deadline is April 16
Research report: Deadline is April 28
5.1 Interview plan
Traditionally, the detailed plan is the first step for a success interview. For me, the major thing should be described is about the interview tools. The in-depth interviews are typically used in the interview. One-to-one interviews are conducted as the individuals complete the instrument being tested. This method helps investigators understand how people perceive and interpret language and their own experiences as they refine the survey instruments. At the same time, based on the topic which is staffing management in the multinational companies, I will choice the telephone interview too.
Five persons will be interviewed to talk about this topic. The purpose of the interviews is to figure out the strategic about the staffing management in the multinational companies, especially the challenges in the multinational is the major issues in the interview. Three persons are chosen from the classmates who had or have the working experience in the multinational companies, the forth person is my friend who works in a multinational company in Toronto, and I will meet him in the weekend to do the interview. The last person works in Montreal, and I will take a telephone interview.
5.2 Level of Language
The effective communication is the critical issues for the success of the interview. The better understanding is helpful to achieve the purpose of the interview.
5.3 Interview questions
- Do you think the staffing management is a critical issue for multinational companies?
- Do you think staffing issues are different and complex in the multinational companies?
- Should there different strategic between the employees in local/ host-country nationals (HCNS), expatriates/parent-country nationals (PCNS), and third-country nationals (TCNS)?
- How to motives the expatriate employees?
- How to make the justice between local and expatriate employees?
- How to implement the performance management for the host-country nationals?
- How to manage the diversity management?
- Why are there so few women on international assignments?
- What kinds training are necessary for the international assignees?
- What are the challenges about staffing management in the multinational companies? 5.4 Analyses about the interview questions
As I mentioned before, five persons were be interviewed to talk about this topic. Three persons are chosen from the classmates who had or have the working experience in the multinational companies, one person who works in the AMD in Toronto, I was meeting him last weekend. And another person who works in Montreal, I already called him to do the telephone interview. Those entire people have the common thinking which is staffing management is very importance and diversity in multinationals. The detailed analysis about the interview questions as following.
1. Do you think the staffing management is a critical issue for multinational companies?
The same answers from five interviewees. All of them given yes to this question. Analysis: People are one of the most important parts in the multinational companies. The staffs are from different countries, they have diverse cultures, religions, and working styles. Therefore, the working environment can be very complex. Finding skilled and talented personnel and motivating them then become more and more important. How to resolve problems and conflicts, and integrate the diverse human resource and management is going to be a critical issue.
2. Do you think staffing issues are different and complex in the multinational companies?
All of five interviewees answered yes in this question. Analysis: Compared to the national company, the multinational company’s target market may be numerous country or while world. According this situation, the employees of multinational companies have different culture, religion and life habit. The employees’ diversiform culture background can help the multinational company understand the local market environment; however, it increases the cost of staffing management. The multinational companies should pay more an attention on the HR management. The enormous human resource data and complex work environment is a trouble for the multinational companies. At the same time, communication problem is also critical when people speak different languages.
3. Should there different strategic between the employees in local/ host-country nationals (HCNS), expatriates/parent-country nationals (PCNS), and third-country nationals (TCNS)?
The answer is yes. Analysis: Based on the countries’ different conditions like economic, living standard, market, etc. The local, expatriates and third-country nationals’ employees are in the different positions. The HCNS are familiar with the culture, environment, and the communication habit. Therefore, the management strategy can be very simple and easy. However, for the PCNS and TCNS, they are unacquainted with the country, and it is harder to accommodate themselves with the new living and working environment. So the communication process will be more complex. Consequently, the companies should use different strategies between the different nationals’ employees.
4. How to motives the expatriate employees?
In this question, building own company culture which is not only local culture but also expatriate and recognizing the and respecting the different culture and habits has been mentioned in all five interviewees.
As interviewees C states that familiarizes the new employee to the company’s culture, business values, people, organization and processes in an efficient manner. Then, helping the person fit into their new environment, lowers feeling of isolation and anxiety, and increases feelings of comfort, security and belonging. Also, creates a favorable impression and attitude. At the same time, interviewee D thought that Special benefits and holidays are the necessary and important rules to motives the expatriate employees.
5. How to make the justice between local and expatriate employees?
The answers about this question related to the understanding about culture and habits and the performance evaluation. Firstly, a series of regulations and rules should be created, Then, try to avoid bias, think objectively, and stand by different positions to see the view. At the same time, the performance evaluation should have the same standard.
6. How to implement the performance management for the host-country nationals?
The performance management should be made based on the appraisals which provide legal and formal organizational justification for employment decisions. Also, the appraisals are used as criteria in test validation and provide feedback to employees. Meanwhile, the appraisals can help establish objectives for training programs and determine organizational problems
7. How to manage the diversity management?
In this question, there are many answers: A, create chance to know each other B, Equal opportunities is just one part of diversity, detailed policies and procedures should be user-friendly. C, establish a heterogeneous workforce performing to its potential in a fair work environment where no member has an advantage or disadvantage for any reason other than merit. E, Establish training system to reduce fail and conflicts. Establish effective communication to exchange information in time.
8. Why are there so few women on international assignments?
In this question, there have the different answers between the male and female interviewees; two male interviewees state that this situation based on the history, culture, like working capability of women can’t be accepted by everyone. One male interviewee claims that he did not find this situation because one of the groups in his department is all women who are in charge of both local and international assignments. The two female interviewees said that Women have more family and emotional burden, and women always lack of career progress (glass ceiling).
9. What kinds training are necessary for the international assignees?
In this question, most interviewees mentioned that the international assignees should be trained of the knowledge of culture, religion, value and working style. Interviewee B still talked about the training should be connected with Sexual Harassment, Legal Issues and Global Corporate Finance.
10. What are the challenges about staffing management in the multinational companies?
- Touch different thinking approach and culture
- How to Improve Expatriate-Local Relations
- How to respect the diverse values, and establish the same corporation values is most challenge
- Conflicts between cultures, communication problems, performance standard.
- Unions want to cooperate but compete with each other for jobs
Finding and Results
The interviews proved my viewpoint that the staffing management is critical and complex to a multinational. Therefore, to successfully achieve its goal, the multinational not only insist its successful experience and culture but also should adjust the strategy due to the diversity and complexity of human resource management which includes the staffing management strategy. In my research, I focus on two aspects: first is about the importance of staffing management in multinational, which even should be considered as the most crucial part in multinationals life. My interview has proven my standpoint, all interviewers agree on the importance of staffing management. A mistake the multinationals may make is they believe the successful experience in the home country will work well in other parts of the world. But the fact usually says no. Therefore, the multinationals need to learn how to face the “difference” in different thinking ways, policy, culture and people’s desires. Thus, the second aspect is how to make and implement the proper staffing management due to de complexity and difference of country situation. Base on this understanding, I listed my questions like “How to motives the expatriate employees”, “How to manage the diversity management?” and “What kinds training are necessary for the international assignees”. Most of these questions relate to the people. Undoubtedly, people are the most important factor in all aspects. No matter how correct a decision or strategy has been made, it depends on how people implement it. My interviewees answered the questions through different aspects which base on their experience. Clearly, all of the answers based on one common point that the staffing strategy has to meet peoples’ basic demands, culture, and inspire them properly. Above all, the interviews supported my original viewpoint and extended my visions in several aspects which I learned from the literatures. I will give the conclusion in next part.
In the past ten years many business cases proved that human resource management especially the staffing management is the critical factor for the business successful. Based on the analysis about the interviews, I got some conclusion. Firstly, the staffing management is the critical issue for the multinational has been proved. People are one of the most important parts within the company. People with different culture will cause a lot of problems because of culture differences for multinational companies. Because of globalization, business are not just addressed within a Country, and it becomes global as well. So how to find, select and train skilled and talented personnel and motivating employees then become more and more important. Secondly, the staffing management issues are different and complex in the multinational. These issues still related to the culture understanding. Different people have the different thinking ways based on the individual background, and different nations have the different habits by the history, religion, policy, etc. So, employees in a multinational have the different thinking ways for the same thing. Those results result to the complex and different staffing strategies. Thirdly the culture shock is another bid issue for the staffing management in the multinationals. All of the five interviewees talked about the better understanding of the different culture and habits, it indicates that diverse culture, religions thinking ways and working style become more and more important in the multinationals, and taking the justice between local and expatriate employees is very important too.
In fact, as we all known, staffing for a multinational company is complicated by the more diverse environment , such as business, economic, political, legal, cultural implications and the Parent company’s need for control. At the same time, as I mentioned before, there is no magic formula which we can follow, and there are even more challenges that Human Resource has to face when the organization goes international. In a multinational corporation, one of the most difficult tasks is to effectively manage people in various countries and cultures. As we discussed before in this article, the employees are the base for the company, and human resource management is the critical factor for the business successful. According to the situation of human resource management in one organization, the HRM managers take special responsibilities. In fact, there is also no denying that the status of the HRM in the enterprise will be higher than before throughout the next decade. At the same time, with the development of global economy, the multinationals acted the more and more important roles in the global trade. This fact enforce the enterprise have to developmen
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