The dynamic rise in the trends and practices of globalization and internationalism in the past few decades has yielded a great number of benefits and advantages to the business organizations and companies around the globe. It has equipped them with the tools and resources required to not only strengthen their businesses in the local markets, but it has also enabled them to explore and expand their business activities to markets which had previously been impenetrable. The practices of globalization have eliminated the limitations imposed by geographical borders and barriers and have opened new opportunities and avenues for the business community in a similar fashion as it has done for the rest of the world.
Firstly, the essay looks at the concept of expatriation and its role in the growth of multinational organizations in the modern world. Secondly, it evaluates the framework of international human resource management presented by Perlmutter (1969) and analyzes the impact of ethnocentrism on the progress of modern day business organizations. Thirdly, it presents some of the advantages and disadvantages of utilizing an expatriation strategy for multinational corporations and provides the example of Coca Cola, which utilizes expat managers for its multinational business operations. Lastly, the essay looks at some of the challenges and implications for human resource practitioners posed by Brexit as they attempt to develop a common and an effective recruitment and selection strategy.
Siljanen and Lämsä (2009) suggest that “expatriation in the traditional sense refers to individuals working in subsidiary offices of multinational enterprises in different parts of the world.” The concept of expatriation in multinational enterprises also falls in line with the ethnocentric approach to recruitment put forward by Perlmutter (1969). His ethnocentric approach to staffing argues for the recruitment and selection of managers of the same nationality as the parent organization. The development of a recruitment strategy involving the processes of expatriation is, therefore, central to the ethnocentric approach to recruitment and selection.
Minbaeva and Michailova (2004), through their research work on the topic, argue that the multinational business organizations and their managerial leaderships rely heavily on the practices of expatriation in order to conduct their business operations and activities in subsidiary offices in an effective and efficient manner(Minbaeva and Michailova, 2004). They also suggest that “the primary goal of expatriation was explicit and well-defined control and coordination: by relocating expatriates, parent organizations have been able to exert control and achieve global integration across subsidiaries” (Minbaeva and Michailova, 2004).
However, given the developments and the evolutions that have characterized global business operations and strategies over the past few decades, the nature of expatriate assignments and projects has also changed(Harzing, 2001). The expatriate employees and managers today are not only expected to maintain organizational control within the subsidiary offices of the company, but they are also expected to develop the local talent within the subsidiary units in accordance with the company’s vision and to support the effective transfer of skill and knowledge from the organizational headquarters to the local offices. (Harris et al., 2003)
Perlmutter’s Typologies and Ethnocentrism
The work of Perlmutter (1969) is considered by many to be fundamental in the domain of human resource management practices in order to effectively deal with the evolving relationships and dynamics that exist between a corporate headquarter and its subsidiaries (Minbaeva and Michailova, 2004). The EPRG model of human resource management presented by Perlmutter is considered to be a significant tool in order to understand the relationship between the headquarter of a multinational company and its subsidiary offices situated in foreign counties. The EPRG framework involves four basic principles namely ethnocentrism, polycentrism, regio-centrism, and geo-centrism(Onodugo et al., 2017).
The Polycentric approach to recruitment revolves around the idea that multinational corporations restrict their hiring practices for subsidiary offices by only recruiting management native to the country in which the foreign office operates. The polycentric approach allows for the organization to understand the local cultures, business practices, and other dynamics that influence market operations in a more effective and efficient manner(Lakshman et al., 2017). The regio-centric approach to hiring, on the other hand, focuses on the recruitment and selection of managers and employees from countries in which the organization operates. Similarly, the geocentric approach to recruitment and selection in multinational organizations refers to the hiring of the best and the most skillful employee irrespective of the nationality that he may belong to. The geocentric approach enables the company to fill its organizational ranks with the most suitable managers that can take the company forward. (COLLINGS and SCULLION, 2006)
The ethnocentric approach to human resource recruitment and selection focuses on the deployment of managers from the organization’s headquarters to its subsidiary offices. The ethnocentric approach calls for the recruitment and selection of subsidiary management that is essentially of the same nationality as the location of the parent company. Banai (1992) argues that the “general rationale behind the ethnocentric approach is that the staff from the parent country would represent the interests of the headquarters effectively and link well with the parent country”(Banai, 1992). The ethnocentric approach to recruitment and selection generally involves four primary stages, namely self-selection, the creation of a candidate pool, capabilities assessment, and identifying the most suitable candidate for the foreign role. (Michailova et al., 2017)
The ethnocentric, polycentric, geocentric, and regiocentric approaches to international staffing can be utilized solely or in combination with one another depending on the workforce requirement and the nature of the international job responsibility(Isiaka et al., 2016). The selection of the best possible hiring approach for multinational business operations is influenced by range of factors and dynamics including monetary resources, time constraints, immigration procedures, sensitivity of the foreign job, impact of culture and language etc. The managerial leadership of multinational enterprises should, therefore, critically evaluate and analyze such factors associated with international hiring before deciding on a common recruitment and selection policy for its subsidiary offices. (Thoo and Kaliannan, 2013)
Merits and Demerits of Using Expats
Using expatriate employees and managers for foreign and subsidiary offices and divisions is one of the most common human resource and management practices used by the multinational organizations today. There are many merits and advantages of deploying expatriate employees and managers in subsidiary divisions that the organizations can exploit in their bid to strengthen and expand its business operations and activities. Firstly, it allows the managerial leadership of the organization to maintain their control over the business activities and operations of the subsidiaries(Yamin and Andersson, 2011). Secondly, it keeps the strategies and practices of the subsidiary employees in line with the strategic goals and objectives that the organizational headquarters has set and, ultimately, helps them in achieving such goals in an effective and efficient manner. Lastly, the usage of employees as expatriates enables the organization to transfer essential knowledge and skills to subsidiary offices. It also allows the management to instill and cultivate a culture of leadership within its foreign offices in order to foster leadership and managerial qualities amongst the employees of the subsidiaries. This, in turn, enables the organization to not only prepare managerial leaders for the future, but it also helps in the retention of the best employees (Harzing, 2001).
However, there are certain demerits and disadvantages that are also associated with the deployment of expat employees and managers in subsidiary offices. One of the primary disadvantages of using expatriate employees in subsidiaries is creating a culture of control and centralization. Expatriate managers are most commonly used to exercise and maintain control of the subsidiary and foreign business operations and activities. Hence, it can develop a sense of frustration and dissatisfaction within the workers of the subsidiary offices if they believe that expat managers restrict their freedom and workplace independence. Another disadvantage of having expat employees and managers is related to the costs of implementing such strategies(Gabriela, 2013). The procedure of sending expat employees and managers to foreign offices can be very costly and time consuming for the organization as immigration and residential processes tend to be both lengthy and expensive. It is also evident from research surrounding the topic that expat employees are prone to high burn out rates. Due to demanding nature of expat assignments and lack of knowledge of local cultures, expats are generally called back earlier than the life of the project. This can be regarded as another substantial disadvantage of using expat employees(Bossard and Peterson, 2005).
Coca Cola, Expats, and International HRM
The Coca Cola Company is one of the leading multinational organizations in the world that utilize the strategy of deploying expat employees and managers to its foreign offices in a bid to manage business operations and activities in an effective and productive manner. The cola giant is present in nearly every corner of the world and sends expat managers to conduct its business operations effectively. The same is the case of Coca Cola UK which operates as the European headquarters of the multinational giant. Coca Cola UK generally sends its UK managers on expat assignments to its European subsidiary offices, but its approach is not ethnocentrism only as the company also utilizes polycentric and geocentric approaches depending on the workforce requirements. The company deploys expat employees to foreign offices primarily due either a lack of domestically available talent or a lack of appropriate experience amongst the managerial leadership within the subsidiary office in consideration(Baruch et al., 2002).
The selection of the right employee for the expatriation assignment also depends on a number of factors and dynamics. The nature of the expat project plays a critical role in the process of evaluation and selection. Similarly, the time limitations and monetary constraints are also critical in order to undertake such a decision. The cross-cultural suitability of the expat manager is, arguably, the most significant factor in the process as the success or failure of the project substantially depends on how well the expat manager is able to connect with the employees in the foreign office(Harvey and Moeller, 2009).
The Brexit Challenge
The issue of United Kingdom’s ongoing departure from the European Union (EU) is one of the most significant challenges for multinationals having business operations and offices both within the UK and in any other EU member countries. Brexit poses a number of different yet complex challenges and problems for the human resource practitioners of such multinational enterprises and severely impacts the recruitment and selection strategies that such organizations adopt. The managerial leadership, along with the human resource experts, of such entities have to address the issues and challenges created by Brexit in an effective and efficient manner in order to maintain the effectiveness of their recruitment and selection processes, so thatthe company maintains its growth and progress(Elliott and Stewart, 2017).
The most fundamental challenge that Brexit poses for the recruitment and selection strategy of a multinational enterprise is the issue immigration. The rules and regulations regarding the immigration of workers to and from other EU member countries are bound to change. It can severelyimpact the operational activities of the multinational enterprises as many expat employees and managers will have to obtain documentations in accordance with the new laws post Brexit. Another significant concern for the multinational companies is the retention of its existing workforce. The current organizational workforce might be comprised of employees belonging to other EU nationalities and their retention after Brexit becomes a major concern for the multinational organizations. If the human resource practitioners do not act effectively, the companies are at risk of not only losing potential best performing employees but then also face a significant challenge in filling vacant positions due to a shortage of talent caused by lack of foreign workers(Teague and Donaghey, 2018).
It can be concluded that a common recruitment and selection strategy can be developed to an extent for a multinational company with business operations in UK and France through the utilization of one or a combination of international staffing approaches discussed. The example of Coca Cola UK suggests that, when used properly, expat employees and managers can unlock several avenues of growth and progress for the company. The issue of Brexit, however, is a significant challenge that needs to be tackled effectively so that the multinational organizations can gain the most out of efficient recruitment and selection processes.
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