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The functioning of international or global companies in the global environment uses different approaches to enhance its competitiveness. The mode by which these companies find their employees, compensate, train and promote varies widely with culture, as they attempt to treat employees equitably and in a culturally appropriate manner. The competitiveness of Multinational Corporation’s future in the global market is usually a contingent of the company’s ability to adapt and change their resources strategically to the global field. The strategies which are adopted by a company must be maintained by its competitiveness, and therefore, the human resource practices must be contingent to the company’s strategic plans, as this facilitates the implementation of the company’s strategies successfully (Caligiuri & Stroh, 1995).
The people within the company are the one that sell and market, develop and create products, and the implement the companies’ programs. Therefore, the human resource is a vital to the success of the company. The maximization of the employees effectiveness by the human resource needs to be strategic, and in accordance with the mission and goals of the company. There is a challenging task for the multinational corporations, as they have to develop the human resource practices that are congruent with the overall strategic plan of the company, while maintaining the balance of the economic, social and legal factors of the host countries (Caligiuri & Stroh, 1995). There are various international human resource management strategies which are associated with the international management strategies to ultimately affect the strategies with overall effectiveness of the company. The strategies that multinational companies adopt include; ethnocentric human resource management, polycentric, geocentric, and regiocentric human resource management (Treven, 2001).
Ethnocentric Human Resource Management Practices
This is a practice that multinational companies adapt in staffing their subsidiaries with expatriates in the key managerial positions, which is centralized to the headquarters control in decision-making more than when the subsidiaries are managed by the nationals of the host countries. This practice has been seen to be the common with new ventures, and when technical expertise is required and impossible to find from the host nationals (Mueller, 2001). Thus, the human resource has to find a suitable expertise abroad that is successful. This mode of practice has seen a high turnover of expatriates, as the success of the expatriate situation has to take special skills and abilities that must be beyond the necessary skills for the domestic positions. The financial and legal restrictions usually interfere with the companies, which are implementing this strategy. The companies tend to transfer their headquarters culture and philosophy to the host countries and the nature of socialization process. This in effect does not apply, as the company is influenced by the culture of the host, and thus, the subsidiary has to conform to the culture (Treven, 2001).
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Polycentric and Regiocentric International HRM Practices
This is a practice where the subsidiaries of the parent company are managed by the host countries nationals with some co-ordinations from the headquarters regarding its operations. The host’s country manages the subsidiary even with the absence of an expatriate. This is due to the fact that the employees of the company headquarters are not able to gain valuable perspective of abroad cultures (Caligiuri & Stroh, 1995). The host nationals manage the subsidiary, and they develop into managers even though they can not be transferred to the parent company due to lack of the organizational culture. There is a little concern for the corporate culture in the polycentric practices of international HRM (Mueller, 2001).
Regiocentric practice is where the host nationals are recruited, in addition to the third-country national, where they are selected and developed as managers on the basis of the region. This is due to the consistency with regions boundaries, and the communication and integrations systems being sophisticated for the headquarters to maintain control over the regions. The advantage with this practice is that there are chances for career advancement of the host nationals within the region, although, it is still limited to the headquarters (Caligiuri & Stroh, 1995). The polycentric practice gives priority to the host national to manage their subsidiary.
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