Chapter 4
Staffing International Operations
for Sustained Global Growth
IBUS 618 Dr. Yang
1
Chapter Objectives
The previous two chapters have concentrated on the global
environment and organizational contexts. We now focus on
the managing people aspect. The aim is to establish the
role of HRM in sustaining international business operations
and growth. We will cover the following:
 Issues related to various approaches to staffing
foreign operations;
 Reasons for using international assignments:
position filling, management development, and
organizational development;
(cont.)
IBUS 618 Dr. Yang
2
Chapter Objectives (cont.)
 Various types of international assignments:
 Standard assignments: Short-term, extended, and longer-term;
 Non-standard arrangements: Commuter, rotator, contractual,
and virtual.
 The role of expatriates and non-expatriates in
supporting international business activities (Flexpriates)
 The role of inpatriates in the corporate global strategy
 Return on investment of international assignments
 The role of the corporate HR functions
IBUS 618 Dr. Yang
3
Approaches to Staffing
 General staffing policy on key positions at
headquarters and subsidiaries
Ethnocentric
Polycentric
Geocentric
Regiocentric
 Constraints placed by host government
 Staff availability
IBUS 618 Dr. Yang
4
Ethnocentric
 Strategic decisions are made at
headquarters;
 Limited subsidiary autonomy;
 Key positions in domestic and foreign
operations are held by headquarters’
personnel;
 PCNs manage subsidiaries.
IBUS 618 Dr. Yang
5
Polycentric
 Each subsidiary is a distinct national
entity with some decision-making
autonomy;
 HCNs manage subsidiaries who are
seldom promoted to HQ positions;
 PCNs rarely transferred to subsidiary
positions.
IBUS 618 Dr. Yang
6
Regiocentric
 Reflects a regional strategy and structure;
 Regional autonomy in decision making;
 Staff move within the designated region,
rather than globally;
 Staff transfers between regions are rare.
IBUS 618 Dr. Yang
7
Geocentric
 A global approach - worldwide integration;
 View that each part of the organization
makes a unique contribution;
 Nationality is ignored in favor of ability:


Best person for the job;
Color of passport does not matter when it
comes to rewards, promotion and
development.
IBUS 618 Dr. Yang
8
Staffing a New International
Venture
 The company recently made
 An Australian wine company
has successful and growing
exports in three markets: U.K.,
U.S., and Scandinavia;
 Gained a global recognition for
quality wine;
 Assisted by technological
improvements, and aggressive
marketing;
 Now the Board wants the
company to “ride the Australian
wave” and gain more market
shares in the European
continent.





an acquisition in France, its
first time FDI:
Which is a middle-level
player in the Fench home
market;
With efficient operation in the
French context;
Modest profit margin;
Limited sales to EU
neighboring countries;
The Broad believes there is
room for improvement
particularly in production
techniques and marketing
IBUS 618 Dr. Yang
9
How would you staff
the new venture?
 Staffing approaches to
 Factors to consider:
consider?
 Strategic goal
 Key positions to be filled:
 Mode of entry
 Managing Director, head
 Degree of control
of the new venture
 French culture and
 Production Manager
labor law
 Marketing Manager
 EU works council
 Chief wine Technologist
 Competence transfer
 HR Manager
 Brands, the “Australian
wave”
 Chief Finance Manager
IBUS 618 Dr. Yang
10
Table
4-1a
Advantages and Disadvantages of Using PCNs
IBUS 618 Dr. Yang
IHRM Chapter 4
11
11
Table
4-1b
Advantages and Disadvantages of Using TCNs
IBUS 618 Dr. Yang
IHRM Chapter 4
12
12
Table
4-1c
Advantages and Disadvantages of Using HCNs
IBUS 618 Dr. Yang
IHRM Chapter 4
13
13
Figure
4-1
Determinants of Staffing Choices
IBUS 618 Dr. Yang
IHRM Chapter 4
14
14
Reasons for International
Assignments
 Position filling, e.g.

Skills gap, launch of new endeavor,
technology transfer
 Management development

Training and development purposes, assisting
in developing common corporate values
 Organizational development

Need for control, transfer of knowledge,
competence, procedures and practices
IBUS 618 Dr. Yang
15
Types of International Assignments
 Short term: up to 3 months



Troubleshooting
Project supervision
A stopgap until a permanent arrangement is found
 Extended: up to 1 year

May involve similar activities as short-term
assignments
 Long term


Varies from 1 to 5 years
The traditional expatriate assignment
IBUS 618 Dr. Yang
16
Non-standard Assignments
Commuter assignments
Rotational assignments
Contractual assignments
Virtual assignments
Some of these arrangements assist in overcoming
the high cost of international assignments but are
not always effective substitutes for the traditional
expatriate assignment.
IBUS 618 Dr. Yang
17
Table
4-2
Differences between Traditional and
Short-term Assignments
IBUS 618 Dr. Yang
IHRM Chapter 4
18
18
Figure
4-2
The Roles of an Expatriate
IBUS 618 Dr. Yang
IHRM Chapter 4
19
19
The Role of Non-expatriates
 People who travel internationally yet are not
considered expatriates as they do not relocate to
another country

Road warriors, globetrotters, frequent fliers
 Much of international business involves visits to
foreign locations, e.g.



Sales staff attending trade fairs
Periodic visits to foreign operations, subcontractors, etc.
Meeting with foreign agents, clients, distributors, suppliers,
etc.
IBUS 618 Dr. Yang
20
A Glamorous Life
 International business travelers cite the
positives as:



Excitement and thrills of conducting business
deals in foreign locations
Life style (top hotels, duty-free shopping,
business class travel)
General exotic nature
IBUS 618 Dr. Yang
21
But a High Level of Stress!
 Home and family issues
 Frequent absence and separation
 Work arrangements
 Domestic side of position still has to be attended to
 Travel logistics
 Waiting in airports, etc.
 Health concerns
 Poor diet, lack of sleep, etc.
 Host culture issues
 Limited cultural training, lack of backup support
IBUS 618 Dr. Yang
22
The Role of Inpatriates
 As both knowledge senders and receivers


Share their local contextual knowledge with
the HQ staff
Socialize in the HQ corporate culture and
learn firm-specific routines and behaviors
 Increasing the capabilities of organizations
to “think global and act local”
IBUS 618 Dr. Yang
23
Figure
4-3
ROI Indicators for Calculating Intl
Assignments
IBUS 618 Dr. Yang
24
24
Steps to Calculate Expatriate ROI
1. Identify financial and non-financial costs and
benefits.
2. Link the costs and benefits to the purpose of the
long-term assignment.
3. Identify the appropriate antecedents from a
system’s perspective.
4. Conduct the calculation at an appropriate time
within the context of the assignment’s purpose.
IBUS 618 Dr. Yang
IHRM Chapter 4
25
25
The Role of the Corporate HR Function
 Can we manage our people like a global
product, e.g., the feasibility of:
The concept of a global internal labor
market
 Standardization of work practices and
HR activities

 What HR matters require central control
and what can be decentralized?
IBUS 618 Dr. Yang
26
Table
4-3
Various roles of corporate HR
IBUS 618 Dr. Yang
IHRM Chapter 4
27
27
Current Trends and Shifts in
International Assignments
Categories
Types of the Assignments
Expected Assignment
Duration
1-3 years (52%) 53%
Permanent 20%
Short-term (9%) 27%
Under 6 months 13%
6 months to1 year 14%
Assignment
completion
On schedule 58%
Extended 31%
Less time 11%
Companies Seeking
Alternative Mobility
Models
Localization 57%
Hiring HCNs 48%
One way move 26%
Short-term 39%
Business travel 36%
Source: adapted from Global Relocation Trends, GMAC-GRS 2002, 2005.
IBUS 618 Dr. Yang
28
Chapter Summary
This chapter has expanded on the role of IHRM in sustaining
international business operations. We have:
 Looked at the various approaches to staffing
international operations – ethnocentric, polycentric,
geocentric and regiocentric – examining their advantages
and disadvantages and factors that may determine the
choice of these options.
 Considered the reasons for using international
assignments: position filling, management development
and organization development.
(cont.)
IBUS 618 Dr. Yang
29
Chapter Summary (cont.)
 Discussed the various types of international assignments:
short, extended and long-term (traditional); and nonstandard forms such as commuter, rotational, contractual
and virtual assignments.
 Examined the various roles of the expatriate: as an agent
for direct control, as an agent for socialization, as network
builders, as boundary spanners and as language nodes.
These various roles of the expatriate help to explain why
expatriates are utilized and illustrates why international
assignments continue to be an important aspect of
international business from the organization’s perspective.
(cont.)
IBUS 618 Dr. Yang
30
Chapter Summary
 Recognized that non-expatriates and inpatriate are also
critical to international business operations.
 International business travellers present their own
challenges, such as the effect of frequent absences on
family and home life, the possible negative health effects
and other stress factors.
 Pointed out the importance to control costs and develop
metrics to measure expatriate return on investment
(ROI).
 Looked at the role of the corporate HR function as the
firm grows internationally, building on sections from
Chapters 1 and 2.
IBUS 618 Dr. Yang
31
Discussion Questions
1. Outline the main characteristics of the four approaches to international staffing.
2. Which factors determine the choice of a staffing approach? Would a MNE choose
the same staffing approach worldwide? Place your arguments in the context of the
model outlining determinants of staffing choices and pros and cons of using PCNs,
TCNs, and HCNs.
3. What are the reasons for using international assignments?
4. What is the role of inpatriates? Do inpatriates guarantee a geocentric staffing
policy?
5. Why is it important to measure return on investment of international assignments?
Which indicators can be used?
6. As a newly appointed Project Manager of a research team, you consider that you
will be able to manage the project virtually from your office in London, even
though the other six members are located in Munich. This will solve your personal
dilemma as your family does not want to be relocated. The project has a six-month
deadline. What factors should you need to consider in order to make this virtual
assignment effective?
IBUS 618 Dr. Yang
IHRM Chapter 4
32
32