Modern day businesses have realized the importance of spreading their operations across the world to achieve the numerous benefits associated with international business. When compared to companies that are limited to their local boundaries, multinational companies have continued to dominate the world, especially with regards to financial performance (Baik & Park, 2015). However, international operations also have drawbacks or challenges that such corporations must encounter. According to Baik and Park (2015), some of the challenges include hiring and staffing the management team. The kind of managerial workforce that selected has an impact on not only the success of an entity in a foreign market but also the long-term survival of an organization. As a result, it is imperative for an organization to make the best decisions when recruiting employees and middle-level managers to spearhead its global operations. This paper examines and discusses the best approach for staffing a subsidiary in a foreign market, especially the South American market.
I would use the ethnocentric staffing model for all global operations. According to Marques, Holt, and Camillo (2014), ethnocentric staffing refers to a hiring model in which a company hires a management team, which comprises individuals that hail from the same nation as the parent company. Therefore, by selecting this model, it means that I would hire individuals from the parent company’s home country to manage its subsidiaries in South America. There are several rationales for selecting such a model. According to Baik and Park (2015), ethnocentric staffing usually appeals to multinationals that are motivated to maintain tighter control over the decision-making process in the branch offices spread across the world. Furthermore, the ethnocentric staffing model facilitates the transfer of unique knowledge from one region to the other. Research indicates that people from diverse cultural backgrounds often present unique opportunities. Each culturally diverse individual has distinctive ideas, perspectives, and beliefs (Marques, Holt & Camillo, 2014). As a result, when culturally diverse people come together, they share these differences to produce desirable, optimal outcomes. Therefore, with the ethnocentric model, the workers in the South American markets in which the company wants to operate will learn new approaches of doing things. Moreover, given that the managers will not come from the same country as the workers, they will acquire new knowledge and competencies on how to handle various issues that are related to the workplace (Marques, Holt & Camillo, 2014). However, the managers will also gain new insight into how the locals go about their contributions towards accomplishing their business goals. Such an influx of knowledge, as a result of the ethnocentric staffing, will help the company to prosper in this particular market.
It is also important to discuss reasons why the other methods of staffing are not ideal or appealing. The other staffing model is the polycentric model. It is a multinational staffing approach whereby each global branch is managed as a distinct national entity. The managers, as well as employees, are hired from within to mitigate cultural and communication issues. This approach to staffing might also be ideal. However, it does not allow for the sharing unique information and knowledge (Marques, Holt & Camillo, 2014). Besides, the parent company’s ability to control the hiring and staffing processes is significantly eliminated, which is not a good approach for my business. Moreover, the lack of international experience will serve as a liability, especially in regards to the fact that present day business environments are increasingly competitive. Furthermore, research indicates that polycentrism brings with it the challenge of achieving efficient communication between managers at the subsidiary level and those at the corporate headquarters.
The global staffing model involves selecting workers from across the world without prioritizing any group. A management team that has been recruited using this model often comprises people from different nationalities, religions, and cultures (Dörrenbächer, Gammelgaard, McDonald, Stephan & Tüselmann, 2013). Research suggests that this model is appropriate because it facilitates the sharing of unique knowledge, which will be integral to the company’s success in the South American market. Nevertheless, the process of hiring that the global staffing model requires is relatively complicated. Therefore, it can delay the company’s bid to venture into new markets. Additionally, with the global staffing model, the business is not guaranteed that it will hire the best managerial talents (Dörrenbächer, Gammelgaard, McDonald, Stephan & Tüselmann, 2013).
In sum, most businesses are spreading tire operations into global markets to increase their market share as well as sales. Therefore, such businesses must learn to deal with some of the challenges that are common in the global markets. Specifically, the companies must identify the best models for hiring or recruiting their employees and management staff. Some of the recruitment models include the polycentric, global, and ethnocentric models. As a result of the inefficiencies of the polycentric and global approaches to staffing, I am convinced that the ethnocentric model is the best approach for the hiring of managers for the upcoming subsidiaries in the South American market. Research suggests that the polycentric and the global approaches to staffing have critical gaps; therefore, they do not guarantee desirable outcomes for a subsidiary in a global market. In regards to the ethnocentric model, the parent company will have full control of the subsidiary and all the unique knowledge, as well as competencies, are shared.
References
Baik, Y., & Park, Y. R. (2015). Toward a better understanding of MNEs’ local staffing decision: a multilevel analysis. Management Decision, 53(10), 2321-2338.
Dörrenbächer, C., Gammelgaard, J., McDonald, F., Stephan, A., & Tüselmann, H. (2013). Staffing foreign subsidiaries with parent country nationals or host country nationals? Insights from European subsidiaries (No. 74). Working Papers of the Institute of Management Berlin at the Berlin School of Economics and Law (HWR Berlin).
Marques, J., Holt, S., & Camillo, A. A. (2014). Social Processes: Needs, Motivation, and Drives. Handbook of Research on Effective Marketing in Contemporary Globalism, 301.
