14.7 Organizational structure and human resource management  (Page 5/6)

Disadvantages: Home country employees are expensive. Many companies estimate that sending an expatriate overseas costs about 2-5 times their annual salary. This means that sending an executive and their family overseas can cost hundreds of thousands of dollars or more per year. The home country employee is usually less familiar with the local culture and employment conditions, and the employee and the family may find it hard to adapt to the new local living and working conditions. In fact, according to widely cited research, failure of the spouse and of the family to adapt to local cultural differences are two of the most frequent reasons that an employee assigned to an overseas post will fail to complete their assignment. Ethnocentric staffing practices are also sometimes criticized for preventing talented local employees from filling the positions held by expatriates.

Polycentric staffing involves hiring local personnel to fill needed overseas positions. For example, under this model, a South African company setting up an office in Brazil would hire a Brazilian to fill an open position.

Advantages: A polycentric staffing strategy is much less expensive than the ethnocentric model. Relocation costs are usually much lower and a standard compensation package consistent with the local market is usually sufficient. Local employees are usually more familiar with the local culture and language and may have access to networks and relationships with local stakeholders.

Disadvantages: Talent is often short in host countries. Lack of familiarity with the home country conditions, culture and language may become a barrier to effective communication with the headquarters staff. Lack of familiarity with headquarters operations may make it difficult for the local staff to access needed resources and assistance.

Geocentric staffing involves staffing a location without regard for the employees’ place of origin. Companies simply scan their global workforce for the best qualified candidate to fill a position. In this model, a Chinese company might fill a position in their Mexico office with an employee from the United Kingdom.

Advantages: The geocentric model offers the most employment flexibility and choice to the company. The company can search the entire global workforce to find the most qualified candidate for a certain position. Opportunities for cross-cultural development are extended to company employees no matter which country they come from. The additional global interaction taking place can foster teamwork across countries and a better cross-border understanding of company operations. A cadre of globally savvy employees with experience in multiple company locations can be a powerful asset as the company continues to seek additional overseas opportunities.

Disadvantages: Geocentric staffing can be as expensive as ethnocentric staffing practices. Employees and families often have to be relocated across country boundaries and long distances. Geocentrically placed employees may be unfamiliar with local practices.