Staffing Policy

By | May 17, 2020

Staffing policy is concerned with the selection of employees for particular jobs. The challenge is whether to fill the vacant positions with home (local) individuals or expatriate (imported) labour.

Management can select any of the following staffing policies:

Ethnocentric Approach:

Here, the home country nationals fill the top-level or key level management positions in the host country. It is the view that home-country evaluation criteria, knowledge, management style, attitude and managers are superior to those of the host country. Countries follow this approach when they feel that host countries are less competent in managing the business. Also, when they believe that the home country practices are the core competencies of the business.

Polycentric Approach:

Polycentric staffing needs host-country nationals to be recruited to manage subsidiaries, while parent-country nationals occupy key positions at corporate headquarters (USA). It is a conscious belief that only the host-country market. With this, the company does not suffer from cultural myopia and perfectly manage the cultural misunderstandings. Implementing this policy is less expensive as compared to the ethnocentric approach.

Geocentric Approach:

A geocentric staffing policy seeks the best people for key jobs throughout the organisation, regardless of nationality. This policy aims at ensuring maximum utilisation of its human resource. A geocentric policy enables the firm to build a cadre of international executives who feel at home working in a number of cultures. It is the belief that the company’s whole management staff must be spread on an inclusive basis. It is based on the assumption that the best manager of a particular position anywhere may be in any of the nations in which the firm operates.

Staffing Policy Functions:

The staffing policy of an international firm comprises of the following functions:


Unlike home-country, a multinational has four categories of potential labour that can be hired. They are as follows

Expatriates: These are individuals rendering series in another country. There are non-citizens of the countries in which they are working.

Locals: These are nationals of the country where the country is operating. They comprise of citizens of the countries in which employees are working. It is also called host-country nationals.

Home-country Nationals: The nationals of the country where the company has originated. They are citizens of the country in which the MNC company has its headquarters.

Third-country Nationals: Labour can be acquired from any third country apart from the host country and home country. Citizens of a country other than a parent or the host country.


  • Selection in IHRM is difficult as compared to HRM. This is because the adaptability of the individual has to check. Also, conventionally, most selection of expatriates was done exclusively on the basis of positive records of job performance in the home country.
  • Selection criteria include expatriates willingness to go abroad, personality factors leadership skills technical/professional skills and previous performance appraisals, previous experience in the country, the ability to work with the teams etc.
  • The best practice is international selection include facilitating self-selection to enable expatriate applicants to decide for themselves whether the projects are right for them. It also includes providing realistic previews to prospective assignees. It uses traditional selection techniques that focus on personal traits such as communication skills, openness etc.
  • Varies agencies such as The Overseas Assignment Inventory (OAI) renders services in developing and testing the competences of the prospective candidates. Personality test looks for candidates who are agreeable, extroverts and emotionally stable. This is because they can easily adjust to the new environment.
  • In selecting employees for global assignment, managers should think through the legal issues of the host countries.
  • Another challenge in staffing comprises ensuring that the employees are following code of conducts. It is challenging to construct global standard laws that can be exported to other countries also.

Training and Development:

Developing a training programme for people having cultural diversity is tricky and challenging. There are various organisations that are specially designed to provide training to expatriates. One such program targets at providing the learner/trainer with

  • An understanding of how cultural values affect communications, values, behaviours and perceptions.
  • The basics of the host/new nation’s demographics, business norms, education system, history.
  • Explaining why such movement to a new country can be difficult and how to tackle the challenges coming along with it.
  • Preparing the persons and their families to successfully interact in everyday life and occupational situations in a foreign country.
  • Understanding the impact various factors have on cultural behaviours and telling about various cultural shocks.
  • The company uses on-going training methods before the departure of the employee for the new country. Also, some of the training programmes are continuous.

Performance Appraisal:

An appraisal is the most complicated part because the question arises who does the appraisal? Whether the local management does it or the parent company. Also, certain gestures have a different meaning in different cultures. This can mislead the person doing the appraisal if he is not accustomed to the new culture. One of the best appraisal practice is to have appraisers from both homes as well as the host country. The key factor to be considered while conducting appraisal is

  • If the home-office manager does the actually written appraisal, have him or her use a former expatriate from the same overseas location for advice.
  • Weight the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s appraisal.
  • Adapt the performance criteria to the local job and situations and conditions.

Compensating Policy:

  • This challenge deals with estimating the remuneration for the workforce abroad. Many firms have three choices in front of them. i.e. pay, so that person’s home-country standard of living stays the same, pay based on what locals in the new country are paid or continue paying based on the person’s current home-country pay.
  • If the compensation is made on the basis of home-country’s standard of living, then the expatriate will be in shock, especially if he is working in a developing country. It is still logical to maintain the home country pay. The most appropriate method is paying him so that his home country’s standard of living remains the same. This is also known as the balance sheet approach. It aims at equalising the purchasing power across countries. It aims ar equalising the purchasing power across countries, a technique known as the balance sheet approach.
  • Companies pay numerous incentives to inspire the worker to take the job overseas. Some of these are Foreign Service premiums are financial payments over above regular base pay.
  • Hardship allowances pay expatriates for hard living and working conditions at certain foreign locations. Mobility premiums are usually lumpsum payments to recompense employees for moving from one job to another.

Thus, aforementioned were the challenges faced by the global human resource management.