Strategic Global Human Resources Management in the Twenty-First Century
by Michael Harvey and Nancy K. Napier
[p.42] The authors start off that in a globalized economy the only advantage businesses have is
"the uniqueness of their human resources and their system of managing human resources". They understand an effective global organization to be a
"repository (Behälter, Fundgrube) of skills, competencies, routines, and dynamic capabilities that are managed by multicultural management teams in a manner difficult for global rivals to replicate". [p.43] Therefore global managers are needed who
"possess a complex amalgamation (Vermischung) of technical, functional, cultural, social, and political skills to successfully navigate the intricacies (Feinheiten) of the new global manager responsibilities".
[p.44] Outlining how companies start doing business abroad, they define a little evolution.
[p.45] At first businesses simply check out their potential in the host country. In this phase they completely rely on their home-grown staff. Expatriates hold the key positions and all of the parent organization's structures and processes are transferred unmodified. The advantages of this
"exportive or ethnocentric orientation" are obvious. The parent organization remains in full control and promising managers gain international experience.
When the host organization appears to bear enough potential, companies shift to a more
"adaptive or polycentric orientation". Host country nationals are employed to manage the business abroad. Human resource management is based on local policies, philosophies, and personnel. All in all the branch office receives more responsibility. Harvey and Napier note that in many countries organizations will directly have to rely on host country nationals. Especially in developing countries this is a popular approach since there are simply not enough expatriates who would give up the comfort of their home.
While the reliance on local staff makes it difficult to implement the corporate culture, it allows the company to more deeply set roots in the foreign country. While at the same time it offers the host country to establish competencies of training and work.
[p.46] In the third step a
"integrative or regiocentric orientation" is established. Ideally staff is exchanged mutually between the headquarter and the subsidiaries and staff is employed on both sides regardless of nationality (even third country nationals are being employed). In this system the best of both sides is used to the company's success.
[p.47] Thus there are different kinds of global managers: the expatriate, the local national, and the inpatriate managers.
The Expatriate
So far sending expatriates is the common business option for companies working abroad. They posses advanced technical as well as business skills, are experienced and hold a broad, informal knowledge in working within the parent organization. While it is their task to establish their company in the foreign country, they often fail to manage and to adjust to the given cultural setting. Even though this fact is well known it still remains difficult to select promising expatriates. [p.48] Research (as I already introduced) nowadays focuses on predictive character traits, mostly focusing on the Big Five (though introduced already, here a short-form):
- extroversion: ability to assert oneself and to gain acceptance through social relationships.
- agreeableness: ability to form reciprocal social alliances and thus to build social capital within the organization; acting as a team player
- conscientiousness (Pflichtbewußtsein): being trustworthy, supportive, and diligent
- emotional stability: ability to cope with stress on a professional as well as on a private level
- openness and intellect: ability to complete an assignment as supposed and apply changes where needed
Though the authors do not support research on predicting expatriate success based on singling out certain character traits they introduce multiple screening devices. [p.49] The Ashridge Management Research Center, for example characterize expatriates by their
"(1) strategic awareness and support,
(2) adaptability in [p.50] new/novel environmental situations,
(3) sensitivity and openness to other cultures and social mores,
(4) language capabilities, and
(5) interpersonal communication skills."
Other sources call expatriates to posses the so-called soft skills such as
"global awareness, international strategy, cultural empathy, international or cross-cultural team building, international negotiation skills, ethical understanding of conducting business in foreign countries, and self-efficacy."
Altogether they pin down expatriate's failure to be caused by problems to adjust to the organization and/or the culture and due to family-related issues. They warn of a lack of cross-cultural training and a lack of support by the organization itself to transfer and to adjust. The authors caution against damaging relationships and therefore business opportunities in the long run, and against damaging the expatriate's career.
Local Nationals
The advantages of hiring local nationals in emerging markets are obvious: They possess a
"tacit knowledge of cultural, social, and economic characteristics". [p.51] Thus they have a lead on handling local institutions. They can rely on a professional and personal network - which expatriates would still have to establish. Different to expatriates who are only on short-term assignments they are also more likely to guarantee stability and do not need any adjustment time. In that regard they are also less expensive since the company does not need to pay extra for housing and incentives.
Additionally, the authors suggest that local nationals might be especially highly motivated because of extra benefits, compensation, and the prestige working for an international company. Presumingly receiving more acceptance throughout staff then foreigners, they could also function as a role model. Especially in developing countries the authors expect to find a larger pool of applicants in the host country than expatriates. They even suggest to find staff that is perfectly qualified but simply does not meet the local market needs - e.g. women. (But actually I think that that contradicts their assumptions of a higher acceptance of local nationals - it sure offers new chances to the affected potential employees but putting them in lead positions might need some extra effort to establish their role.)
As disadvantages Harvey and Napier name questionable loyalty. They also mention difficulties to first find and then retain qualified staff with experience. They assume potential qualified staff to be mostly integrated in family owned businesses or in the government. They also warn that different cultures might stick to different hierarchies: the most qualified might not necessarily be accepted in the designated role when normally, for example, the oldest person holds the lead position. It might also be difficult to impose Western business practices and policies on the subsidiary.
Altogether it seems as if multinational companies are afraid to take the challenges and even more important they are reluctant to give away control.
Inpatriate Managers
Inpatriate managers are host country nationals who are referred "back" to the headquarter. Harvey and Napier understand them to be
"linking-pins". [p.52] As expatriated host nationals they possess a deep social knowledge about their home country, they have their existing networks, they know the culturally "right" way of handling staff and partners. Going abroad they are getting attached to the businesses corporate culture and thus gain credibility and trust. They broaden their skills by taking an external view on the local business, getting
"a keen sense of the dynamics". Having grown up with a different education, different training and different work experiences they can enrich the company to a "pluralistic strategic orientation". Thus inpatriate managers can function as
"boundary spanners between the domestic and foreign operations of a company".
Harvey and Napier see inpatriate managers to be the future of global business.
in: Gerald R. Ferris, M.Ronald Buckley, Donald B. Fedo.:
Human Resources Management - Perspectives, Context, Functions, and Outcomes. Upper Saddle River, NJ: Prentice-Hall, 2002. 4th edition
