Approaches to Managing and Staffing Subsidiaries
Global companies have different types of selection of employees depending on whether candidates are from the home country, the host country, or a third county (Ball, 2004). 1. Home country. Company sent home country employees abroad. Usually, headquarters from the home country makes decisions, employees from the home country hold important jobs, and the subsidiaries follow home country resources management practice. 2. Host country national. The employee's nationality is the same as the location of the subsidiary. A company that applies this approach is under the assumption is that each country is different from all the others and that the subsidiaries in each country should develop locally appropriate practices. To impart knowledge of business techniques, the company may set up in-house training programs in the host country subsidiary, or send host county employees to home country business schools’ training programs (Ball, 2003). 3. Third country national. Hiring employees who are citizens of neither the home country nor the host country is often advantageous. Organizations try to combine the best from headquarters and the subsidiaries to develop consistent worldwide practices (Treven, 2006). The advantages of using local employees to staff international subsidiaries are local employees’ familiarity with the socioeconomic, political and legal environment and with business practices in the host country. This also demonstrates trust in the local citizenry. In addition, using local employees’ increases acceptance of the company by the local community, leads to recognition of the company as a legitimate participant in the local economy, and effectively represents local considerations and constraints in the decision-making process. The disadvantages are difficulties in exercising effective control over the subsidiary’s operation; it leads to postponement of difficult local decisions, difficulty in recruiting qualified employees, and communications difficulties in dealing with the home company personnel. The advantages of using expatriate employees to staff international subsidiaries include familiarity with the home company’s goals, objectives and policies; technical and managerial competence, and cultural similarity with home company. The ensuing transfer of business practice permits closer control and coordination of international subsidiaries and gives employees a multinational orientation through experience with the home company. The disadvantages include difficulties in adapting to the foreign language and the socioeconomic, political, cultural and legal environment (Briscoe, 2004). Also it involves high transference and salary costs result in personal and family problems. And then, it has a disincentive effect on local management morale and motivation.