Ethnocentric Human Resource Policy Essay ⋆ Business Essay Examples ⋆ EssayEmpire

The term ethnocentric is derived from the Hellenic (Greek) word εθνοκεντρισμός, a composite word that consists of the term έθνος, which means nation, and the term κέντρο, which means center. The meaning of the term is identical in both the Hellenic and the English language, and signifies that policies and systems in the countries in which the multinational corporation operates (the host countries) revolve around the policies and systems of the country from which the multinational organization originates (the home country).

In ethnocentric orientation, human resource systems in the host countries mirror those that are utilized in the home country. The idea is that if these systems have worked well in the home country, they should work well everywhere, with little or no adaptation to the local conditions and culture. Hence, the ethnocentric human resource approach pays minimal attention to local factors. However, evidence suggests that direct transferability of human resource systems across national boundaries without taking into account cultural factors is risky.

A trademark characteristic of the ethnocentric human resource approach is the employment of home country nationals to fill key positions in the host country. Reasons for adopting an ethnocentric approach in the staffing of operations include:

Starting up operations in host countries. This is a critical stage, and there is a need to place individuals in host countries who are fully aware of the needs of the multinational and any specifications, as these have been set by the headquarters. Normally individuals who are most familiar with the goals and demands of the multinational as these have been set by the headquarters are home-country nationals who have been with the corporation for some time.
Technical expertise. Many times multinational corporations need to transfer scientific and technological knowledge, professional expertise, and managerial skills into new operations. In many cases the knowledge and skills do not exist in the local workforce, especially if the product is highly specialized and utilizes cutting-edge technology. Therefore, it is necessary to deploy home-country nationals in host-country operations.
Maintenance of financial control and facilitation of coordination. A major need for the headquarters is effective and efficient communication as well as trust with key employees in host countries. It is natural to consider that this is more feasible when key positions in host-country operations are filled with home country nationals.
Provision of international experience for promising managers and professionals. An assignment abroad normally requires ability to work independently and to show initiative in an unfamiliar environment. This serves as a test and as an opportunity for development for home-country managers and professionals who are groomed for senior positions.
Need to maintain the foreign image of the multinational corporation. Sometimes the headquarters consider that it is in the best interests of the corporation that operations in particular countries are associated with the home country. This, for example, can be the case when products from a particular home country in a particular market have a very good reputation; or when a particular home country is viewed positively by host-country nationals.
The multiracial or multireligious population of the host country. In some cases the host country has a population that belongs to two or more races or religions that have a history of rivalry. In such cases it may be risky for the multinational corporation to appoint a local national, because nationals from the other races or religions may perceive it as bias against them.

Ethnocentrism in human resource policy has been the norm in the past, but it is a phenomenon that is dissipating. There are a number of reasons for this, including the realization of the importance of cultural factors in the appropriate functioning of human resource systems, the improving level of education around the globe that has increased the availability of qualified managerial and professional workers in host countries, and the high cost of expatriates.

Bibliography:

David G. Collings, Hugh Scullion, and Michael J. Morley, “Changing Patterns of Global Staffing in the Multinational Enterprise: Challenges to the Conventional Expatriate Assignment and Emerging Alternatives,” Journal of World Business (v.42/2, 2007);
Terence Jackson, “The Management of People Across Cultures: Valuing People Differently,” Human Resource Management (v.41/4, 2002);
Jo Rhodes, Paul Walsh, and Peter Lok, “Convergence and Divergence Issues in Strategic Management—Indonesia’s Experience With the Balanced Scorecard in HR Management,” The International Journal of Human Resource Management (v.19/6, 2008);
Michael Stevens et al., “HR Factors Affecting Repatriate Job Satisfaction and Job Attachment for Japanese Managers,” International Journal of Human Resource Management (v.17, 2006);
Miao Zhang and Christine Edwards, “Diffusing ‘Best Practice’ in Chinese Multinationals: the Motivation, Facilitation and Limitations,” The International Journal of Human Resource Management (v.18/12, 2007).

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