Regiocentric Human Resource Policy Essay ⋆ Business Essay Examples ⋆ EssayEmpire

A multinational organization is able to pursue one of a number of different approaches in relation to its international staffing. One of these approaches is the regiocentric staffing approach. A regiocentric approach is applicable to situations where regional groups of subsidiaries reflecting the organization’s strategy and structure work as a unit. Where multinational corporations structure their organizations based on regions, they are more likely to view their staffing on a regional basis rather than on a host country basis. A regiocentric staffing approach is one where the human resource policies reflect the strategies used by the multinational organization in that particular geographic region. This approach is similar to a geocentric approach in the sense that a wider pool of managers is used. Unlike the geocentric approach, however, the movement of managers is restricted. Under this strategy, regional staff have the capacity to move outside their countries, but they are limited to their geographical regions. While regional managers are also not able to be promoted to positions at headquarters outside their region, they do experience autonomy in terms of decision making within their regional boundaries.

A regiocentric staffing approach develops regional staff for key positions anywhere in the region that is defined by the multinational organization. For example, a United Kingdom–based company could differentiate into a number of different regions, including western Europe, eastern Europe, North America, Latin America, the Caribbean, southeast Asia, the Pacific Rim, the Middle East, and west Africa. Their staff could easily be transferred between countries in the western European region (e.g., from the United Kingdom to France; from Ireland to Italy), however, transfers between the regions (e.g., United Kingdom to Japan) would be rare. Regiocentric policies allow multinational organizations a means of gradually progressing from a strictly ethnocentric or polycentric approach to a more geocentric approach by breaking down the steps of transition.

Regiocentric staffing policies can involve the use of a mixture of host country and parent country nationals. Given the regional focus, all transfers within the region are considered to be host country nationals. Where parent country nationals are used, they are more likely to be allocated to a region rather than a particular country.

Because local subsidiaries are staffed almost entirely by host country nationals, the staffing policy is one that reflects sensitivity to local operations with less corporate integration, similar to the polycentric approach. Language and culture barriers are reduced alongside the costs associated with hiring. Additionally, this approach allows interactions and the sharing of information between those managers who have been transferred to regional headquarters from subsidiaries within the region and the parent country nationals who have been posted to regional headquarters.

The disadvantages associated with a regiocentric approach mirror those that accompany the use of largely host country nationals. Because of the high levels of control given to regional managers, the levels of control held by global headquarters may be inhibited. Furthermore, although a regiocentric approach does improve career prospects at national levels, opportunities are largely limited beyond the given subsidiary or region of operation. Thus, while opportunities may exist at the level of regional headquarters, these seldom extend to those at parent headquarters. Because a regiocentric approach constitutes a large concentration of host country nationals, there is also a risk that it can produce federalism among the regional units, rather than on a national basis. This, in turn, may hinder the organization from establishing a global stance.

Research has shown that better-performing multinationals are more likely to make use of regional transfers. Multinational organizations in certain regions may, however, experience difficulties finding adequately qualified managers to staff their operations. Those located in emerging markets such as China, eastern Europe, southeast Asia, the Middle East, and Africa, in particular, may encounter difficulties locating managers with the right mix of skills necessary to manage regional operations. In these situations, it is far more likely that parent country nationals will be posted.

Bibliography:

Yi Ying Chang, Adrian J. Wilkinson, and Kamel Mellahi, “HRM Strategies and MNCs From Emerging Economies in the UK,” European Business Review (v.19/5, 2007);
Fragkiskos Filippaios and Ruth Rama, “Globalisation or Regionalisation: The Strategies of the World’s Largest Food and Beverage MNEs,” European Management Journal (v.26/1, 2008);
David A. Heenan and Howard V. Perlmutter, Multinational Organisation Development (Addison-Wesley, 1979);
Allan J. Morrison, Daniel A. Ricks, and Kendall Roth, “Globalisation Versus Regionalisation: Which Way for the Multinational?” Organisational Dynamics (v.19/3, 1991);
Arnold Schuh “Regionalization in Central and Eastern Europe: Searching for Regiocentric Orientations in MNC Strategies,” Journal of East-West Business (v.13/2–3, 2007).

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