Global Staffing

Hugh Scullion, David G Collings, David G. Collings

• Publisher: Routledge
• Year: 2006
• eBook ISBN: 9781134202829
• Topic: Business
• Subtopic: Business General
• Index: Business

Staffing is one of the biggest issues facing companies moving into the global market today. This book provides a multi-disciplinary, integrated and critical discussion-based analysis of current and emerging issues in global staffing.

It critically examines best practice and leading approaches, drawing on research from a range of disciplines including international strategy, management, HRM and organizational theory. The key theme of localization is also examined along with the complex associated implementation issues in a number of different regions.

This text takes a truly international approach, giving students of HRM and international business an in-depth understanding of the processes of global staffing.

1 Introduction

HUGH SCULLION AND DAVID G. COLLINGS

The major themes of the book

Global Staffing covers a wide range of topics within the rapidly developing field of international staffing. The comprehensive coverage encompasses strategic and operational aspects of global staffing and four major themes run through all the chapters.
The first is the need to understand global staffing strategies and practices in relation to the changing strategies of the international firm. The second is the need to explore the links between the implementation of international strategies and staffing policies and practices.
Third, there is the need to examine the various global staffing activities in ways that recognise how they link with each other. Finally we are also cognisant of subsidiary perspectives on staffing of subsidiary and headquarter operations and this is reflected in Chapters 2, 3, 7 and 8 in particular. The text is aimed at advanced undergraduate courses, masters’ level courses and also as a resource for the reflective practitioner.

This introductory chapter has four main aims. First, it seeks to provide a brief introduction and overview of international human resource management (IHRM) and to consider why international staffing is different from staffing in domestic operations. Second, it examines the main reasons for the growth in importance of international staffing. Third, it outlines the distinctive contribution of this volume and seeks to review important theoretical and empirical developments in the area of global staffing since the mid-1990s. The final section provides a brief summary for each chapter to help the reader identify the main themes and issues covered in each of the chapters.

Staffing in context

The emergence of international HRM

While the primary focus of this book is on Global Staffing, in contextualising our later discussions it is important to consider the evolution of IHRM. In this regard, companies operating in the international business environment are faced with a great variety of cultural and institutional variations which make managing in a multinational context particularly complex (Doz and Prahalad, 1986). Significantly, managers of multinational corporations (MNCs) are increasingly realising the importance of HR practices in ensuring the profitability and viability of their business operations, while research suggests that many firms continue to underestimate the complexities of managing human resources across borders which often results in poor performance in international operations (Dowling and Welch, 2004).

Despite some similarities between operating in the domestic and international business environment, there is growing recognition that IHRM is distinctive from HRM (Dowling and Welch, 2004), and there is growing support for the argument of Evans et al. (2002: 14) that ‘in the global era the most relevant insights into management processes will come from studying human resource management in an international context’.

There are two major factors which differentiate domestic HRM from IHRM. First, the complexities of operating in different countries (and therefore in different cultures), and second, the employment of different national categories of workers. Domestic HRM is involved with employees within only one national boundary, while IHRM, on the other hand, deals with three national or country categories: the parent country where the firm is usually headquartered; the host country where a subsidiary may be located; and other countries which may be the source of labour, finance or research and development. In addition, there are three types of employees of an international firm: parent country nationals (PCNs), host country nationals (HCNs) and third country nationals (TCNs). (For example, Citibank, headquartered in the USA, might recruit some Australian managers to work for them in Japan.) There is no consensus about the definition of IHRM although most studies in the area have traditionally focused on the area of expatriation (Brewster and Harris, 1999). A number of more recent definitions cover a far wider spectrum than the management of expatriates and involve worldwide management of people (Dowling and Welch, 2004). For example, Iles (1995) identifies four key areas in IHRM as recruitment and selection, training and development, managing multicultural teams and international diversity and performance management. Scullion (1995: 352), on the other hand, defined IHRM as ‘the HRM issues and problems arising from the internationalization of business, and the HRM strategies, policies and practices which firms pursue in response to the internationalization process.’ More recent definitions emphasise a more strategic approach and consider the role and organisation of IHRM functions, the relationship between headquarters and the local units as well as the actual policies and practices adopted. An important contribution defined IHRM as ‘the distinct activities, functions and processes that are directed at attracting, developing and maintaining an MNC’s human resources. It is thus the aggregate of the various HRM systems used to manage people in the MNC, both at home and overseas’ (Taylor et al.,1996: 960). This highlights that IHRM is concerned with identifying and understanding how MNCs manage their geographically dispersed workforces in order to leverage their HR resources for both local and global competitive advantage (Schuler et al., 2002). Globalisation has brought new challenges and increased complexity, for example in the form of changing organisational structures, such as the challenge of managing new forms of network organisation. In recognition of such developments, some writers have developed new definitions where IHRM is seen as playing a balance between the need for control and coordination of foreign subsidiaries and the need to adapt to local environments (Adler and Ghadar, 1990). More recently, definitions have been extended to cover localisation of management, internal coordination, global leadership development and the emerging cultural challenges of global knowledge management (Evans et al., 2002) suggesting that developing future global leaders is a key priority in the management of human resources in the global firm (Scullion and Starkey, 2000).

There are a number of indicators of the rapid development of the field of international HRM since the mid-1990s (Harzing and Van Ruysseveldt, 2004). First, it has been argued that the more rapid pace of internationalisation has led to a more strategic role for HRM and that a more systematic approach to studying international HRM is emerging. One good indicator in this regard is the development of more sophisticated theoretical work in the area including the development of frameworks which identify the main determinants of IHRM policy and practice and the development of models which bring together the strategic and international dimensions of IHRM (De Cieri and Dowling, 1999; Schuler et al., 1993). Another important indicator of the growing importance of IHRM since the mid-1990s is the rapidly growing body of empirical research on IHRM strategies and practices of MNCs taking place outside the United States (Scullion and Brewster, 2001). Research highlights the major differences in approaches to international HRM between US, Asian and European firms (Harzing, 1999; Jung, 1982) and one objective of this book will be to shed light on the differences in international staffing policy and practices employed by MNCs from different regions of the world. Indeed, global staffing is increasingly seen as a primary HR practice used by MNCs to control and coordinate their spatially dispersed global operations (Dowling and Welch, 2004). The next section will examine the reasons for the growing importance of global staffing in the international firm.

The emergence of global staffing as a key area in international HRM

We define global staffing as the critical issues faced by multinational corporations with regard to the employment of home, host and third country nationals to fill key positions in their headquarter and subsidiary operations. Thus our conceptualisation not only concerns the transfer of PCNs to subsidiary operations, as is implied in traditional definitions of expatriation, but also includes staff flows in other directions.
Global staffing has emerged as a critical issue in international management for several reasons:

• There has been a considerable increase in the mobility of human resources due to the more rapid growth of internationalisation and global competition since the mid-1990s (Black et al., 2000).
• The effective management of human resources at the international level is increasingly being recognised as a key source of competitive advantage in international business (Dowling and Welch, 2004).
• There is growing recognition that the success of global business depends most critically on recruiting the desired quality of senior management in the MNC (Schuler, 2000).
• Staffing issues are different and more complex in the international environment (Torbiörn, 1997), as in addition to the complexities of operating in different countries, the MNC employs different national categories of workers.
• The performance of expatriates continues to be problematic and the evidence suggests that the costs of poor staffing decisions in international business are often costly in human and financial terms (Dowling and Welch, 2004).
• Many MNCs continue to underestimate the complexities of global staffing and lack of knowledge of labour markets in a variety of countries and how to recruit in these markets is a major challenge for MNCs (Briscoe and Schuler, 2004).
• Shortages of international managers are a growing problem for international firms and the implementation of global strategies are increasingly constrained by shortages of international management talent (Scullion, 1994).
• The rapid growth of the emerging markets such as China and India (cf. UNCTAD, 2003, 2004) implies an increasing need for managers with distinctive competencies and a desire to manage in these culturally and economically distant countries (Garten, 1997). Also, there is greater competition between MNCs and local organisations in the emerging markets for managers with context specific knowledge of how to do business in such countries (Harvey et al., 1999).
• Global staffing issues are becoming increasingly important in a far wider range of organisations partly due to the rapid growth of small and medium enterprise (SME) internationalisation (Anderson and Boocock, 2002). Research has highlighted the importance of staffing and the top management team’s international experience to the performance of international SMEs (Monks and Scullion, 2001).
• Recent research highlights the importance of staffing strategies to the successful implementation of the rapidly increasing number of strategic alliances and cross-border mergers and acquisitions (Schuler et al., 2004), particularly as the context of strategic alliances and global business is increasingly shifting from formal, developed and mature markets to informal, emerging and culturally distant markets (Harvey et al., 1999).
• The move towards network multinational organisation and the shift away from traditional hierarchical organisation structure means a more flexible role for staffing in the global network organisation. The development of networks of personal relationships and horizontal communication channels requires a more significant role for global staffing in the network organisation (Boxall and Purcell, 2003; Marschan et al., 1997).
• Research has shown the growing importance of emerging staffing strategies such as inpatriation which reflect the growing need for MNCs to develop a multicultural international workforce (Harvey et al., 1999).
• There is a growing recognition that the source of advantage for multinational firms is derived from the firms’ ability to create, transfer and integrate knowledge across borders (Kogut and Zander, 1992). This suggests an increasingly strategic role for international staffing as the role of subsidiary knowledge and the organisational context is increasingly recognised (Foss and Pedersen, 2002; see also Minbaeva and Michailova, 2004).
• Recent studies have highlighted the growing importance of alternative types of international assignment suggesting the emergence of new patterns of global staffing (Fenwick, 2004). Research suggests that long-term expatriate assignments may become a less dominant aspect of international work (Harris, 1999) and that organisations are increasingly using a range of assignment options that were previously only considered within a limited geographical or national context. More employees are ‘international’ in the sense that they travel widely to other countries on behalf of their organisations on a variety of schedules from brief visits to intermittent expatriates who return home regularly for briefing and do not move permanently to longer term assignments (Mayerhofer et al., 2004).

In evaluating the evolution of the literature on global staffing we can point to a number of key trends. First, much of the early work on international staffing was drawn from research focused on North American MNCs and the main topic of attention was the explanation of expatriate failure, a concept which has received an amount of critical attention (Harzing, 1995). Much of this early work was largely descriptive, prescriptive and lacking in analytical rigour. A notable exception was the work of Tung (1981, 1982) which highlighted that expatriate performance was a particular problem for US MNCs. The management of expatriates continued to be a key issue in international staffing and North American academics ‘set the agenda’ in this field through exercising a defining influence on research and theory in this field (Scullion and Brewster, 2001). However, there was growing critique that many American based theories implicitly assumed universality despite a large body of empirical research substantiating the cultural diversity of values and the impact of such diversity on organisational behaviour (Hofstede, 1980).

A further critique suggested that staffing policies are often developed in isolation from other corporate policies and companies often fail to connect expatriate selection to the company’s international strategy (Brewster and Scullion, 1997). More recently, however, research has shifted towards considering staffing questions in a more strategic context. In an effort to consider the range of possible headquarters – subsidiary relationships, researchers are suggesting more ‘variety’ (Bonache and Fernandez, 1999) in approaches to staffing and other IHRM activities, and recent work has highlighted the advantages of mixed staffing approaches rather than adhering to a particular policy. Researchers are further drawing attention to the need to consider global strategy as well as local conditions in determining appropriate staffing approaches (Bonache and Cervino, 1997). Drawing on the theoretical notions of the resource based view recent research has attempted to explain the strategic dimensions of expatriate selection (Bonache and Fernandez, 1999). This reflects a new body of work which illuminates the linkage between expatriate assignments and competitive advantage by highlighting the importance of the transfer of tacit knowledge to new markets. It also highlighted the need to pay attention to the international transfer of teams and not just individual managers, which conflicts with the dominant trends in the literature.

Since the mid-1990s there has also been a rapid growth of research on international staffing outside North America, and particularly in Europe which has added to our knowledge of expatriation by contributing to a deeper understanding of the importance of the context in which international staffing takes place. This is an important development as studies suggest that there are major differences between US, Asian and European firms with regard to staffing practices (Kopp, 1994; Ondrack, 1985). This research also highlights the different staffing issues and challenges which firms face during the various stages of the internationalisation process (Scullion and Brewster, 2001). Harzing’s (1999) study highlights the importance of country specific factors and reports large differences between European co...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Illustrations
• Contributors
• Foreword
• Abbreviations
• 1 Introduction
• Part 1 Global staffing: theory and practice
• Part 2 Global staffing: composing the international staff
• Part 3 Global staffing: emerging themes