Staffing Internationally LEARNING OBJECTIVES
1. Be able to explain the three staffing strategies for international businesses and the advantages
and disadvantages for each.
2. Explain the reasons for expatriate failures.
One of the major decisions for HRM when a company decides to operate overseas is how the overseas
operation will be staffed. This is the focus of this section.
Types of Staffing Strategy
There are three main staffing strategies a company can implement when entering an overseas market,
with each having its advantages and disadvantages. The first strategy is a home-country national strategy.
This staffing strategy uses employees from the home country to live and work in the country. These
individuals are calledexpatriates. The second staffing strategy is a host-country national strategy, which
means to employ people who were born in the country in which the business is operating. Finally, a third-
country national strategy means to employee people from an entirely different country from the home
country and host country. Table 14.4 “Advantages and Disadvantages of the Three Staffing Strategies” lists
advantages and disadvantages of each type of staffing strategy. Whichever strategy is chosen,
communication with the home office and strategic alignment with overseas operations need to occur for a
successful venture.
Table 14.4 Advantages and Disadvantages of the Three Staffing Strategies
Home-Country National Host-Country National Third-Country National
Advantages
Greater control of organization
Language barrier is
eliminated
The third-country national
may be better equipped to
bring the international
perspective to the business
Managers gain experience in
local markets
Possible better
understanding of local rules
and laws
Costs associated with hiring
such as visas may be less
expensive than with home-
country nationals
Possible greater understanding
and implementation of business
strategy
Hiring costs such as visas
are eliminated
Home-Country National Host-Country National Third-Country National
Cultural understanding
Morale builder for employees
of host country
Disadvantages
Adapting to foreign
environment may be difficult
for manager and family, and
result in less productivity
Host-country manager may
not understand business
objectives as well without
proper training
Must consider traditional
national hostilities
Expatriate may not have
cultural sensitivity
May create a perception of
“us” versus “them”
The host government and/or
local business may resent
hiring a third-country
national
Language barriers
Can affect motivation of
local workers Cost of visa and hiring factors
HUMAN RESOURCE RECALL
Compare and contrast a home-country versus a host-country staffing strategy.
Expatriates
According to Simcha Ronen, a researcher on international assignments, there are five categories that
determine expatriate success. They include job factors, relational dimensions, motivational state, family
situation, and language skills. The likelihood the assignment will be a success depends on the attributes
listed in Table 14.5 “Categories of Expatriate Success Predictors with Examples”. As a result, the
appropriate selection process and training can prevent some of these failings. Family stress, cultural
inflexibility, emotional immaturity, too much responsibility, and longer work hours (which draw the
expatriate away from family, who could also be experiencing culture shock) are some of the reasons cited
for expatriate failure.
Table 14.5 Categories of Expatriate Success Predictors with Examples
Job Factors
Relational
Dimensions Motivational State
Family
Situation Language Skills
Technical skills
Tolerance for
ambiguity Belief in the mission
Willingness of
spouse to live
abroad
Host-country
language
Familiarity with host
country and
headquarters
operations Behavioral flexibility
Congruence with
career path
Adaptive and
supportive
spouse
Nonverbal
communication
Managerial skills Nonjudgmentalism
Interest in overseas
experience
Stable marriage
Administrative
competence
Cultural empathy and
low ethnocentrism
Interest in specific
host-country culture
Interpersonal skills
Willingness to
acquire new patterns
of behavior and
attitudes
Source: Adapted from Simcha Ronen, Training the International Assignee (San Francisco: Jossey-Bass,
1989), 426–40.
Most expatriates go through four phases of adjustment when they move overseas for an assignment. They
include elation/honeymoon, resistance, adaption, andbiculturalism. In the elation phase, the employee is
excited about the new surroundings and finds the culture exotic and stimulating. In the resistance phase,
the employee may start to make frequent comparisons between home and host country and may seek out
reminders of home. Frustration may occur because of everyday living, such as language and cultural
differences. During the adaptation phase, the employee gains language skills and starts to adjust to life
overseas. Sometimes during this phase, expatriates may even tend to reject their own culture. In this
phase, the expatriate is embracing life overseas. In the last phase, biculturalism, the expatriate embraces
the new culture and begins to appreciate his old life at home equally as much as his new life overseas.
Many of the problems associated with expatriate failures, such as family life and cultural stress, have
diminished.
Host-Country National
The advantage, as shown in Table 14.4 “Advantages and Disadvantages of the Three Staffing Strategies”,
of hiring a host-country national can be an important consideration when designing the staffing strategy.
First, it is less costly in both moving expenses and training to hire a local person. Some of the less obvious
expenses, however, may be the fact that a host-country national may be more productive from the start, as
he or she does not have many of the cultural challenges associated with an overseas assignment. The host-
country national already knows the culture and laws, for example. In Russia, 42 percent of respondents in
an expatriate survey said that companies operating there are starting to replace expatriates with local
specialists. In fact, many of the respondents want the Russian government to limit the number of
expatriates working for a company to 10 percent. [1] When globalization first occurred, it was more likely
that expatriates would be sent to host countries, but in 2011, many global companies are comfortable that
the skills, knowledge, and abilities of managers exist in the countries in which they operate, making the
hiring of a host-country national a favorable choice. Also important are the connections the host-country
nationals may have. For example, Shiv Argawal, CEO of ABC Consultants in India, says, “An Indian CEO
helps influence policy and regulations in the host country, and this is the factor that would make a global
company consider hiring local talent as opposed to foreign talent.” [2]
Third-Country Nationals
One of the best examples of third-country nationals is the US military. The US military has more than
seventy thousand third-country nationals working for the military in places such as Iraq and Afghanistan.
For example, a recruitment firm hired by the US military called Meridian Services Agency recruits
hairstylists, construction workers, and electricians from all over the world to fill positions on military
bases. [3] Most companies who utilize third-country national labor are not new to multinational
businesses. The majority of companies who use third-country national staffing have many operations
Figure 14.2 Phases of Expatriate Adjustment
already overseas. One example is a multinational company based in the United States that also has
operations in Spain and transfers a Spanish manager to set up new operations in Argentina. This would be
opposed to the company in the United States sending an American (expatriate) manager to Argentina. In
this case, the third-country national approach might be the better approach because of the language
aspect (both Spain and Argentina speak Spanish), which can create fewer costs in the long run. In fact,
many American companies are seeing the value in hiring third-country nationals for overseas
assignments. In an International Assignments Survey,[4] 61 percent of United States–based companies
surveyed increased the use of third-country nationals by 61 percent, and of that number, 35 percent have
increased the use of third-country nationals to 50 percent of their workforce. The main reason why
companies use third-country nationals as a staffing strategy is the ability of a candidate to represent the
company’s interests and transfer corporate technology and competencies. Sometimes the best person to
do this isn’t based in the United States or in the host country.
KEY TAKEAWAYS
There are three types of staffing strategies for an international business. First, in the home-
country national strategy, people are employed from the home country to live and work in the
country. These individuals are called expatriates. One advantage of this type of strategy is easier
application of business objectives, although an expatriate may not be culturally versed or well
accepted by the host-country employees.
In a host-country strategy, workers are employed within that country to manage the operations
of the business. Visas and language barriers are advantages of this type of hiring strategy.
A third-country national staffing strategy means someone from a country, different from home
or host country, will be employed to work overseas. There can be visa advantages to using this
staffing strategy, although a disadvantage might be morale lost by host-country employees.
EXERCISES
1. Choose a country you would enjoy working in, and visit that country’s embassy page. Discuss the
requirements to obtain a work visa in that country.
2. How would you personally prepare an expatriate for an international assignment? Perform
additional research if necessary and outline a plan.
[1] “Russia Starts to Abolish Expat jobs,” Expat Daily, April 27, 2011, accessed August 11, 2011, http://www.expat-
daily.com/news/russia-starts-to-abolish-expat-jobs/.
[2] Divya Rajagorpal and MC Govardhanna Rangan, “Global Firms Prefer Local Executives to Expats to Run Indian
Operation,” Economic Times, April 20, 2011, accessed September 15,
2011, http://articles.economictimes.indiatimes.com/2011-04-20/news/29450955_1_global-firms-joint-ventures-
investment-banking.
[3] Sarah Stillman, “The Invisible Army,” New Yorker, June 6, 2011, accessed August 11,
2011,http://www.newyorker.com/reporting/2011/06/06/110606fa_fact_stillman.
[4] “More Third Country Nationals Being Used,” n.d., SHRM India, accessed August 11,
2011,http://www.shrmindia.org/more-third-country-nationals-being-used.
http://www.expat-daily.com/news/russia-starts-to-abolish-expat-jobs/
http://www.expat-daily.com/news/russia-starts-to-abolish-expat-jobs/
http://articles.economictimes.indiatimes.com/2011-04-20/news/29450955_1_global-firms-joint-ventures-investment-banking
http://articles.economictimes.indiatimes.com/2011-04-20/news/29450955_1_global-firms-joint-ventures-investment-banking
http://www.newyorker.com/reporting/2011/06/06/110606fa_fact_stillman
http://www.shrmindia.org/more-third-country-nationals-being-used
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International Recruiting OBJECTIVES FOR LEARNING
1. Be able to explain the three international business staffing techniques and their benefits.
and each has perks and downsides.
2. Describe the causes of expatriate failures.
When a company decides to expand worldwide, one of the important decisions for HRM is how the overseas operations will be managed.
operation will be staffed. This is the section’s main point.
Types of Staffing Strategy
There are three main staffing strategies a company can implement when entering an overseas market,
with each having its advantages and disadvantages. The first strategy is a home-country national strategy.
This staffing strategy uses employees from the home country to live and work in the country. These
individuals are calledexpatriates. The second staffing strategy is a host-country national strategy, which
means to
