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Business LibreTexts

14.2: Staffing Internationally

  • Page ID
    8296
  • 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 called expatriates. 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
    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.