14.2: Staffing Internationally

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Learning Objectives

Be able to explain the three staffing strategies for international businesses and the advantages and disadvantages for each.
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		Can affect motivation of local workers

Human Resource Recall

Compare and contrast a home-country versus a host-country staffing strategy.