Case study – Spanning the globe, Allen D. Engle, Sr.
Introduction
Eric Christopher was the Associate Director for Global HR Development at Tex-Mark. He got a very good education in Europe, he travelled a lot around the world and he could speak many languages as well. Tex-Mark was a firm in the printer and optical scanner industry. It had international production facilities. Eric had two meetings: one with the Plant Engineer (Fred) and one with the Director. Eric knew also the plans that the company wanted costs cut and the Vice President for HR wants this by having cheaper training programs, shorter expatriate assignments and a faster appointment of HCNs.
At the first meeting, Eric realized that Fred’s team did not relate well to their Mexican counterparts and Tex-Mark did not treat the local and national government agencies with enough respect and sensitivity. Although, it seemed that Fred will get a good position in India, but in the last minute, another candidate got it. Eric thought that this was due to Fred’s unwillingness to train and hand over responsibilities to local engineers and his inability to work well with district and federal regulations in India.
After the first meeting, Eric prepared for the second one with the Director and gathered all the necessary data. He realized that there is a big need for language training because China is more challenging, but this causes language problems and cultural difficulties as well. He was also thinking on the repatriation, so he searched the data on repatriate turnover.
HR Analysis
The strength of the HR manager department is the innovativeness, they offer many career opportunities for their employees and they also care about them. They have good strategies for expatriate preparation and on-assignment support. They also support the expatriate’s family with job search activities and they help finding good schools for the expatriates’ children. This expatriate training program has language courses, where the expatriate can learn the basic, “survival” level of the given language. These candidates also get some cultural knowledge about the given country. We can mention as a weakness of the HR that this program doesn’t work well because many engineers do not want to participate on this program. The pre-departure activities are not compulsory which means that if the expatriate decides not to participate then he/she does not get the required knowledge and training for the foreign assignment.
Question 1. Summarize your thoughts on the problems at hand, alternative solutions and your strategy on how to proceed at the forthcoming meeting.
The biggest problem in case of Tex-Mark is that not every manager (e.g.: Fred) can see the opportunities of the expatriate preparation and on-assignment support what Eric developed and they do not want to participate on this training. But this program would be a good solution for reducing the problems occurred by the departure. They have language courses, the company supports the families of the expatriate and they also offer cultural programs for the candidates. However, these activities are not compulsory and many expatriate quit these programs.
The company uses the ethnocentric approach which suits for an international strategy, it creates global culture, and the transfer of core competencies are advantages of this strategy. However, the drawbacks come out, too. These are cultural myopia, expensiveness and immigration barriers. As the company would like to reduce the costs of training and shorter the assignment, we think that polycentric staffing philosophy would suit better to the organization. This strategy means that the key positions are staffed by local managers, then the company could reduce its costs, and it also avoids the adjustment problems of expatriate managers and their families. Employing host-country nationals eliminates language barriers and this strategy avoids the turnover of key managers that results from the ethnocentric approach and we can see it in the case of Tex-Mark also.
Our team would gather all the data which are relevant in this case, like costs, language problems, turnover rate, cultural differences and the time required for the adaptation. These are all underlying the drawbacks of the ethnocentric approach and as an alternative, we would suggest the polycentric approach which solves these problems.
Question 2. How will your proposal solve the problems you have defined?
The polycentric approach would solve all the problems which occurred because of the ethnocentric staffing philosophy. Using this strategy, the company employs HCNs and it eliminates the language barriers. We could see, that at the company there were many problems with the different languages, so after this approach, it would be reduced. Moreover, it avoids the adjustment problems of expatriate managers and their families and it also reduces the problems which come from the cultural differences. This strategy is much cheaper than the ethnocentric and the company would like to reduce the costs, so the polycentric staffing would suit to this plan. Further, it reduced the political and environmental risks and it avoids the turnover of key managers also.
On the other hand, there are some disadvantages which have to be carefully analyzed by the organization. First, it can cause a gap between HCN subsidiary managers and PCN managers at corporate headquarters. Mainly language problems and cultural differences can cause this gap but with a good (and cheaper) training these can be solved. This kind of staffing philosophy limits the HCNs managers’ opportunities to get foreign country experience. Tex-Mark should analyze this drawback, whether it is a big problem or not. We would suggest making a survey or an interview with the employees and ascertaining their motivation to work abroad. If there is no need for this experience outside their own country, then the HR department can introduce the polycentric approach and use this in the further.
Question 3. How can you defend your solution from budgetary concerns? In what way is your approach both a solution to the problems of expatriates at Tex-Mark and a good economic investment?
The polycentric staffing strategy is much cheaper than any other strategy. The company does not have to spend money for the expatriate’s training and for the support of the expatriate’s family, which are huge advantages. This solution also reduces the language barriers, so Tex-Mark can save again money by reducing the costs for language courses. After repatriation, the company can save money again because the expatriates do not have to go through a career counseling session with HR staff. Even, if the high-quality applicants get a premium, this strategy is less expensive, than the previous used ethnocentric.
If we see this problem from an economic view, the polycentric philosophy is also a better investment opportunity for the company. Employing host-country nationals improves the continuity of management because these employees can stay longer in a position, which will increase the performance and the efficiency of the company. Using the ethnocentric approach, this was impossible and also the expatriates did not want to stay long in a foreign country. Cultural differences, political and environmental risks decrease, so the company does not have to handle these questions. This approach also solve the compensation differences because in many cases, the company has to pay different salaries for PCNs and for HCNs. This could have created before a gap between the two specialists, but now, these differences disappear. Not to mention the fact, that HCNs can improve their knowledge also, so they will get a better opportunity for developing and getting a higher position.
Question 1. Does Eric’s personal background assist in his assessment of the problems he faces?
Eric studied History and Spanish in Texas, but he spent many summers in Europe because his grandmother was born and grew up in Scotland. Eric could speak many languages well; he travelled a lot around the world as well, so he has a very good cultural intelligence, which is necessary for his position. He worked for SouthWest Airlines for four years and he got work experience there. Tex-Mark has subordinates in Mexico, Leith, Scotland and in Jaipur, India. The company would like to start production in Wuhu, China next year. Eric travelled a lot in South America and in Europe, where he got knowledge and experience about the cultural differences. This experience can be used very well at Tex-Mark because the company has subsidiaries in these regions. Eric begins studying Mandarin which is also very useful if Tex-Mark would like to start its production.
On the other hand, he does not have economic knowledge, so he needs to improve this area in order to give good advices for the company. We think that in a global world this knowledge is necessary and very important. Eric has the required cultural awareness, working experience and he developed a very good plan for the expatriate’s on-assignment support. He just needs some improvement in economy and management.
Question 2. Would you have approached this situation differently? If so, what benefits would your different approach provide for Tex-Mark?
Using the polycentric staffing strategy is just one option. We described the advantages and disadvantages of the polycentric approach before, now we would like to present how the ethnocentric approach could work properly in this situation.
In order, to use this strategy well, all the expatriates who will work abroad, has to participate on the pre-departure activities which were developed by Eric. These are very useful; the candidates will get good language skills and cultural intelligence. The assignments will improve the expatriates’ knowledge about the world and about the different subsidiaries. After the repatriation, headquarter can use this experience and they can improve the performance and the efficiency of the subsidiaries. This philosophy suits for those companies where the whole organization is centrally controlled. The company can choose the best people for the job, so they can be sure that this employee has the required special skills and experiences. Managers can get international experiences which broaden their mind.
Both strategy can be used effectively, the question is, what is the aim of the company? What are the opportunities using the ethnocentric or the polycentric approach? After discussing these questions, Tex-Mark can decide which staffing philosophy suits best and use that one properly. The HR has to involve the managers and specialists into this question and decide it together with them. If the managers and engineers are involved into the decision making process, they will accept the final decision better.
Conclusion
This case study helped us to understand the different staffing approaches better in an international environment and decide which strategy would be better for the organization. Both strategies have the advantages and disadvantages, so the decision was difficult. Tex-Mark would like to reduce the costs and the repatriation turnover rate was high, that is why we have chosen the polycentric staffing philosophy. It is very important to consider the pros and contras, listen to the employees: what they want; and after make the final decision. We think that the HR of Tex-Mark should improve in this field. If they involve the engineers and the managers from the subsidiaries into the decision-making process, they could get a better solution for the problems.