There are three major HRM strategies that may be adopted by a parent company in a host country, and they include ethnocentric, polycentric, global and hybrid. These strategies allow the parent company to have HRM policies in the host country which resemble of their country style or similar to the host countries local style or a companywide style irrespective of home or host countries favorite and established styles.
Ethnocentric is a staffing strategy used in companies that have primarily international strategic alignment usually adopted by headquarters by transferring employees from the home or parent countries to the host country. This strategy is used best in situations such as a team is sent from the parent country to assist in setting up a new plant as well as train subsidiary employees to use the new system. One relevance of this strategy to host country is that it might lead to the exemplary performance similar to that of the parent company. Another advantage of this approach is that it allows both the home and subsidiary companies to have a clear and joined approach to their HRM thus preventing detrimental and inconsistency, imbalance, and confusion. Lastly, the benefit of having staffs from a home country abroad is that employees may gain experiences worldwide to become a higher level in management of their headquarters because international managers require broad view and international exposure.
The Polycentric strategy is the policy involved in employing and promoting personnel who are citizens of the abroad country that the subsidiary is operated usually accompanied by a devolved organization structure and a few human resource plans for best practices. The value of this strategy is that the human resource policies and practices are in line with the host country culture and environment and are therefore easier to implement and get results. It also minimizes the hiring cost of employees and smoothens the communication within the operation.
Global strategy involves a strong cultural organization culture in which a collaboration between various best practices regardless of their country of origin are created and incorporate in the companies ways of doing things (Armstrong,1992). The major advantage of this strategy is that there is interrelation and consistency of management approach across the company. It also allows the subsidiary company to use the human resource policy that best suits it thus improving its performance.
While entering new markets, the parent organization need to understand the host country markets properly before deciding which HRM strategy best suits the market. By doing so, it will reduce chances of failure in the new market that may be costly to the parent company.
Best parent company strategy for India
Over the past 20 years, multinational companies have made considerable entries into the Indian market. But many have failed to realize their goals: some have succeeded in achieving large-scale market leadership but others havent maximized economies of scale. For multinationals, the key to attaining the next level is learning handle business the Indian way, rather than simply imposing global business practices and models on local markets hence the best strategy the Indian market use of Hybrid strategy.
In Hybrid strategy, the parent company treats each subsidiary depending on the circumstance surrounding it. It also enables a company to change a strategy adopted over time (Rowley & Warner, 2013). For example, a company may adopt ethnocentric strategy during formation of the subsidiary company in India but after a time change to polycentric strategy. For instance, an automobile company is one of the most profitable industry in India, growing at a rate of slightly more than 40 percent a year for the last ten years, through building local facilities, setting up development and research center that played a role to better comprehend what has appealed to Indian consumers.
The strengths of adopting a hybrid strategy on the Indian market is that the employees understand and are familiar with the organization culture that makes communication within the organization smooth thus improving the performance of the company. Also, it allows the hiring of a citizen of that country who understand the buying patterns and perception of the host country that has a competitive advantage when it comes to designing and marketing of company products.
Impact of workforce demographic on recruitment and selection in India
Recruitment and selection are the process through which qualified individuals are attracted on a timely basis. Following selection of incumbents, they can consequently be chosen to develop interest an organization and apply for jobs later. Suitable candidates are recruited and selected using appropriate techniques during their career development (Wood & Payne, 1998).Demographic characteristics such as age, gender and culture may affect the recruitment process of a company depending on the legislation of the concerned country.
In the recent past there has been a shift in recruitment and selection process in India and the World at large in search for an all-inclusive labour workforce, For example, there has been an increase in female employment that has an impact on working arrangements. With many women managing careers with children, most choose to work part-time, which may have a knock-on effect on the businesses.
Secondly there has been a shift on ethnicity. Most organization are now recruiting people from all ethical background in searching for unique skills and abilities from different cultures. This as an impact on the human resource policy that the organization has to adopt to understand the different cultures.
Age also has a major impact on recruitment and selection process. Most companies hire both the aged and the young people which has brought about generation conflict in this organization. To reduce these conflict the organization are forced to train both the aged and the youth to understand and appreciate each other way of doing things.
It is clear that these demographic factors require new approach by HR departments, who need to update required practices to curb ever rising challenges.
Armstrong, M. (1992). Strategies for human resource management: A total business approach. London: Kogan Page.
Continuing medical education: The perspective of quality ... (n.d.). Retrieved from http://journals.sfu.ca/cuaj/index.php/journal/article/download/1767/1534
How multinationals can win in India | McKinsey & Company. (n.d.). Retrieved from http://www.mckinsey.com/insights/winning_in_emerging_markets/how_multinationals_Rowley, C., & Warner, M. (2013). Globalizing International Human Resource Management. Hoboken: Taylor and Francis.
Wood, R., & Payne, T. (1998). Competency-based recruitment and selection. Chichester: Wiley.
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HRM Essay Sample on the Relevance of Parent Company Strategies in Host Countries. (2019, Jun 14). Retrieved from https://speedypaper.com/essays/the-relevance-of-parent-company-strategies-to-host-country-operations
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