According to Barro (2001), human capital is a collection of behaviors, knowledge, social, and individual qualities that are inherent in a person that helps to carry out labor to produce economic value. International companies are firms that operate in more than one country or continents, and thus, they have a vast scope of human capital to choose from. Therefore, they need to select the right fit of personnel who will be able to acclimatize to the cultural differences and record-high levels of production. The following are human capital characteristics that the international consider in recruiting their staff.
According to Ployhart (2012), the level of creativity of the employees is comparable to the value created by the employees. The international companies require to hire expatriates who can be able to; handle the company's business in new ways, those can be able to adapt to a foreign culture quickly and maintain the right perspective, those who can take a risk in new ventures and break the monotony of doing a thing repeatedly in the same way. The expatriate possessing high creativity skills will help the multinational corporations to develop practical problem-solving techniques, promote innovation, and develop top quality products and services that will help the company to compete favorably in different markets.
Knowledge and Experience
The level of knowledge and experience of the expatriates is paramount for International Human Resources Management operations (Ployhart, 2012). The expatriate's knowledge about the activities of the company, culture, clientele needs, and the market would assist the international companies in carrying out their operations and achieve profitability. On the other hand, the experience of the expatriates would result in high-quality products since the employees are established in their areas of services and therefore need minimal or no training to induct them into the companies. The more knowledgeable and experienced the expatriates are, the more they make value; thus, this is a quality for hiring the right fit for the international human resources management.
This is the third human capital to be considered for hiring the right fit employees for international companies. According to Ployhart (2012), talents are uniquely human characteristics that foster productivity. The foreign companies should commit to hire, preserve, and develop talented workers. To ensure they get the right fit, they should attract gifted employees who, in turn, will help the company to improve its business performance. The skilled expatriates become the right fit for the organizations because they help the company to keep up with the changes in the market and the development of superior brands that withstand competition in the market.
The human capital ability is the potential that one has that helps him/her to carry out some task (Ployhart, 2012). The skills of the employees hired in the international corporations give them the competency required in the assigned duties, thus becoming productive. Some of the abilities to be considered for the right recruits include but not limited to, ability to make a sound, sensible and suitable decision, impartiality in decision-making, ability to communicate effectively, professional skills, and ability to maintain excellent personal skills.
According to Crawley (2013), the EPRG model is an abbreviation of ethnocentric, polycentric, region-centric and geocentric, which is an approach by the international companies, which helps them to make decisions and carry out operations between their headquarters in the mother country and the subsidiaries across different geographical locations.
Ethnocentrism is a method of international recruitment where the right person for the job is hired based on the required skills and the readiness of the applicant to adapt to the culture of the hiring organization (Crawley, 2013). However, recruits from the mother country of the company fill the critical positions at the apex. In this approach, making all the strategic decisions happens at the head office, and the subsidiaries are subject to implement them. This approach relies on the premise that staffs from the mother country are superior and can better represent the welfare of the head office as compared to expatriates from the host countries. Challenges associated with ethnocentrism include cultural clashes, cost implications due to the hiring of expatriates expensively, and government restrictions that may prohibit the business.
According to Crawley (2013), the polycentric approach considers every subsidiary as a separate national entity. The subsidiaries employ their staff from the host country to fill the available positions, including the top managerial positions. This approach is supported by the idea that employees from the host country are aware of the environment; therefore, the company will not face problems in establishing itself in that particular market. Besides, the approach acknowledges that doing business in different countries requires different methods; therefore, there is a need to decentralize the decision-making process. Challenges associated with this approach include the language barrier and inadequate market information in the host country.
The third approach of hiring in international companies is region-centrism (Crawley, 2013). Region-centric is the process whereby managers of the subsidiaries are employed from other countries within the region where the host country is with the same or almost the same culture. This approach is used to help the company select people who are aware of the business patterns in the host countries and the clientele needs. Also, this approach helps to cut costs by employing talented employees locally. Some of the challenges that affect this approach include barriers in communication and hostility in some countries.
Lastly, international companies can also use a geocentric staffing approach (Crawley, 2013). This approach entails hiring the most suitable person at any level of the multinational corporation irrespective of the nationality. This approach postulates that the globe is a pool of skilled and talented workers; therefore, qualified applicants should be selected regardless of their nationality. This approach helps international firms to have staff with international experience, thus being able to have an integrated global policy. The plan has two main challenges; first, there is a need to find employees and managers with the ability to adapt quickly with various cultures. Secondly, due to cultural diversity, one loses the advantage of concentrating on one culture in a single country.
Barro, R. J. (2001). Human capital and growth. American economic review, 91(2), 12-17.
Crawley, E., Swailes, S., & Walsh, D. (2013). Introduction to international human resource management. Oxford University Press.
Ployhart, R. E. (2012). Personnel selection: Ensuring sustainable organizational effectiveness through the acquisition of human capital. The Oxford handbook of organizational psychology, 221-246.
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