Strategic Human Resource Management BMO5572 Individual Assignment

What are the advantages and disadvantages for employers of employing migrants? Do these differ from the native-born population?

Prepared for: Dr Karen Manning & Dr Nagiah Ramasamy

Prepared by: Lim Seu Li Sally VU ID: 3907809 Sunway ID: 11058856

11 March 2012

Gone are yonder days of the Objectivist and Constructivist schools of thoughts where they assumed that an individuals career has been confined to the service of one, or very few, organisations. In a journal by Bani and Harrys (2004), it was suggested that since the 1980s, these assumptions have changed tremendously. Globalization, restructuring, downsizing, reorganizing, and outsourcing have transformed business, and the structure of the workforce has also changed. The paradigm shift saw employees unilaterally taking charge over their careers and seeking employment that enables them to achieve excellence and stay competitive. This gave rise to the number increase in migrants in boundaryless global careers. The term migrants will be interchangeably used with expatriates here. According to Harzing and Pinnington (2011) while the term expatriate could factually be taken to refer to any employee that is working outside his or her home country, it is normally set aside for Parent Country Nationals (and sometimes Third Country Nationals) working in foreign subsidiaries of the Multi National Company (MNC) for a pre-defined period, usually 2-5 years. Much of the work stressed the factors that might influence the choice between using Parent country nationals (PCN) or Host country nationals (HCN) and / or Third country nationals (TCN). Factors such as parent country/company, host country, industry and subsidiary characteristics can influence the choice between PCN and HCN (Harzing and Pinnington 2011). MNCs from countries with a national culture that scores high on uncertainty avoidance have a higher tendency to employ PCNs as managing directors for their subsidiaries as PCNs will have the advantage of easier enforcement of control over the subsidiarys operations. MNCs with a research intensive product are also more likely to transfer at least some of this knowledge to their subsidiaries and to train local managers. However, the PCN is more likely technical specialists than the managing director. On the other hand, MNCs with a multidomestic/global strategy and a polycentric managerial orientation will more likely staff their culturally dissimilar subsidiaries with HCNs that have been socialised at the HQ (Harzing and Pinnington 2011, p. 191).

In a journal written by Harzings (2001), she elaborated on three general company motives for sending out expatriates: position filling (PF), management development (MD) and organization development (OD). PF refers to the transfer of technical knowledge, mainly to developing countries where qualified local nationals are not always available. Transfer for MD gives the expatriate manager in question international experience and develops him for future roles in subsidiaries abroad or with the parent company. And as for the third reason, organisation development refers to category coordination and control (CC). She further explained that these three differs in importance in each unique circumstance, company and country to where the expatriates are sent for different reasons. Lenartowicz and Johnsons (2007) work states that the demand for culturally competent manager may challenge the advantages a PCN could bring. And the hiring of a HCN could be more advantageous if it means the organizations goodwill with overseas partners, suppliers, customers and employees are at stake. A HCN is also less expensive and deemed to be more politically, economically and socially savvy, who is also more familiar with the local legal system, languages and the subtle nuances of the local environment. All these are true if there is no shortage of local management talent who has the required English language skills. Kidgers (2001) research shows that if the impact of international competition is growing, it would be expected that the greater pressure would be towards global standardisation/ management control in MNCs and therefore structural integration. In a research report by Kidger (2001), it was mentioned that approaches may initially be ethnocentric to bring advantages partly because of the difficulty in finding suitable people in some countries, but mainly due to the importance of creating a sense of common identity and purpose across the whole organisation at the onset, as well as based on the notion that the parent organisation knows the best way to manage affairs and the subsidiary had to learn from the parent. The use of PCNs not only better encourages international knowledge transfer, both managerial and technical, but exercises more corporate influence from the parent company that were critical to their objectives.

However, as the subsidiary matures, and as local managers were previously immersed in the parent company culture possibly via PCN, natives are often preferred over migrants as they provide the understanding of local conditions, including political and cultural context and considering cost efficiency and the ability to deal more effectively on the delivery customer service at this stage of company life cycle (Kidger 2001). In Banai and Harrys (2004) work, it was highlighted that many expatriate assignments do not seem to have positive effects on the development of a managers career at corporate headquarters. This ends up a disadvantage when expatriates are neglected on their return to their home bases, put on hold, and not valued for their international experience by their firms, when the firm ignore the needs for proper assimilation back into the parent organization. There are both advantages and disadvantages to being an expatriate (Takeuchi 2010). Takeuchis (2010) research was mainly done from the perspective of the expatriate. For an expatriate who is sent overseas to complete a time-based task or accomplish an organizational goal, the benefits can include the acquirement of global management skills, which are highly sought after in the labor market. International assignments also play an essential role in building global and international skills for organizations. Expatriate experience at some time in an employees career may even be a necessary criterion for his or her advancement in the corporate ladder. On the other hand, there can be a number of disadvantages, including poor performance due to difficulties in adjusting to the foreign environment or letdown with little parent company support. As employers mull over the choice of employing migrants or hiring, instead, nativeborn population in todays globalized competitive environment, several factors and motives can influence the decision. One thing clear is that none of the options is without its disadvantages (Harzing and Pinnington 2011, p. 188). And according to Lenartowicz and Johnson (2007), there is no one size fits all solution, but a combination of strategies will work in todays boundaryless global milieu.

Word Count: 1041

Reference Banai, M and Harry W 2004, Boundaryless Global Careers, International Studies of Management & Organisation, vol. 34, no. 3, p. 96-120 Harzing, A 2001. An analysis of the functions of international transfer of managers in MNCs, Employee Relations, vol. 23, no. 6, p.581-598 Harzing, A, & Pinnington, A 2011, International Human Resource Management, 3rd edn, TJ International Ltd, Padstow, Cornwall, Great Britain Kidger, P 2002, Management structure in multinational enterprises - Responding to globalisation, Employee Relations, vol. 24, no. 1, p. 69-85 Lenartowicz, T and Johnson, J 2007, Staff managerial positions in emerging markets: a cultural perspective, International Journal of Emerging Markets, vol. 2, no. 3, p. 207-214 Takeuchi, R 2010, A Critical Review of Expatriate Adjustment Research Through a Multiple Stakeholder View: Progress, Emerging Trends, and Prospects, Journal of Management, vol. 36, no. 4, p. 1040-1064