Ethnocentric Approach

ZoyaNadeem · August 9, 2021, 5:49am

The ethnocentric approach to recruiting implies we employ from our parent nation globally. If we wish to fill a foreign executive post, we may relocate a permanent resident of our parent nation.

What is the Ethnocentric Approach?

For multinational companies, an Ethnocentric Approach is a form of international recruiting in which potential employees are screened for their qualifications and interest in assimilating into the company’s culture.

The Ethnocentric Approach places nationals from the parent country in positions of power inside the organization. When it comes to managerial choices, there are a lot of moving parts. The host organization must adhere to the same mission, vision, and objectives established by the parent firm of the multinational corporation.

Benefits of an Ethnocentric Approach

There has to be better communication between the host and the parent firm.
It is simple to introduce the values and norms of the parent organization into the overseas branch.
Holding a strong hand over the subsidiary.
The main office can keep tabs on how its subsidiary is doing.
The sharing of technical knowledge is improved.
The host and the parent firm are in constant contact with one another.
There’s no need for a flourishing foreign-born local job market.

Drawbacks of the Ethnocentric Approach

Culture shock is a real possibility for home-country employees when relocating to a foreign nation.
Challenges in providing leadership to remote workers.
Could not take advantage of the situation to recruit the most qualified natives of the host country.
Disagreements between the parent country’s executives and the host country’s workers due to cultural differences.
The cost of employing an expat from the home nation is substantially more than that of a local worker.
The host country’s government’s regulations may hurt the parent company’s bottom line.
There is a significant rate of failure.
This method is useful when a parent business establishes a branch in the host nation and sends staff there to launch operations.

How does an Ethnocentric Approach Influence Human Resources?

As a result of technological advancements and widespread globalisation, more and more small firms are venturing into foreign markets. Setting up overseas factories and sales rep offices is part of this growth strategy.

Companies may be tempted to take an ethnocentric approach to their H.R. policies to mitigate the perceived risk of these new enterprises. Companies with an ethnocentric focus tend to hire foreign nationals for top positions and implement policies similar to those used at home.

Recruiting and Choosing

An ethnocentric firm anticipates a lack of qualified workers from the host nation. An ethnocentric business will hire locals for entry-level jobs but hire only nationals from its native country for higher-level positions such as management.

An ethnocentric firm might improperly impose its cultural standards on potential employees during the hiring process. It may have trouble finding qualified workers if it requires credentials not often pursued in the host nation or entry-level workers to understand a second language to interact with expat management.

Training and Development

In ethnically oriented businesses, expatriate nationals from the target country sometimes temporarily assume senior positions. It’s doubtful that they’ll provide management or advanced technical training to citizens of the host country, reducing opportunities for advancement.

There are few opportunities for natives of the host country to advance in their chosen fields. Talented local workers may depart for higher-ranking positions at competing organizations if they aren’t satisfied with their career progression prospects at their current workplace. The high turnover rate of foreign and domestic workers can disrupt business operations.

Payment and Reward

To entice employees to accept overseas postings, many companies offer expatriates higher salaries and other benefits. Typical benefits packages cover housing costs, employee and family airfare, and salary increases.

Human resources must handle the issue of expats’ higher salaries with care to avoid a backlash from local workers. Nationals of the host country may get disillusioned due to the salary gap. Additionally, the enterprise’s profitability might be negatively impacted by lavish compensation and reward packages for expatriates.

Strategies, Methods, and Ideas

Alternative methods of handling foreign operations are available to small businesses. When taking a polycentric strategy, businesses are encouraged to run each international outpost independently, with a dedicated team of locals in charge. However, in a polycentric organization, regional managers are not likely to be relocated to the corporate headquarters.

Summary

A geocentric business views its workforce as a global resource from which the most qualified employees may be recruited and placed anywhere in the world. Businesses with a regional focus, or “geocentric,” adopt the same strategies as their geocentric counterparts but limit personnel relocation inside a certain region.

Other International recruitment Approaches

1. Ethnocentric approach

An ethnocentric approach is when a corporation hires its residents in host countries primarily. Parent-country expats usually hold higher-level international posts. The ethnocentric approach assumes personnel from the parent nation will successfully represent the headquarters’ interests and link with it.

Self-selection, developing a candidate pool, technical skills evaluation, and mutual decision. Self-selection is an employee’s choice of international activity. Next, the personnel database is readied for foreign operations.

Technical skills evaluation analyses the database to choose the best candidates for worldwide assignments. The finest applicant is then sent overseas with his approval.

The ethnocentric strategy promotes natives of a company’s home nation at home and abroad. The U.S. parent firm places U.S. natives in important positions in the U.S. and Mexico.

2. Polycentric approach

A polycentric approach is when a corporation limits recruiting to locals. This strategy reduces international operations costs progressively. Even organizations that start as ethnocentric may transition to polycentric.

Handing over administration to locals helps the organization grasp local commercial, political, cultural, and legal situations. Companies that use this technique usually have a local H.R. department that controls H.R. in that nation. Many international corporations in Britain and Japan use this method to hire branch managers.

In this scenario, the Australian parent business utilizes Indian locals to manage the Indian subsidiary and Australian natives to run the home office.

3. Geocentric approach

A geocentric approach is when a company recruits the most qualified people for available positions, regardless of nationality. It is difficult for H.R. operations to use this approach due to political, ethnic, and government laws, but large global companies do.

For international recruitment, especially on foreign soil, organizations use manpower agencies or consultants with international connections and reputations to source candidates and conventional sources.

Global companies need an internal database of employees and an effective tracking system to identify the most suitable persons for global postings. In this case, the U.K. parent firm utilizes locals of numerous countries at its headquarters and U.S. subsidiary.

4. Regio-centric Approach

The Geocentric Approach is a worldwide recruiting method where Multinational Companies hire the best candidate regardless of nationality.

The Regio-centric method utilises managers from different nations in business areas. Although the managers function autonomously in the region, they are not generally relocated to corporate headquarters.

Note: When regional experience is needed, locals of the region are employed; if product knowledge is necessary, parent-country nationals might be brought in. Regional managers may not grasp the vision of headquarters managers, while headquarters may not have enough international managers.

FAQs

Some related questions are given below:

1 - What is an ethnocentric approach?

With an ethnocentric strategy, we fill positions worldwide with citizens of our nation. To fill an executive position in a foreign nation, for instance, we could: Relocate one of our current workers who is a permanent resident of our parent country.

2 - Explain the differences between an ethnocentric and a geocentric viewpoint.

There are three main ways that MNCs transfer H.R. policies and procedures from one country to another:

Using the same H.R. policies and procedures as the parent company in the host country (the “Ethnocentric” approach).
Hiring locals as employees and adapting H.R. policies and procedures to the host country’s needs (the “Polycentric” approach).
Using the same policies and procedures as the parent company in every country.

3 - What is an ethnocentric approach in culture?

Ethnocentrism is the bias toward seeing things solely through the lens of one’s own culture. A key component of ethnocentrism is a belief that one’s race, ethnicity, or culture is the most significant or that some or all parts of one’s own culture are superior to those of other groups.

4 - What are the examples of the ethnocentric approach?

If you have no good cause to criticize the food habits of people in other nations, you are being ethnocentric. Many Americans, for instance, may find the idea of eating guinea pigs prepared in various ways revolting.

5 - When someone is being ethnocentric?

Ethnocentrism is the belief that all people are fundamentally the same, regardless of their skin color, hair color, or the uniqueness of their clothes. Like the last speaker, this person thinks his or her culture is the greatest and most superior of all cultures.

Conclusion

It is important to examine the benefits and limitations of the ethnocentric approach to HRM in light of its potential use in MNEs. The company could be liable for substantial relocation payments and compensation costs; transferring employees to branches could contribute to health and professional problems, and the likelihood of negative consequences would increase significantly.