Q4. Why do many MNCs continue to recruit internally from the home country instead of the local labour market when seeking to hire managerial staff for overseas subsidiaries? What are the limitations of this approach and how should management respond?
Abstract
A selection of perceived and valid reasons encourage Multi National companies (MNCs) to recruit Parent country nationals (PCNs) for managerial positions at overseas subsidiaries rather than employing Host or Third Country Nationals (HCN/TCNs). The reasons range from a good ‘fit’, of the person to their environment (Tarique, 2006) and, the employees actual capabilities of doing the job. However, limitations exist when adopting this approach in various aspects of the process. These limitations are associated with the failure of the international assignments and are addressed in this paper in order to deduce comprehensive suggestions for management that will minimise or at least
reduce the risk of failure, that the hiring of PCNs at overseas subsidiaries pose.
The choice of hiring a PCN instead of a HCN for an assignment in a foreign country can be defined as the ethnocentric approach to recruitment. It uses PCNs, the majority of the time when filling key positions. This occurs when a high degree of control and co-ordination is required by the MNC. (Tarique, Schuler & Gong, 2006). All internal factors focus on what the firms’ current resources are and how best to apply them. The external factors usually limit the employment of PCNs in the host country and promote HCN/TCN employment. The exception in this case is technology, because in-house systems from home country may need to be transferred and implemented to the subsidiary. Working knowledge of the systems and technical expertise will ne ...