Geocentric Advantages & Disadvantages

A geocentric company is one where the management looks at staffing opportunities on a multinational scale. Instead of focusing on the way that business gets done in a given country, it looks at how to conduct business anywhere in the world based on common ways of communicating.

Geocentricity can be applied to hiring practices when you mix people from all of your locations equally based on their competencies rather than their home country.

Given that the entire world is drawing closer together, geocentric approaches are a fantastic way for international businesses to reach economies of scale.

Creating ways of doing business that are sensitive to different styles of communication or business in other countries makes it easier for you to communicate if you need to have subsidiaries elsewhere.

On the other hand, given the large number of host country nationals (sometimes called hcns) in the United States, it can also make it easier for you to do business with people in your own backyard when they have different cultures.

Geocentric staffing policies pose two key challenges.

First, you will need to find managers and employees that have the ability to adopt multiple styles at once.

Second, you lose some of the benefit of being an expert in any local markets.

An alternative if your business only does business in one additional country is to adopt a polycentric approach. This method of doing business looks for people that are able to follow the norms of the country in which they are actually doing business.

Looking for people who understand German culture to staff your Munich office would be an example of this. Cultural differences are one of many advantages & disadvantages in a polycentric staffing: they could quickly divide your office, or they could help foster creativity and innovation.

Divisions amongst staff can usually be attributed to the fact that many of your employees might have previously worked under an ethnocentric approach.

Ethnocentric staffing policies mean that employees were taught to analyze and evaluate different countries and cultures using their home country culture as a lens. Because of this, a parent company using a polycentric approach might have to invest in more international human resource management for their foreign subsidiaries to foster communication.

Geocentric hiring refers to putting the best people in key positions in your offices regardless of where they come from. If you have a star performer in your Taipei production office and your Toronto-based office needs them for a management position, you'd bring them over to the Toronto office under the geocentric model.

The key benefit of using every office as a pool for every other one is that it allows you to use all of your talent where it's most needed.

When you're a small business, you may not build the extensive global infrastructure that allows you to truly leverage a geocentric model. Given just a few offices outside the home country, the costs of the model may outweigh its benefits.

When you start pulling expatriates from overseas, your training and relocation costs can skyrocket while you also have the added complexity of dealing with visas and other immigration-related requirements. At the same time, you risk diluting the relational cultures in each of your offices.