In What Ways Does an Ethnocentric Approach Affect HR?

An ethnocentric approach is one of several human resources strategies a company can employ when expanding operations into a new foreign country. Given the risks to a small business in globalizing, it is especially important to weigh the pros and cons of ethnocentricity against other alternatives to HR.

With an ethnocentric approach, you intentionally recruit and deploy parent company leaders and employees to manage foreign operations. This approach puts localized decisions in the hands of people directly connected to the company's central headquarters, Decisions on the ground are made by employees familiar with the parent company's culture but not necessarily the native one. Additionally, putting parent company leaders in place can help ensure consistency in operations in foreign markets.

An ethnocentric approach challenges HR because its staff may not be familiar with the local customers and business processes. Often, domestic firms outsource HR or hire international consultants to assist in getting a new foreign office off the ground. As you screen employees, you want to ensure that the people you recruit meet the technical requirements and have a desire and willingness to transfer overseas. Before using an ethnocentric strategy, spend time researching the market to see whether your HR policies and talent resources make this the best strategy.

When a new headquarters opens, you may need established parent company managers and trainers to spend weeks or months with the new staff. This ensures new employees understand the challenges and changes in policies, procedures and task requirements of the operation, department and positions they hold. Additionally, a key HR concern in globalizing is maintaining a consistent organizational culture while having staff spread across countries. This initial training process can help in building company-wide cultural norms in the new office.

Polycentric, geocentric and regiocentric are common alternatives to ethnocentric HR. A polycentric strategy involves hiring locals to manage and work the business to better connect with the area's customers and customs. Geocentric HR means you hire the best mix of employees regardless of nationality. Regiocentric approaches are common in companies with widespread global operations. In this approach, you hire regional leaders as opposed to country-based leaders. A London-based manager might head up European operations, for instance.