 In this topic and the subsequent ones, we will be discussing the approaches to staffing, human resource and other operations in international organizations. So we will be discussing what are the different ways of staffing operations in international management. Stacking means appointing, recruiting, selecting the appropriate people for the various different job positions in an organization. So how do we hire people and particularly in international operations where your firms are operating in more than one country, how do we hire people, how do we select people, that is something which we are going to discuss in this topic and the subsequent few topics. So in this topic, we will be discussing the approach to staffing which is ethnocentric approach. Ethnocentric approach as ethnocentricism means that favoring your own ethnicity, that is basically the literal meaning of ethnocentricism. So favoring your own ethnic group, ethnic class, that is the basic spirit of ethnocentric approach. It means that when an organization is operating in various different countries, the organizational management and its top management, it has a strategic plan and objective to favor the appointment of people from its own country, from its own ethnicity means from basically from its own country. So parent country nationals, as you know that there are parent country national, host country nationals and third country nationals in international human resource management. So parent country nationals are given more importance and they are given appointments and roles and responsibilities even in the international divisions. So if a firm belongs to USA and they have got subsidiary in Pakistan or India, they will be sending their own people, American people to manage the firms which are operating in Pakistan or India. All right so in ethnocentric firms, there are few foreign subsidiaries, they have the autonomy and strategic decisions are made at the headquarters. So they keep things within themselves and they believe that the own country management can look after the decisions of the organization for the entire subsidiaries working in the global markets. So there is not much autonomy that is given to the foreign subsidiaries. Regarding human resource management, the key positions in domestic and foreign operations are held by managers from the headquarters. So even if it is the domestic subsidiary or the foreign subsidiary, the position will be held by parent country nationals and managers who are sent from the headquarters. So if an American company has its headquarters in America, American people will be sent to manage the subsidiaries which are in the rest of the world. And then subsidiaries are managed by staff from the home country. So parent country nationals are going to come and manage subsidiaries in the rest of the world. That is an ethnocentric approach to staffing. Why would we do that? Let's take a look at the reasons. Number one reason for having an ethnocentric approach is a perceived understanding that there are not enough skilled people in the host country. So if, for example, you are opening up operations in Pakistan and you are coming from Germany or France or Australia, you think that in Pakistan there is not enough, there is a perceived understanding. It may not be true. It is not necessary that this is the case, but those who are coming from abroad, they have a perceived understanding that there are not enough qualified host country nationals. So that is one of the top most reasons why they would be appointing people from the parent country. Then there, if the reason, another reason is the need to maintain good communication, coordination and control links with the corporate headquarters. So if there is a requirement which needs to have a good communication, a good coordination with the parent country, the strategic decision making is coming from the parent country and the host country operations, they are not skilled and expert enough to manage things on their own. That means that there has to be good coordination between the headquarters and the subsidiaries. So if that is the case, then parent country nationals would be sent to manage so that there is good coordination and communication between the host country subsidiary and the headquarters. And this is particularly very much important at the early stages of internationalization because that can reduce the high risks inherent in new environment. So when you are entering, you are in the early stage of internationalization, it means you are entering a market which is unknown to you, which means that there are high risks attached with the new environment. You may not know what kind of market it is. You may not know what kind of people they are. You may not know what kind of culture there is. So there is possibility that you would not be understanding the new environment. So it is better to be safe and keep it to your own parent country national managers to be managing your operations so that there is good coordination and control. And the strategic objectives of the organization can be met in the initial phases of the internationalization. Then later on, this approach can change as the organization becomes more and more entrenched in the new culture, in the host country environment. So this situation can change later on. It's not something that if you employ an heterocentric approach at one time, you cannot change and shift to another approach at the later time. But this definitely has got some disadvantages. And what are those disadvantages? First of all, it limits the promotion opportunity of host country nationals. And because the parent country nationals, people from the headquarters, they are basically coming and they are occupying the top positions, particularly the top positions in the subsidiary organization. So the head of operations would be a foreigner. The head of admin would be a foreigner. The head of finance would be a manager. So if there is such a situation, then when host country nationals, when they look at their career objectives, they would feel that they have got a career block over there and they will not be able to progress. And what will it cause? It will cause a lack of productivity and low motivation in those people who are actually belonging to that environment, who are actually receiving the rewards, who are receiving the goods and services of that environment. The people who are coming from that environment will not be satisfied. So that may lead to some kind of increased turnover among that group because they will not be committed to the organization as they don't see career development over there. Then another disadvantage of an ethnocentric approach is the adaptation of expatriates could take a long time. When a foreigner is coming to a new culture, the more they adapt, the more they don't understand the culture. The more they don't understand the culture, the more they will be making poor decisions because they do not understand the environment. So that may lead to additional costs for the organization. Another advantage is that the parent country nationals and host country nationals, their compensation packages are starkly different. So for example, if somebody is coming from USA, he will be paid in dollars, whereas if the subsidiary is operating in Pakistan, they will be paid in rupees and there is going to be a huge difference because the average income in USA and average income in Pakistan is starkly different. But when they will be working in the same place, so for example, if a manager is earning, let's say, $10,000 per month, whereas a person who is just next to him, his subordinate, he is only getting 4 to 5 lakh rupees, that is going to be a huge difference between the pay that is perceived by organizational members. So compensation packages are going to be hugely different, which would definitely be, it would cause a sense of unfairness in the organizational members. Then another disadvantage of ethnocentric approach is that people coming from the foreign operations from the headquarters, they would have this kind of a sense of authority, a sense of pride, and that would mean a new status for them. And this could lead to a kind of insensitivity towards the host country nationals because when they have this kind of pride, like if we are American or British and they belong to another developing country, they are Chinese or Korean or Pakistani, they would have this kind of pride over them that we are somebody who are managing these people. So this could lead to an insensitivity towards the host country nationals, which also is going to lead to different disastrous situations among the organization if it is not managed well. So these are some of the various different aspects of an ethnocentric approach to staffing and the reasons behind it and what are the different disadvantages related to that.