Introduction
Human capital seems to be both a tangible and intangible asset of the company. On the one hand, the number of people and their best skills are listed in the organization’s files, although each employee’s knowledge and experience is unique and may not always be measured. Therefore, it is rather vital for businesses, especially, the ones that operate on a foreign market to adapt and plan their team’s recruiting strategy. In light of this, it is paramount to be knowledgeable of the EPRG staffing model, associated strategies, and challenges that will be discussed in the present paper.
EPRG and International HRM
According to Drachal (2014), the model was first introduced as a three-component one and included ethnocentrism, polycentrism, and geocentrism and was abbreviated as EPG. A few years later, the authors of the original model included one more factor such as regiocentrism and the concept became known as EPRG. In international human resources management, this model is of utmost importance as it allows organizations to choose methods of staffing through assessing their goals, ambitions, and resources. The choice of the right employee for a certain position is a non-trivial task that requires serious consideration. The model is designed to simplify it, allowing the organization to choose its orientation on the market, and therefore decide on its staffing needs. Each of the four orientations has unique properties and requires further analysis.
Ethnocentrism
Ethnocentrism presupposes business orientation to a domestic market. However, it does not necessarily mean that the company cannot have operations abroad. In fact, foreign markets are considered a secondary priority. For instance, a manufacturing company can sell its surplus products or leftovers from retail stores to foreign markets. Another characteristic feature of ethnocentric companies is the absence of adaptation techniques. Sales, marketing, and recruiting strategies in foreign units under such an approach do not change significantly. Staff hired in the domestic region is considered superior to a foreign one and regarded as most effective. Broad use of expatriates is also of note. In addition to that, major operations and decisions are planned in headquarters, while units abroad only carry out those orders.
Such a model of corporate governance is usually top-down and profit-oriented. Examples of such companies may include clothing companies such as Zara, H&M, Pull&Bear, and so forth. Importantly, the managers rely on values and implement HR practices that are common in home country rather than in foreign ones. In certain occasions, it may be rather profitable since it requires no additional funds for adaptation and development of unique marketing, staffing, or sales practices. It is also easy for companies to exercise such an approach in countries with a similar culture. The challenge, however, is to maintain a rational attitude towards other countries and their workforce (Valentino, Brader, & Jardina, 2013). If people abroad are continuously considered as inferior workers, the company may face issues of power abuse.
Polycentrism
In some instances, polycentric companies are similar to ethnocentric, yet possess certain distinctive features. Similar to ethnocentric, polycentric are also primarily oriented on the domestic market. Nonetheless, the difference is that they focus more on the distinctions between home and foreign markets rendering each one as unique. Consequently, such companies are prone to adaptation and development of marketing, staffing, and sales that fit perfectly for the customers and employees abroad. For polycentric businesses, it is often important to maintain public trust. Nonetheless, such organizations consider their culture as primary and cultural export exchange is still maintained.
Still, HRM practices may include hiring local people in senior managerial positions in order to help the company adapt. The key decisions are made at home, yet they consider the needs of local markets. The major distinctive feature of polycentrism is recognition and use of cultural, language, and traditional differences in favor of the company. For instance, McDonald’s does not produce and sell burgers from beef in India instead trying to serve vegan food (Kannan, 2014). In Hinduism, a cow is a sacred animal and Muslims do not eat pork. A large disadvantage of polycentrism regarding HRM is the lack of coordination between headquarters and local units. Local executives may often resist changes induced from the domestic region due to claims of better knowledge of the local market (Drachal, 2014).
Regiocentrism
Regiocentrism is rather similar to polycentrism in the aspect of adaptation. The major characteristic feature is a deeper level of foreign market analysis. Such a model allows grouping countries with similar culture and customer behaviors. In regard to staffing, regiocentrism allows for better influence on regional manager’s decision making. In addition, regiocentric companies may save resources on hiring native managers as the pool of “local” workers increases. Similar to the polycentric approach, here senior management-management-employee communication issues can also arise due to various barriers (Drachal, 2014). Nonetheless, in certain business types, this strategy could be effective. For instance, MTV channel uses local partners to create joint ventures, grouping them into MTV Korea, China, India, and so on. They use local employees but not necessarily natives.
Geocentrism
Geocentrism appears to be a mixture of ethnocentric and polycentric approach, as it recognizes both similarities and differences in other countries in order to create a unique fit-for-all policies and strategies. Famous quote, “think local, act global” seems to be defining geocentric approach well. Staffing policies are identical and standardized in every unit. The main hiring principle is competition – the most competent receives the job (Plakhotnik, Rocco, Collins, & Landorf, 2015). Cultural preferences are of no significance if an employee performs well. In terms of subordination and power, a geocentric organization does not have rigid control over local subsidiaries, which means consensus-based problem solving and strategizing.
The advantage of geocentric staffing is in the ability to form a considerable international workforce with diverse skills, experience, and connections in several countries, which can eventually become effective senior managers (Drachal, 2014). However, the major challenge of global hiring policy is excessive costs of the recruitment process, training, and travel. As the world is full of capable employees, the process of selection can be rather time-consuming as well. Nonetheless, learning opportunities are rather significant as employees can improve their knowledge of languages, local management practices, and so on.
Conclusion
All things considered, staffing is an important attribute of an organization that delivers results based on the choice of orientation. Each of EPRG components has its advantages and disadvantages, which requires the company to choose recruiting and decision-making model wisely. If the company orients mostly on domestic markets, implementing the ethnocentric approach could be profitable. If an organization decides to expand to a new area with diverse culture, it is probably a good idea to implement a polycentric or regiocentric approach depending on the breadth of interests. If the company has an established corporate culture, standards and sufficient funds for recruitment and training, then geocentric approach may be of use.
References
Drachal, K. (2014). What do we know from EPRG model? Ecoforum Journal, 3(2), 85-92.
Kannan, S. (2014). How McDonald’s conquered India.BBC News. Web.
Plakhotnik, M. S., Rocco, T. S., Collins, J. C., & Landorf, H. (2015). Connection, value, and growth: How employees with different national identities experience a geocentric organizational culture of a global corporation. Human Resource Development International, 18(1), 39-57.
Valentino, N. A., Brader, T., & Jardina, A. E. (2013). Immigration opposition among US Whites: General ethnocentrism or media priming of attitudes about Latinos? Political Psychology, 34(2), 149-166.