Based on literature review, this research paper is to investigate staffing management in multinational companies (MNCs) is not only a complex issue but also a crucial one to the international human resource management (IHRM). The structure of this research paper consists of three parts. First of all, the introduction of concept, challenges, culture difference, and new alternatives in international assignments will be summarized. Then to discuss for the answer to subsidiaries’ staff retention in the human resource management (HRM) of MNCs. Lastly, to support my observations, the qualitative research method will be utilized and one-to-one interview to figure out the dilemma about staffing management in MNCs and the conclusion is drawn.

II. Keywords

HCNs Local/host-country nationals

HRM Human resource management

IHRM International human resource management

MNCs Multinational companies

PCNs expatriates/parent-country nationals

TCNs Third-country nationals

III. Introduction

The title of the paper is “the importance of staffing management in MNCs and by using qualitative method to find out the implications”. In this paper, what will be the research plan to collect useful information and how? What steps to use for organizing the research and make analysis reliable? The questions will be answered in the following sections.

IV. Purpose

The objective of this paper is to investigate the importance of staffing management in MNCs. In the last decades, an extensive amount of articles of this topic have been published, obviously, staffing management is a critical issue in the HRM for MNCs:

1. How to balance the expatriates/parent-country nationals (PCNs), local/ host-country nationals (HCNs), and third-country nationals (TCNs)?

2. How to reconcile the individual career plan to the corporation scope?

3. How to manage the multicultural team?

These topics have been explored in conceptual theory and empirical analyses. In the meantime, with global economic and political development, some new trends and patterns have appeared in international business, for example, global virtual team, the e-business, etc. These new challenges bring new patterns for staffing management of IHRM. Thus I will focus on new changes and patterns to bring out solutions, such as alternatives for the conventional expatriate assignments and the retaining of the local staff retention.

V. Literature Review

In order to get the general knowledge about staffing management in MNCs, a few books have been chosen as the literature related to the topic. In those books, the authors claimed that people are the foundation in MNCs; most of the attention of HRM in MNCs is concerned with staffing management, while staffing management is the most difficult task for them. How to effectively manage people in various countries and cultures is a big issue in staffing management of MNCs. Meanwhile, in order to get the recent research topic, some articles which were published in the academic journals have been chosen as well.

V.1. Conceptual Introduction

Before proceeding to a definition of international HRM, it is better to know what the general field of HRM is all about. Typically HRM refers to the activities undertaken to effectively utilize its human resources within an organization. These activities would include as follows: a) Human resource planning; b) Staffing; c) Performance management; d) Training and development; e) Compensation and benefits; & f) Employee relations. We can now explore further of which activities change when HRM goes international. According to the article of Morgan & Bottrall (1988) on the development of international HRM, it is helpful in considering this question. They presented a model of international HRM (Figure 1) that consists of three dimensions:

V.1.1. The three broad human resource activities of procurement, allocation, and utilization. (These three broad activities can be easily expanded into the six HR activities listed above).

V.1.2. The three national or country categories involved in international HRM activities: (i) the host-country where a subsidiary may be located, (ii) the home-country where the firm is headquartered, and (iii) “other” countries that may be the source of labor or finance.

V.1.3. The three types of employees of an international firm: (i) host-country nationals (HCNs), (ii) parent-country nationals (PCNs), and (iii) third-country nationals (TCNs). Thus for example, IBM employs Hong Kong citizens (HCNs) in its Hong Kong operations, often sends U.S. citizens (PCNs) to Asia-Pacific countries on assignment, and may send some of its Australian employees on an assignment to its Singaporean operations (as TCNs).

Morgan & Bottrall defined IHRM as the interplay among these three dimensions – human resource activities, types of employees, and countries of operation. We can see that in broad terms IHRM involves the same activities as domestic HRM, for example, procurement refers to HR planning and staffing. However, domestic HRM is involved with employees within only one national boundary.

Whilst staffing management deals with a comprehensive term for all operative functions namely recruiting, placing, appraisal, rewarding, assessing, developing performed in HRM (http://en.wikipedia.org/wiki/Human_resources, 2009). Face to those options and wide resource, the managers in global enterprises have particular concern about the employees’ ability to disseminate knowledge and innovation throughout their global operations. The use of expatriates has seemed to be a logical choice for staffing, while the use of parent-country nations seems to be the most appropriate in some specific situation. Some other global enterprises also prefer to integrate expatriates and local human resource. Nevertheless, each procedure has both advantage and disadvantage.

With regard to the staffing approaches of international enterprise, Perlmutter (1969) identified three ways in how global corporations are staffed. The fourth staffing approach was added a few years later, they are: ethnocentric approach, polycentric approach, regiocentric approach, and geocentric approach.

These four approaches, in summary, are useful for MNCs, and they can choose one of four approaches to manage the international staffing policy, however, there are no restricting rules for staffing management. Some important questions which MNCs still have to face are: recruitment and selection of HCNs and TCNs in global labor market, equal employment opportunity, legal issues, predictors of expatriate success, and expatriate failure rate, etc..

V.2. Challenges of MNCs

The rapid expansion of global trade, business consolidation and geographical diversification are driving companies for changes in their management structure and style. The nature of international business is undergoing a dramatic change. MNCs need to consider regional market current conditions and develop strategies to cater for each of the regional markets.

Another factor driving the need for change is the global mergers and acquisitions, joint venture, and strategic alliance. Companies acquired other companies’ abroad need to change their HR policies and management as it is not applicable on the acquired company. Behind these scenes, MNCs face more or less the following challenges in global talent acquisition:

V.2.1. Blockage