Chicago Food and Beverage Company
The staffing framework familiar in the case study is the ethnocentric approach. The ethnocentric approach to human resource management does not delegate any decision to the subsidiaries of the company. The most important decisions are made at the headquarters, and expatriate employees who are dispatched run the subsidiaries of the organizations from the headquarters (Bodolica & Waxi, 2007). The headquarters also solely make the decisions related to international posting such as training, selection and recruitment. The ethnocentric approach to international human resource management will definitely interfere with the ability of Paul to discharge his role. Paul is not familiar with the Asian culture in the country he will be posted, and this can create ambiguity and misunderstanding when communicating with indigenous employees (Bodolica & Waxi, 2007).
Paul may also fail to show cultural sensitivity to indigenous employees and this may strain their relationship leading to poor performance. The best staffing approach that is most suited for the company is the region-centric approach that would recruit and train Asian managers to run the company’s subsidiaries in the region (Bodolica & Waxi, 2007). However, in the case, the Chicago Beverage and Food Company is still using the ethnocentric approach meaning there are no qualified regional leaders who can take over. In the end, the ethnocentric approach will prove ineffective. Hence, the company needs to start recruiting and training regional managers, but this will take some time before the managers are competent enough (Bodolica & Waxi, 2007).
The reason that Paul wants the new position as the regional manager in one of the subsidiaries is that he is looking for new experience and challenges having worked for the company it its headquarters for several years. Paul is not a good candidate for the job because he lacks some of the most critical skills for the job (Bodolica & Waxi, 2007). For instance, he lacks the relevant international experience in a similar position. The international experience he has is as an exchange student in Oxford in an English speaking country. Paul only knows one language, that is, English. In addition, he lacks competency in the Asian cultures, and adaptability and sensitivity to these cultures (Bodolica & Waxi, 2007).
Generally, an expatriate manager need to be someone with competency in the local cultures even if he/she is recruited from the company’s headquarters. Cultural competency and sensitivity determines whether an expatriate manager will fail or succeed in his/her duties. Specifically, expatriate recruitment policies should focus on training and developing local employees to take over the management of the company’s subsidiaries in other regions (Bodolica & Waxi, 2007).
The familiar methods of expatriate compensation include the negotiation approach, mixed method, international approach, and the balance sheet approach. One of the advantages of the negotiation approach is that it is effective with a few managers because it is flexible and justifiable. However, the approach is costly when a company has many managers, and it can create inequalities among managers (Bodolica & Waxi, 2007). Moreover, the approach can be time consuming because the company will have to reengage in negotiation every time they are transferred to a different region. The advantages of the balance sheet approach is that it strike a balance between what the expatriate earned in his home country and the compensation in the new country. This enables the expatriate to maintain his previous lifestyle; allow family members to adapt, and ensure international equity in comparison to other managers in the same position in the host country (Bodolica & Waxi, 2007).
The shortcomings of the balance sheet approach is that it is difficult to manage, expensive, and requires the consultation of data on the cost of living in the foreign country. The advantage of the international method is that it favors expatriates because it entails different bonuses such as mobility and expenditure (Bodolica & Waxi, 2007). The shortcoming of this approach is that it is costly to the company. The advantage of the mixed approach is that it designs compensation based on the experience of the expatriates whereby seniors benefit from the international approach and juniors are compensated using the balance sheet approach. The approach saves cost, but makes the management of expatriates complex. The balance approach is the most effective in improving expatriate compensation and satisfaction (Bodolica & Waxi, 2007).
Bodolica, V. & Waxi, M. (2007). Chicago food and Beverage Company: The challenges of managing international assignments. Journal of the International Academy for Case Studies, 13(3), 31-42.