The Geocentric Human Resource Policy

The geocentric approach to multinational operations reflects the attitude that the circumstances dictate the best policies and the most appropriate individuals to staff the operations. The geocentric approach could be placed somewhere in between the ethnocentric and the polycentric approaches, as it considers that the best elements of each culture should be adopted in the design of human resource systems and the most qualified individuals, irrespective of nationality, should be employed in the key positions of a multinational enterprise. The geocentric approach is allegedly the most advanced of the approaches to human resource policy, and the one that is directed by the constantly accelerating globalization that blurs borders and cultural barriers.

On the other hand, it requires substantial investment and knowledge of cultural factors on the part of the multinational corporation. The geocentric approach is more likely to characterize corporations that are found in advanced stages of internationalization. In the staffing of operations it is manifested by the utilization of home country, host-country, and third-country nationals in key positions, both in the headquarters and in the host countries of the multinational corporation. What matters most is credentials and fit into the role rather than the country of origin. The country of origin may be taken into account when this is considered as a factor that may affect success on the job.

For example, U.S. companies tended to prefer British nationals for managerial positions in their operations in former British colonies because the British were presumed to be most familiar with the culture and institutions of the host countries and also with U.S. culture (and language). In general, third-country nationals can bring the following qualities: (1) understanding of the operation from the perspective of a foreigner, who is not biased by the cultural perspective either of the home country or of the host country; hence, these individuals can bring more unbiased and potentially novel ideas and perspectives; (2) increased likelihood of acceptance by both home country and host country employees; and (3) demonstration of the global image of the multinational corporation.

An increasing number of corporations around the globe resort to appointing third-country nationals in key positions; a major reason for this is, as already seen, the need for the most competent individual to take over important roles, and the fact that as organizations become global they gradually become dissociated with particular countries. Even Japanese corporations, which traditionally have adhered to an ethnocentric approach in staffing, are gradually abandoning this policy. This is because they have increasing proportions of their interests in countries outside Japan, and they realize that there is a need for taking into account the perspectives of these countries in their strategic planning; hence, the need to include nationals of these countries in key positions, including the boards of directors.

An example of a third-country national appointment in a key position of a multinational is Jose Lopez (Ignacio Lopez de Arriortua), a Spaniard who in the 1980s and 1990s held executive positions in both General Motors (a U.S. multinational corporation) and in Volkswagen (a German multinational corporation). The ultimate manifestation of the geocentric human resource policy is the appointment of hostcountry nationals in key positions in the headquarters, that is, in the home country. These individuals are labelled inpatriates. A prime inpatriate case has been the appointment in 2005 of Howard Stringer (British, with a corporate career in the United States) as chief executive officer of SONY, allegedly the first foreign-born CEO of a major Japanese corporation.

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