Definition: A polycentric approach entails international recruitment where an organization hires local personnel for operation in the host country.
This allows firms to market themselves as local and expand their operations. Local managers can help run the firm more smoothly and efficiently than expatriates since they are familiar with local cultures, norms, and regulations.
Reasons for Selecting Polycentric Approach
There are three key reasons to adopt the polycentric approach:
- Necessity: A business cannot run complete operations in another country with foreign staff and needs local hires. So, the business must hire local recruits to run their operation. According to a report by the American Workforce Policy Advisory Board, American firms frequently benefit from hiring local talent when expanding overseas, ensuring smoother operational transitions.
- Requirements: Most governments have regulations to hire a certain percentage of local staff to support the local economy. If this is the case, a business must hire local personnel. This is to bolster the local economy and provide job opportunities. For instance, the Organisation For Economic Co-Operation And Development encourages foreign businesses in the U.S. to adopt a balanced hiring approach, ensuring local citizens also benefit from international investments.
- Affordability: Hiring local managers is cheaper than assigning a foreigner. Foreign managers charge high salaries, and the organization has to pay the relocation costs. The polycentric approach helps save these costs. As per PMI, “Hiring locally can significantly reduce a company’s operational costs.”
Some other issues that force businesses to adopt a polycentric approach are foreigners not being able to adjust to the host country, issues with family adjustment, cannot absorb the local culture, language barrier, etc.
Pros of Polycentric Approach
- The process is affordable
- High morale of employees
- Better productivity
- Local support
Cons of Polycentric Approach
- Lack of international knowledge
- Lack of company culture
- Inefficient communication with the parent company
Summary
Businesses can use the polycentric approach to find local managers for their operations in a host country. This method allows firms to respond to local culture while also lowering the cost of hiring. These recruits have a better understanding of the local environment and are beneficial to the host country’s business growth.