What Is an Ethnocentric Approach? [Definition, Meaning, and Best Practices]

An ethnocentric approach is one of the methods used during international staffing recruitment. The HR department recruits a person suitable for the job for international businesses based on their skills and willingness to blend with the organization’s culture.

In an ethnocentric approach, your organization’s key positions worldwide are filled with employees of the same nationality as your parent company. An ethnocentric approach is considered to be a common approach to international staffing.

Benefits of an Ethnocentric Approach

Ethnocentric staffing involves staffing your company’s most important positions in a foreign country with employees of your parent company’s nationality. Ethnocentric staffing offers many benefits to your company for a few reasons:

  • There is no need to have a full-fledged international labor market
  • Communication is better between the parent company and the host
  • You have effective control over the subsidiary
  • There is typically better coordination between the parent company and the host
  • The parent company’s culture can be easier to transfer to the subsidiary company, combining practices and beliefs in the foreign country
  • The parent company can closely watch over the subsidiary’s operations
  • Technical expertise is shared more efficiently
  • Communication is better between the parent company and the host

Drawbacks of Ethnocentric Approach

  • Your company may have missed out on the opportunity to hire the best employees from the host country
  • The parent country’s staff might find it challenging to adjust to the host country because of cultural differences
  • The host country’s government’s restrictions might infringe on the parent company’s business
  • Employees may consider this approach to be a form of adverse impact
  • It can be difficult to guide your employees that are far away from the parent country
  • There could be cultural clashes between the staff of the host country and the executives of the parent country

When to Use Ethnocentric Staffing

An ethnocentric approach in international business should be used when you open a new office in a new country because it makes it easier for your company’s procedures and policies to be transferred from the parent country to the company’s new unit. 

Expatriates from your parent country should encompass less than 20 percent of a foreign office so you can minimalize hiring costs. Ethnocentric staffing is used when a new subsidiary is set up in a host country, and the parent company’s employees initialize operations while visiting. Cross-cultural training can be beneficial when using ethnocentric staffing.

What Is Polycentric Approach?

A Polycentric approach is when you hire locals to fill positions in a foreign country. You can create a contract with a local recruitment agency or advertise on local job boards. Polycentric staffing is used when you need the skills of locals to help run your business. 

You can hire a local professional who understands the market and can coordinate sales operations if you want to expand your clientele to a particular country. In a Polycentric approach, those with the host country’s nationality are recruited for upper-level positions to implement the subsidiary company’s operations. 

Many companies choose the Polycentric approach because the locals of the foreign country understand their culture better and can efficiently run the business better when compared to their foreign equivalents.

Benefits of Polycentric Staffing

  • Removes the need to adjust team members
  • Saves money on relocation and hiring costs
  • Can increase the morale of your employees
  • Increases local support and knowledge

Drawbacks of Polycentric Staffing

  • There is a lack of knowledge about the host country’s market conditions
  • It can be difficult to implement control over the subsidiary
  • There can be a lack of coordination between the parent company and the host
  • Communication might not be effective between the staff of both the parent company and host due to a barrier in language
  • There can be a conflict between the managers of both the parent company and the host due to different ways of thinking

What Is a Regiocentric Approach?

A regiocentric approach to recruitment means that you either transfer or hire employees within the same geographic area to fill your open positions because their environment and culture closely match the host country. 

Regiocentric approaches can help regional and international companies recruit the best of the best from neighboring countries. Ther similar cultures help to develop an integrated working environment and bring expertise at an affordable recruitment cost.

Using a regiocentric approach requires less cost than hiring employees from a foreign country, and as a manager, you will likely face fewer difficulties being from a similar culture. In addition, moving between the parent country and the host country is simple to manage.

Benefits of a Regiocentric Approach

  • Less cost is sustained in hiring natives of the host country
  • The host country’s nationals can better influence the manager’s decision at headquarters concerning the whole region
  • It is a better cultural fit
  • Managers work well in the geographic region of business throughout all the neighboring countries

Drawbacks of a Regiocentric Approach

  • Managers in different regions might not understand the viewpoints of managers at the parent company
  • There can be a communication barrier due to different languages
  • Confusion can arise between the regional and global objectives

Final Thoughts

An ethnocentric approach, polycentric approach, and regiocentric approach are all different ways your company can recruit international employees. ARC Relocation can help with the relocation of your employees. Schedule a free consultation with ARC Relocation today.