Received: 08. 09. 2001 Review
Accepted: 15. 11. 2001 UDC: 658.3

In the paper, the author first presents various approaches to the management and recruitment of employees in subsidiaries that the company has established in different countries. Then, she turns her attention to the basic functions of international human resource management, among them recruitment and selection of new employees, development and training of employees, assessment of work efficiency, as well as remuneration of employees. As the expatriates are often given special attention by their work organizations, she concludes the paper with the description of the additional challanges occurring in the management of these employees.


In Slovenia, with a population of only two million, we have a lot of organizations doing business successfully, not only in the domestic but also in the international environment. Lek, one of our two pharmaceutical companies; Fructal, which produces juices from various kinds of fruit; SCT, the road construction company and Mura, which produces men’s and women’s clothes, are some examples of our most prominent firms.

In those, as well as in similar organizations that function in the global environment, they can use different approaches to managing employees. How they find employees, pay, train, and promote them varies with culture. They usually attempt to treat their employees equitably, yet in a culturally appropriate manner.

When the organization sends its employees to some other country, it takes over the responsibilities besides the basic functions of human resource management. For example, the functions of staffing, training and development are especially emphasized in this organization. They do not deal merely with the selection of the best employees for work in foreign countries but also have to be aware of the needs of the whole family that will accompany the employee to the new cultural environment. A lot of individuals taking on international assignments are unsuccessful since their spouces or families can not adjust to their new surroundings. Hence, it is necessary to organize training in the foreign language for the employee and his family some months before departure. Everything necessary for the journey, including visas, have to be provided for on time. It is also necessary to prepare their residence in the new surroundings, as well as to assure health services and enrolment into schools for the children of the employees.


Companies can apply one of the three different approaches to managing and staffing their subsidiaries (Francesco, Gold, 1998):

1. Ethnocentric. The home country practice prevails with this approach. Headquarters from the home country makes key decisions, employees from the home country hold important jobs, and the subsidiaries follow the home country resource management practice.
2. Polycentric. Each subsidiary manages on a local basis. A local employee heads a subsidiary because headquarters’ managers are not considered to have adequate local knowledge. Subsidiaries usually develop human resource management practices locally.
3. Geocentric or global. The company that applies the global integrated business strategy manages and staffs employees on a global basis. For example, Electrolux (the vacuum cleaner company) has for many years attempted to recruit and develop a group of international managers from diverse countries. These people constitute a mobile base of managers who are used in a variety of facilities as the need arises.

In the ethnocentric approach, the cultural values and business practices of the home country are predominant. Headquarters develops a managing and staffing approach and consistently applies it throughout the world. Companies following the ethnocentric approach assume the home country approach is best and that employees from other parts of the world can and should follow it. Managers from headquarters develop practices and hold key positions in the subsidiaries to ensure consistency.

Advantages Disadvantages
• Lower labor costs
• Demonstrates trust in local citizenry
• Increases acceptance of the company by the local community
• Maximizes the number of options available in the local environment
• Leads to recognition of the company as a legitimate participant in the local economy
• Effectively represents local considerations and constraints in the decision-making process
• Makes it difficult to balance local demands and global priorities
• Leads to postponement of difficult local decisions until they are unavoidable, when they are more difficult, costly, and painful than they would have been if implemented earlier
• May make it difficult to recruit qualified personnel
• May reduce the amount of control exercised by headquarters

Figure 1. Advantages and disadvantages of using local employees to staff international subsidiaries (Gomez-Mejia,