International Staffing Strategies Used By Coca Cola Company

Staffing is often a complex issue for multinational corporations when they are internationalizing their business. Staffing policies have a great influence on the success or failure of the subsidiaries. The Coca Cola Company employs three major strategies when internationalizing its activity – geocentric, polycentric and ethnocentric. Geocentric strategy focuses on the employee’s skills and experience without taking into consideration his or her nationality. This strategy ensures that the company gets the best candidates to fill its key management positions. The strategy also gives the third country nationals (TCNs) a chance to work on key management positions. Indeed, the Coca Cola Company is largely a geocentric multinational corporation (MNC) because it operates in over 195 countries and most of its employees are TCNs. The company also uses polycentric and ethnocentric strategies in some aspects. For instance, it uses polycentric approach to limit the parent company’s influence on the management of its subsidiaries. On the other hand, the corporation utilizes ethnocentric strategy in order to provide its managers with global exposure.

Staffing for multinational corporations is often a complicated issue for their management due to cultural peculiarities, diverse environment (legal, political, economic, business) and the parent organization’s need for control (Wu 2008). Thus, staffing has a great influence on the human resource management, effectiveness and acceptability. Most multinational corporations often draft their host-countries’ staffing policies based on the parent countries’ viewpoints. This kind of staffing policies tends to be ethnocentric and parochial since it leads to the conflicts between subsidiary and parent company management. This problem is compounded with the fact that the management of the subsidiaries often fails to identify the problem of the staffing policies, especially when such policies are written by the parent company. Scholars proposed that the parent companies should grant the subsidiaries with the freedom of making their own staffing polices (Thoo &Kiliannan 2013). This is essential in guaranteeing that the subsidiaries’ staffing policies meet the country-specific requirements. The main purpose of this study is to examine the different staffing strategies employed by the Coca Cola Company when internationalising its business. The study will also identify the answers, whether there is any advisable order of strategic usage preference. The paper concludes with a recap of major findings in this study and provides the necessary recommendations.

Findings

Staffing entails the identification of external and internal candidates for job positions. External candidates are being discovered through recruitment while internal ones are identified through job posting. Staffing also involves the assessment of the candidates’ academic and other qualifications mainly through structured interviews as well as the selection of suitable applicants for  certain positions. The Coca Cola Company increased both its diversity recruitment initiatives as well as its monitoring of all the necessary stages of the staffing process (Thoo & Kiliannan  2013). Additionally, the company also uses an approach called integrated talent acquisition in this process. It is essential in ensuring that the company acquires a diverse talent pool to meet the versatile organisational needs and stimulate all business processes in the company. The company’s talent acquisition procedure starts with the identification of the necessary talent that will meet the changing business needs. After identifying the talent requirements, the suitable candidates are then being sourced either internally or externally.

The Coca Cola Company has developed an effective and efficient staffing philosophy to support its international staffing strategy. In this regard, the company’s staffing approach is to employ nationals in its subsidiaries. This philosophy is based on the assumption that local employees are capable of conducting business operations in their home countries better than foreign ones. However, the possibility of hiring expatriates in the subsidiaries cannot be excluded for major reasons. The first reason for that is the necessity for the expatriates  to fill job positions in the countries where there is lack of certain skill sets. For instance, when the company started its business operations in the developing countries, it has to employ foreigners for some specialised job positions. The other reason as to why the company employs expatriates in the subsidiaries is to provide them with an opportunity for their own development (Aswathappa 2010). In this regard, the company relocates its employees to foreign countries in order to facilitate their advancement. Such employees are able to gain more experience in another environments and, thus, embrace diversity. Generally, the various staffing approaches employed by the Coca Cola Company when internationalising its business are geocentric, ethnocentric and polycentric.

Geocentric Strategy

Geocentric approach to international staffing focuses only on the employee’s skills and adopts the most efficient and effective HR-practices irrespective of the employee’s nationality (Tiwari 2013). This staffing approach often select the companies, which intend to implement a transitional orientation. The Coca Cola Company adopts this staffing approach when recruiting its employees on the terms of taking into consideration their experiences and skills irrespective of these workers’ nationality. Such an approach enables the company to get the most appropriate candidates for its job positions. Hooper and Newlands (2012) assert that geocentric strategy in which the company appoints the best people to its movement positions is often used by multinational corporations “for which integrated worldwide operations are important and which see themselves as a networked federation” (p. 195). Hooper and Newlands (2012) further note that the Coca Cola Company is among the various examples of geocentric corporations. The enterprise conducts its business operations in over 195 nations across the globe, and most of its employees are composed of third country nationals (TCNs) (Hooper & Newlands 2012). In general, most TNCs are often found in geocentric multinational corporations such as the Coca Cola Company.

The company uses geocentric approach to staffing since it strongly believes that the nationals could understand their business environment better than foreigners. Additionally, the company also employs this strategy when its HRM group creates the global service programme. As such, the programme grants the company an opportunity to develop its human resources as well as building a team of executive managers. Geocentric strategy has various advantages. For instance, it facilitates the Coca Cola Company to advance its multinational team of top executive managers. These executive managers are responsive to diverse foreign cultural, political and socio-cultural environments in which the company operates. This ensures that the company has a good understanding of the global perspective. Another advantage associated with geocentric approach to staffing is that it creates a platform for developing global managers who could be deployed at any subsidiary across the globe (Hooper & Newlands 2012). Moreover, geocentric strategy can enhance knowledge transfer, resource sharing and cooperation within the Coca Cola Company. Furthermore, Hooper and Newlands (2012) assert that geocentric approach is cheaper than both polycentric and ethnocentric because it relies on third country nationals (TCNs) and host-country nationals instead of parent-country nationals (PCNS). However, this approach has its fair share of drawbacks as well.

How It Works

Polycentric Strategy

Polycentric strategy is a staffing approach in which host-country nationals are favoured on key management positions in the company’s subsidiaries. In this regard, the host-country nationals are recommended at the expense of the parent-country nationals. This strategy ensures that there is a minimal interference of the parent company to the subsidiaries’ management (Colakoglu, Tarique & Caligiuri 2009). The strategy is appropriate when subsidiaries are located in market environments with significant national differences as a result of consumer preferences, technical standards or legal reasons. The Coca Cola Company uses polycentric strategy to provide the subsidiaries with the independence and freedom conducting their business operations in accordance to their product market environments. It also uses this strategy in order to give local businesses an opportunity to develop their most suitable HR practices.

Polycentric strategy has various advantages. One of the pluses is that it facilitates the company to advance a management team in its subsidiaries with a thorough understanding of the competitive, cultural and national environment. The management is also familiar with the nationals’ native languages. Another advantage is that it enables the Coca Cola Company to reduce the costs needed for the employment process. Polycentrism also enhances motivation of the employees as it provides the local nationals with a chance to develop in their career ladders (Colakoglu, Tarique & Caligiuri 2009). Moreover, host-country governments may favour home-country nationals in the multinational companies’ subsidiary. However, the major drawback of polycentrism is that it creates challenges in aligning the activities and goals of the parent company and the subsidiary (Tian 2007). It may also make difficulties to HCN managers when it comes to relocating to other subsidiaries or the parent company.

Ethnocentric Strategy

Ethnocentric strategy is a staffing approach according to which the parent-country nationals (PCNs) are favoured when appointing people to fill senior management positions in the subsidiaries abroad (Gupta 2013). This approach is often based on a number of assumptions. The first is that PCN managers have good knowledge and experience regarding the company procedures, policies and corporate culture. Another assumption is that appointing PCN managers to the subsidiaries abroad would simplify communication (Sharan 2008). Basing on this thought, the Coca Cola Company uses ethnocentric approach mainly in countries that use different national languages from the parent company’s language (English). This ensures that the senior managers use a common language and, thus, enhance the level of understanding as well as speed up dialogue. Notably, the Coca Cola Company uses ethnocentric strategy in order to limit the autonomy of its subsidiaries. For instance, the company brought its expatriate from its parent company, located in Chicago, to fill the position of finance manager in its Brazilian subsidiary (Aswathappa 2008). The company also uses this strategy in order to provide its managers with global exposure.

Conclusion and Recommendations

This research paper sought to examine the different staffing strategies that the Coca Cola Company uses when internationalizing its business. Staffing is often a complicated issue for multinational corporations due to the diversity of product markets and the parent company’s influence on the business operations of the subsidiaries. When multinationals draft their staffing policies without taking into consideration the difference in the legal, political, business and economic environments in the local country, conflicts are likely to arise. As such, scholars proposed that the subsidiaries should be granted the freedom of making their own staffing policies. This study establishes that the Coca Cola Company employs three different types of staffing strategies when internationalizing its business. These staffing strategies are geocentric, polycentric, and ethnocentric one. When using geocentric approach to staffing, the company focuses on the employee’s skills and experience rather than worker’s nationality. This facilitates the company to recruit the most appropriate candidates to fill the key management positions in its subsidiaries abroad. On the other hand, the company also uses polycentric strategy. In this case, it favours host-country nationals at the expense of expatriates. This provides the nationals with an opportunity to develop their HR practices. In some circumstances, the company also utilizes ethnocentric strategy. In this regard, the corporation favours PCNs in filling the key management positions in its subsidiaries located in foreign countries. This study recommends the companies to prioritise polycentric strategy in order to provide the local nationals a chance to improve their careers. Additionally, the locals understand the market environments in their home-countries better than expatriates do. When polycentric strategy is not applicable, companies should use a geocentric one then. Finally, the study also recommends to utilize an ethnocentric strategy should as the last resort when the other two approaches failed.