Strategic employment of third country nationals: keys to sustaining the transformation of HR functions - Document (2024)

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    Author: Calvin Reynolds

    Date: Mar. 1997

    From: Human Resource Planning(Vol. 20, Issue 1)

    Publisher: Human Resource Planning Society

    Document Type: Article

    Length: 4,145 words

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    Volumes have been written about the management of expatriates. And there is a growing interest in the effective employment of nationals of countries in which global companies have operations. But practitioners and academics alike have treated lightly the unique role of third country nationals (TCNs) in the international work-force. To the extent that authors and researchers have covered the subject, the focus has usually been on compensation and benefits.

    The objective of this article is to examine how companies in various stages of globalization and headquartered in different countries and regions utilize TCNs, to explore their strengths and weaknesses relative to other groups of employees, to suggest strategies for capitalizing on their unique strengths, and to assess their importance in the globalization of organizations.

    Third Country Nationals

    A third country national, as the term is used here, is an employee, working temporarily in an assignment country, who is neither a national of the assignment country nor of the country in which the corporate headquarters is located. An example is a Spaniard transferred from Spain by an American headquartered company to be Managing Director of a subsidiary in Argentina. Excluded from this definition is the hiring locally by a subsidiary in Argentina of a Spaniard living permanently in Argentina. It also excludes foreign nationals assigned to headquarters. The distinction here is that the employer is participating in the management and development of TCNs outside their home and the headquarters countries.

    Reasons for Third Country Nationals

    It is unusual to find TCNs in a newly emerging multinational. When a company opens its first one or two overseas operations (whether it is a bank opening its first branch in London, a manufacturer building its first factory in Taiwan, or an exporter opening its first sales office in South Africa) it will invariably staff the operation(s) with a combination of qualified nationals it can find locally and a limited number of parent country nationals (PCNs). It will not hire a search firm to look for a German to set up a subsidiary in India. PCNs are employed primarily to represent the company's interests and to transfer corporate technologies and competencies. A new employee, particularly a national of another country, could not be expected to understand and transfer corporate culture or practices.

    Low-cost Substitutes

    Typically, the first TCN is employed when a company has a few foreign operations and decides to open yet another. It is at a point when the company is opening a new branch in a new location and has a choice between sending another expatriate from headquarters or transferring an employee from another existing overseas operation. It is when a North American multinational has a well developed organization in France and decides to open a new subsidiary in the Cote d'Ivoire. Should we transfer an American or a French employee to organize and manage the sales department in Abidjan? An American is often presumed to have a better appreciation of corporate culture and as such, may be considered to be a...

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    Copyright: COPYRIGHT 1997 Human Resource Planning Society

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    Gale Document Number: GALE|A19419211

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    Strategic employment of third country nationals: keys to sustaining the transformation of HR functions - Document (2024)

    FAQs

    What is third-country national staffing strategy? ›

    A third-country national staffing strategy means someone from a country, different from home or host country, will be employed to work overseas. There can be visa advantages to using this staffing strategy, although a disadvantage might be morale lost by host-country employees.

    What does third country nationals mean in HR? ›

    'Third Country Nationals' refers to those employees working outside their home country in such a branch of the company that is neither situated in the employee's home country nor in the company's home country.

    What is the advantage of hiring third country nationals for a global business? ›

    Third-country nationals will bring their culture, background, perception, problem-solving skill, and work ethics, which are not used in that workplace. This will make the workplace more diverse and skillful by using the best strategies from their country and third-country national's country.

    What is the difference between expat and TCN? ›

    Expatriates who are from the country where the company is headquartered are referred to as headquarters expatriates. An expatriate may also be referred to as a parent-country national. Third-country nationals (TCNs). These employees are not from the home country or the host country.

    What are three 3 types of international staffing policies? ›

    Staffing Policy:

    Staffing policy is the means by which companies operate their offices and is influenced by international involvement. The preferred strategy for staffing for international staffing operations is ethnocentric, polycentric, and geocentric.

    What are the key elements of strategic staffing? ›

    Components of Strategic Staffing
    • “Prospect” – Joint interaction between the applicant and the organization.
    • Recruitment – Identification and attraction.
    • Selection – Assessment and evaluation.
    • Employment – Decision-making and final match.

    What is an example of a third-country national? ›

    An example is a French citizen who is assigned to work in the United Kingdom.

    What are examples of third party nationals? ›

    3. Nationals of Micro-States (Monaco, San Marino, Vatican City) are treated as third-country nationals since, although there are no border controls, there is no formal agreement for them to be 'beneficiaries of the free movement of persons' as defined in the EU acquisEN•••.

    What is a third country employee? ›

    Third Country National (TCN) employee means an individual who meets the citizenship requirements of the TCN definition in (48 CFR) AIDAR 702.170 and is hired while residing outside the United States for work in a Cooperating Country.

    What are the three advantage of foreign employment? ›

    Advantage over other jobseekers

    This shows adaptability, motivation and determination – three skills that employers and recruiters greatly value. In addition, having international experience will put you at an immediate advantage over other candidates who have never worked abroad.

    Why are companies increasingly recruiting third-country nationals? ›

    Why are companies increasingly recruiting third-country nationals? Because they are familiar with an industry or foreign country. To ensure that a candidate will operate effectively in a foreign culture, a company's international marketing positions should include _____ along with a description of the position.

    What are the pros and cons of hiring foreign employees over local employees? ›

    Advantages and Disadvantages of Hiring Foreign Workers
    • Access to international talent: ...
    • Reduction in employability costs: ...
    • Increased Productivity: ...
    • Flexibility with the job profile: ...
    • Increased problem-solving capabilities: ...
    • Exploring into new markets:

    Are US citizens third country nationals? ›

    A third-country national (TCN) is an individual who meets the following criteria. (1) Is neither a citizen of the United States nor of the country to which assigned for duty. (2) If employed, is eligible for return travel to the TCN's home country or country from which recruited at U.S. Government expense.

    Is an expat still a U.S. citizen? ›

    Expatriation is the process of relinquishing U.S. status. It includes both U.S. Citizens and Green Card Holders (aka Legal Permanent Residents) who meet the definition of a Long-Term Resident (LTR). The baseline perspective is that formal expatriation rules apply to US Citizens and Lawful Permanent Residents.

    Are expats considered immigrants? ›

    An expat or expatriate is simply defined as a person who lives outside their native country. Similarly, an immigrant is a person who comes to live permanently in a foreign country. Only one distinction is made here – immigrants intend to stay in their new country indefinitely.

    What are the four staffing strategies? ›

    This sample International Recruitment Policy template describes the four global staffing approaches: ethnocentric, polycentric geocentric, regiocentric, and it will help you set up your own international staffing strategy.

    What are the strategic approaches to international staffing? ›

    In international business, companies adopt four approaches in staffing its offices and facilities. These are ethnocentric, polycentric, regiocentric, and geocentric approaches.

    Which international staffing approach is the best? ›

    The Geocentric Approach is one of the methods of international recruitment where the Multi National Companies recruit the most suitable employee for the job irrespective of their Nationality.

    What are the 3 key elements of strategic planning? ›

    Effective strategic planning is a process that should be broken down into three separate, equally important components: strategic thinking, long-range planning, and operational planning.

    What are third country nationalities? ›

    A third-country national is a person who does not have the nationality of one of the Member States of the European Union, nor the nationality of one of the countries associated with the European Union (Iceland, Lichtenstein, Norway and Switzerland).

    What is the difference between a host country national and a third-country national? ›

    Host Country National – Permanent resident of the country where the operations of the company are located. Third Country National – Permanent Resident of a country other than the parent country and the host country.

    What are 5 examples of third parties? ›

    This section includes any party that has a left-liberal, progressive, social democratic, democratic socialist, or Marxist platform.
    • Communist Party USA.
    • Freedom Socialist Party.
    • Justice Party USA.
    • People's Party.
    • Party for Socialism and Liberation.
    • Peace and Freedom Party.
    • Socialist Action.
    • Socialist Equality Party.

    What are the three major third parties in the United States? ›

    The two-party system is based on laws, party rules, and custom. Several third parties also operate in the U.S. and, from time to time, elect someone to local office. Some of the larger ones include the Constitution, Green, Alliance, and Libertarian parties, with the latter being the largest third party since the 1980s.

    Who was the most successful third party candidate? ›

    In fact, Roosevelt ran one of the most successful third-party candidacies in history but was defeated by the Democrat (Woodrow Wilson) and the Progressive party quickly disappeared while the Republicans re-gained their major party status.

    What is one in three foreign employment requirement? ›

    If the beneficiary is outside the United States at the time of filing, the “one-in-three” rule applies. That is, the petitioner must demonstrate that the beneficiary's one year of qualifying foreign employment occurred within the three years immediately preceding the filing of the EB-1C petition.

    What does third country status mean? ›

    Definition(s)

    A country that is not a member of the European Union as well as a country or territory whose citizens do not enjoy the European Union right to free movementEN•••, as defined in Art.

    What are the four importance of foreign employment? ›

    It has reduced the problems of unemployment. It has earned remittance. It has increased the national income and thus investment. It has decreased poverty.

    What are the importance and challenges of foreign employment? ›

    Common Challenges of Foreign Employment
    • Payroll and Benefits. Once you know whom to hire, the next step is to add them to your payroll. ...
    • Tax Compliance. ...
    • Salary and Perks for Employees. ...
    • Non-compete and Intellectual Property Provisions.
    Mar 31, 2022

    What are the pros and cons of a 3 year job in another country? ›

    The Pros and Cons of a Career Abroad
    • Pro: Experience the Global Marketplace. ...
    • Con: Interrupted Career Progression. ...
    • Pro: Cross-Cultural Communication. ...
    • Con: Office Politics in a Second Language. ...
    • Pro: Diversify Your Income. ...
    • Con: Hidden Costs of Living Abroad. ...
    • Pro: Experience Different Ways of Doing Business. ...
    • Con: Feeling Transient.

    What are the top 3 countries that employees Americans at their foreign controlled companies? ›

    Among foreign enterprises, British-owned companies employed the highest number of U.S. workers in 2015 (around 1.1 million), followed by companies with majority ownership in Japan (around 856,000) and France, Germany and Canada (each over 600,000).

    Why do US companies hire foreign workers? ›

    Hiring international employees brings people into your business who have different perspectives since they came from entirely different places. The blending of ideas and perspectives from various cultures is the best possible recipe for creativity and innovation that can take your company to new heights.

    Why does the US employ workers from other countries? ›

    Companies in countries with developed economies can often save money by hiring foreign workers from countries with less developed economies. Part of this cost reduction is related to the advantageous conversion rates between strong and weak currencies.

    What are the advantages and disadvantages of recruiting expatriate staff? ›

    What are the Pros of Hiring Expats for your International Business ?
    • Quality over Quantity. ...
    • The Target Country has a Limited Local Talent Pool. ...
    • Your Operation Must Conform to the Standards of your Home Market. ...
    • Expats are Expensive & Problematic. ...
    • High Burnout Rate. ...
    • Legal Risks.
    Oct 12, 2015

    What are the advantages of hiring local country nationals? ›

    Knowledge of the local culture and business practices

    Local candidates understand the culture in which they live. That means they can navigate potential problems with greater ease. That usually translates to higher productivity and a decrease in financial loss, if any.

    What are the advantages of third country nationals? ›

    The main reason why companies use third-country nationals as a staffing strategy is the ability of a candidate to represent the company's interests and transfer corporate technology and competencies. Sometimes the best person to do this isn't based in the United States or in the host country.

    Are U.S. nationals considered U.S. citizens? ›

    Someone who is a U.S. citizen will be a U.S. national at the same time, but U.S. nationals are not always U.S. citizens. U.S. nationals also have some restrictions, while U.S. citizens are less restricted and have more benefits. However, U.S. nationals can apply for citizenship after three months of residency.

    Can I lose my U.S. citizenship if I live in another country? ›

    You may lose your U.S. citizenship in specific cases, including if you: Run for public office in a foreign country (under certain conditions) Enter military service in a foreign country (under certain conditions) Apply for citizenship in a foreign country with the intention of giving up U.S. citizenship.

    Do expats pay Social Security tax? ›

    If a foreign employer employs you, you will generally NOT be required to pay into US Social Security. If you are self-employed, you will generally be required to pay a self-employment tax, which covers the Social Security and Medicare taxes you would generally split with a US employer.

    Do American expats have to pay U.S. taxes? ›

    Do expats pay taxes? Yes, you file a U.S. tax return if you're a U.S. citizen and make over the general income threshold — regardless if you live abroad or Stateside.

    What is the difference between an immigrant and an expatriate? ›

    The difference between an expat and immigrant

    Often, an immigrant is seen as someone who has moved to another country permanently, and an expat may be seen to have moved to a country temporarily. Expats may be more likely to move around than an immigrant. Both immigrants and expats often find work abroad.

    Who qualifies as a US expat? ›

    If you are an American citizen and move to another country and plan to stay there, you have become an expat.

    Why do Americans say expat? ›

    The word comes from the Latin terms ex ('out of') and patria ('country, fatherland')”. Defined that way, you should expect that any person going to work outside of his or her country for a period of time would be an expat, regardless of his skin colour or country.

    What is an example of third-country national? ›

    Depending on the used definition, people from Norway, Iceland, Liechtenstein (European Economic Area) and Switzerland might be considered as third country national or non third country national.

    What is a third-country national business? ›

    A third country national is a worker hired in a country outside the United States who is assigned to work in a country other than their country of origin.

    What is a third-country national? ›

    Definition(s)

    Any person who is not a citizen of the European Union within the meaning of Art. 20(1) of TFEUEN••• and who is not a person enjoying the European Union right to free movementEN•••, as defined in Art. 2(5) of the Regulation (EU) 2016/399 (Schengen Borders Code)EN•••.

    Is a US citizen a third-country national? ›

    A third-country national (TCN) is an individual who meets the following criteria. (1) Is neither a citizen of the United States nor of the country to which assigned for duty. (2) If employed, is eligible for return travel to the TCN's home country or country from which recruited at U.S. Government expense.

    What is a third-country national in Spain? ›

    Third-country nationals require a national visa when they are going to stay in Spain for more than 90 days (in any 180-day period) for the purposes of work, study or establishing their residence. They also need a national visa when moving to Spain to work for a period of under 90 days.

    What is staffing strategy in HR? ›

    Strategic staffing means making sure your organisation has the workforce it needs to deliver its current and planned business objectives. Markets and plans can change. Many organisations have short, medium and long-term strategic staffing plans and review them regularly in context of overall business strategy.

    What is an example of strategic staffing? ›

    The emphasis is on finding talented and creative people and then offering them enough to join the company. A law office recruiting the best new lawyers in the area or a sales office hiring the top salespeople away from a rival firm would be examples of this staffing strategy.

    What are the 5 phases of staffing? ›

    Staffing Process Steps
    • Assessing Manpower Needs. Based on the work that needs to be done, it should be fairly easy to estimate what your manpower requirements are. ...
    • Recruitment. ...
    • Selection. ...
    • Placement and Orientation. ...
    • Training and Development. ...
    • Performance Appraisal. ...
    • Compensation.
    Oct 2, 2018

    What are the characteristics of third country? ›

    The modern definition of “Third World” is used to classify countries that are poor or developing. Countries that are part of the “third world” are generally characterized by (1) high rates of poverty, (2) economic and/or political instability, and (3) high mortality rates.

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