Decision-making Approaches to Managing Risks in Foreign Workforce Integration: Evidence from Croatia

The growing labor shortage has become a critical challenge for companies, leading to an increasing reliance on foreign workers. However, the integration of this workforce entails a range of risks, including language barriers, cultural differences, legal and regulatory non-compliance, and high employee turnover. Effective management of these risks requires the application of structured decision-making methods and knowledge management tools. This study employs two multi-criteria decision-making techniques: Failure Mode and Effects Analysis (FMEA), which enables the identification and quantification of risks, and the Analytic Hierarchy Process (AHP), which provides a framework for determining the relative importance of criteria in managerial decision-making. The empirical study was conducted on a sample of 324 respondents from the private sector, public sector, and student population, with an additional subsample of managers in the Republic of Croatia. The findings indicate that language barriers and legal compliance are perceived as the most critical risks, while managers assign the greatest weight to the business and operational impact of these risks. The results underscore the importance of integrating FMEA and AHP methods into knowledge management processes, thereby enabling more effective decision-making and fostering the development of innovative business models.