Irhr3540 International Human Resource Management Assessment Answers

Answer:

Traditional expatriate package and its limitations

Akiko Nishimura is a Japanese employee working in the controlling department with a German Multinational manufacturing organization. She was a part of the talent pool of the organization and was sent on an expatriate assignment to India two years ago. Now she was seeking relocation to Singapore from her organization. She was called in by the HR manager Puja Malik and she was informed of the modifications in the expatriate package of the organization (Pena & Betton, 1998).

The expatriate package that was offered to Akiko when she relocated to India was the traditional expatriate package. This was the package that the organization offered to the employees that were in the talent pool. It was a specially designed for the employees from the talent pool of the organization to be sent for the expatriate projects for a duration of three years or less. The company provided many benefits to the employees under this offer and the provisions were very generous for the expats. The contents of this package included the entire cost involved in relocating from one country to the other for the employee. Additionally, the employee was paid for an annual trip to the home country and the airfare for the same. The housing allowance for living in the new country was also paid additionally to the employee and they were provided with an allowance for hiring the company car for their local travel needs (PM University, 2013).  The cost of education for the children of the expatriates was borne by the organization and the support for the family was paid additionally with the salary of the employee. Once the foreign assignment was complete, the complete relocation cost of the employee when returning back home was also covered by the organization only under the traditional expatriate package. There were certain additional allowances in the package according to the local needs of the employees and a retention bonus was additionally paid to the expatriates on completion of the assignment.

 An organization has two primary reasons to send the employees offshore for assignments. The expatriate assignments are designed to help the employees in gaining experience of countries other than their home country and to transfer the knowledge and skills across international boundaries. The traditional package designed for the expatriate compensation was based on the approach that the expatriated must be given all the facilities as they are the valued talent employees of the organization (PWC, 2011). This package, although was beneficial for the employees, the organization was at a loss due to employees staying in international locations for years together. The employees would also at times take up new jobs or relocate permanently to the new countries while continuing to enjoy the expatriate benefits. Thus the organization designed new policies that provide benefits to the expatriates only for a limited period of time after which they are given a compensation at par with the local employees of the organization (Meier, 2015).

SWOT analysis of Local International policy of the organization

A detailed analysis of the newly designed local international expatriate policy of the organization as explained by Puja Malik gives us various insights. The local international policy was the one offered to Akiko by Puja of she decides to relocate to Singapore with her husband Hiroshi. This is a relatively new expatriate policy that was designed a year back by their organization for Asian expatriate assignments specifically. A SWOT analysis of the policy and its features helps us better understand its intricacies and its advantages and disadvantages for Akiko and other expatriates.

According to the new policy, the employees will be paid an allowance as the settling in cost in the new country. Their medical checkup and medical expenses will also be covered in the policy. Additionally, the organization will arrange the visa and permits required for relocation and also take care of the costs involved in the same. The travel costs will also be covered by the organization. This policy is more cost effective for the organization as it saves on the additional benefits that were earlier given to the employees. It ensures that the payout to the expatriates and the people working in the same organization in their home country is somewhat even. The increasing willingness of the people to relocate and the expat assignment costs for the organization will also be taken care of by this (Denmark, 2016).

The employee benefits have been significantly reduced by the organization when compared to the traditional policy. This will result in a drop in the willingness of the employees to relocate as the package is not that attractive now. The employees like Akiko, who are already on an offshore assignment will get the added blow as the policy has been modified while they are on an assignment and they have no other option but to accept the changes. This will cause a reduction in mobility and knowledge sharing as fewer employees opt for relocation. The dissatisfaction among the employees can also lead to decreased loyalty towards the organization. The host country based salary being offered in the package might not suit all employees and may result in added expenditure for the expatriates.

The new policy of local international expatriate payout will prove to be cost saving for the organization. It will prevent wasteful expenditure that the organization was earlier bearing and the amount saved can be used by the organization for further development of the organization. The employees will still be getting the retention bonus at the end of the assignment and the organization will also save the additional expenses done on the employees who went offshore and left the assignment midway (Forgas, 2010).

The employees relocating from a high income country to a lower income country will have no additional benefits in their compensation. They have to take care of the additional expenses that happen while settling in and the other benefits that the organization earlier provided and has discontinued in the present policy have made the international assignments and relocation less attractive for the employees. The organizational knowledge sharing will reduce as fewer employees opt for foreign assignments. This will also result in an increase in the employee turnover and additional costs for the organization for hiring and training new employees. They will suffer from an additional loss of talent due to employees leaving the organization (IUCN, 2006).

Comparison of employer needs against the employee needs

The employee and employer needs differ when it comes to the expectations from the local international policy of the organization. While the both aim to maximize their benefit from the policy, employees want to get support and maximum compensation for the assignment. The employer or the organization on the other hand wants to save costs from the expatriation. The following are the needs and expectation of each of them from the local international policy for the expatriates.

The employer wishes to make the program more cost effective and beneficial for the organization. They want to have more employees moving about for international projects as it reduces their training costs. This also facilitates transfer of knowledge across the international borders and increases employee retention as the employees can associate with the organization for a longer period of time (Duvoisin, 2012). At the same time, the organization wants that they should cover minimum costs for employee relocation and they should pay the expatriated equivalent to the local employees to minimize dissatisfaction among the local workforce. Therefore in the current policy, they have an added clause according to which the expatriates will be treated as local employees after they have been there for some time.

The employees who are taking up international assignments and relocating to international locations also have certain expectations from the organization and their expatriate policies. They want to gain international exposure and want their maximum relocation costs and additional expenses covered by the employer. Want the transition from one country to the other to be easy for them and that the assignment should give them opportunities to develop professionally and personally. They want the policies to be flexible so that they get benefits according to their needs and they also wish to receive additional incentives for working in a location away from their home country. They also expect the organization to make the transition smoother for the spouse and children of the expatriates and cover their travel, visa, permits and education in the new country (International HRM Association, 2013).

Differences between the three assignment packages

As explained by the HR manager Puja Malik, the organization has done away with the single expatriate contract and has now designed new contracts that have policies specifically designed for the expatriates working in their organization. If we compare and contrast the three packages offered by the organization, we can find out the similarities and differences between them. The packages being offered now are the local contract, the local international contract and the expatriate contract.

The local contract of the organization is for the newly hired employees of the company. In this contract, the organization provides basic benefits to the employees along with the salary according to the country of operations. The local international contract is for the expatriates who wish to relocate for reasons other than career or job assignments (Czajor, 2014). A local international contract changes to a local contract automatically after the employee has been living in the same country for more than two years. In this program, the employees are offered the location based salary compensation and a few added benefits for expatriation. The third program designed by their organization is the expatriate contract. Under this program, the employees are offered either home based salary or that according to the parent country. This program is for the employees of the ‘talent’ group of the organization and who are being relocated on job assignments or projects. The employees on an expatriate contract are provided various additional benefits, however, the duration of this contract is limited to three years only. If the employee is staying beyond  three years, the contract gets switched to the local international contract.

In the given case, Akiko is living in India for last 2 years. When she was relocated, there was only one program for the expatriates. Now that she wishes to relocate to Singapore for personal reasons, the contract that will be offered to her is the local international contract. Under this contract, she will no longer receive the benefits that she was receiving. Even if she continues to stay in India, after the completion of three years in the country, the contract will switch to local international one (Tiwari, 2013). Although the process seems fair and reasonable from the organization’s point of view, it is unfair for expatriated like Akiko. The implementation of these policies will only result in dissatisfaction among the employees and the employee loyalty towards the organization will also reduce.

Suggested global policy for the organization

In this case study, the organization has changed the organizational policies for the expatriates and unlike the earlier single policy for all the employees moving to international locations for offshore assignments, the organization has designed three specific policies that are based on the need for relocation, duration for relocation and the duration for which the employee has been working in the organization. The organization has taken this step to provide a cost effective policy for international relocation as supporting the expatriates and their families for longer duration was proving to be expensive for the organization. The employees, however, do not find the new policies fair and are dissatisfied due to this (Suutari, 2000). This dissatisfaction will result in higher employee turnover for the organization and will ultimately cost the organization in terms of both talent and money. Some of the suggestions that we can give for the improvement of the implementation of these policies are- the organization needs to first communicate with the employees and the new policy structure must not come as a shocking revelation to them as it happened in case of Akiko. This will help in preparing the employees and managing their expectations towards the organization (Barrett, 2014). They can additionally have a variable component in the payout structure of the local international contract to increase the compensation of the employees  having good performance. These employees need to be retained and for that the organization cannot have an equalized payout structure for them and the locals. This will also make them more loyal towards the organization. The financial benefits alone cannot make up for the loss of trained manpower and value adding ideas and suggestions received from the valued employees.

There is no doubt about the fact that the organization is going to save costs by implementing the new expatriate policies, but this must not come with the added costs of employee recruitment, selection, orientation and training. The organization can instead focus more on localization and avoid relocation of employees. The employees going offshore for assignments will only be dissatisfied if their relocation costs are not covered by the organization and if they have to face difficulties later on. Thus, it is suggested that the organization must limit the number of employees being relocated and promote local employment. The purpose of these plans must be resource creation and maintenance. The company must also devise a globally equivalent expatriate policy that caters to the needs of both the organization and the employees. There must be a more open and interactive environment created in the organization so that the employees have not just been dictated the rules, but they are also made a part of the decision making process. The employees must be asked for suggestions and opinions and the leaders must not give instructions from the ivory tower.

As a suggestion to Akiko in this case, we would like to suggest her to continue to stay in India for another year and complete her assignment after which she can weigh her alternatives. She can either relocate to Singapore with Hiroshi after that if it is possible or move back to Tokyo. She is currently on the expatriate contract which changes to local international contract in a year’s time. Akiko should wait till then to decide if she wants to stay in India with the local international package, move with her family to Singapore or move back to Tokyo to her home country. In the mean time, Hiroshi can either take up the offer in Singapore or wait for a year to take up a job in Tokyo itself. The family will definitely face some inconvenience, but the loss of benefits for Akiko if she moves to Singapore at this time can be more.

References

Barrett, B. (2014, August). Training Global Managers to Prepare and Train Expatriates for More Efficiency and Effectiveness. Journal of Economics, Business and Management, 2(3), 1-6. Retrieved from https://www.joebm.com/papers/124-L00013.pdf

Czajor, J. (2014). Expatriate Management/International Assignment Policy. Retrieved from https://rd.springer.com/chapter/10.1007/978-3-662-43553-3_41#page-1

Denmark, A. (2016). Terms & Conditions for Expatriates. Retrieved from https://www.ms.dk/sites/default/files/filarkiv/dokumenter/aadk_expatriates_terms_and_conditions_2016.pdf

Duvoisin, J. (2012). The Nestlé Human Resources Policy. Retrieved from https://www.nestle.com/asset-library/documents/jobs/the_nestle_hr_policy_pdf_2012.pdf

Forgas, M. (2010). “Expatriates” At P&G. Retrieved from https://www.iom.int/jahia/webdav/shared/shared/mainsite/microsites/IDM/workshops/migration_and_transnationalism_030910/Session4-Forgas.pdf

International HRM Association. (2013). Managing Human Resources in an International Business. Retrieved from https://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf

IUCN. (2006). Guidelines and procedures for expatriates. Retrieved from https://archive.ramsar.org/pdf/mtg/mtg_adhoc_wg_ar3-08.pdf

Meier, O. (2015). Global Mobility: Moving The Right People To The Right Place At The Right Cost. Retrieved from https://www.imercer.com/uploads/GM/qol2015/pdf/Global-Mobility-Moving-the-right-people-to-the-right-place-at-the-right-cost.pdf

Pena, L., & Betton, J. (1998). designing competitive international compensation programs. Retrieved from https://www.scielo.br/pdf/rae/v38n1/a03v38n1.pdf

PM University. (2013). Policies And Procedures: Human Resources. Retrieved from https://www.pmu.edu.sa/Attachments/About/PDF/About/PP/HR%20Policies%20and%20Procedures%20Manual%202013.pdf

PWC. (2011). International assignment perspectives: Critical issues facing the globally mobile workforce. Retrieved from https://www.pwc.com/us/en/hr-international-assignment-services/publications/assets/ia-perspectives-v5.pdf

Suutari, V. (2000). Determinants of Expatriate Compensation – Findings among Expatriate Members of SEFE. Retrieved from https://lta.hse.fi/2000/4/lta_2000_04_a4.pdf

Tiwari, N. (2013). Managing Human Resources in International Organizations. Global Journal of Management and Business Studies., 3(4), 355-360. Retrieved from https://www.ripublication.com/gjmbs_spl/gjmbsv3n4_02.pdf