face

Evaluate the decisions companies face when compensating an international workforce? What factors need to be considered, and how do these decisions affect the company? Provide an example.

Your response should be at least 75 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.   

No wiki, dictionary.com or work not cited.

      

Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2011). Fundamentals Of Human Resource Management. (4th ed., pp. 472-475). Boston, MA: McGraw-Hill.

    

472 PART 5 Meeting Other HR Goais

cultures rvhen they estabiish perforrnance manageirent lnethocls in other coultries.
Differences may include which behaviors are rated, how and the extent to u,l-rich
performance is tneasured, u,ho performs the rating, and how feedback is provided.l0

For example, National Rental Car uses a behaviorally based raring scale for custorne

r

serrrice representati\res. To measure the extent to rvhich customer seruice representatives’
behaviors contribute to the company! goal of imploving clrstolller ,.rvi.”, the scal

e

measures behaviors such as smiling, making eye contact, greeting custolners, and solving
ctlstolner problerns. Deper-rding on the country, dilferent behaviors nay be appropriate
In Japan, culturally defined stanc{ards for polite behavior include the angle of bowing
as well as proper back alignrnent and eye contact. in Ghana and many other African
ilations’ appropriate measllres wotrld include behaviors that reflect loyalty and repaying
of obligatioi-rs as rvell as behaviors related ro fol1ou’ing regulations and procedures.

The extent to n’hich rlanagers lrreasure performance may also vary frorn one coun-
tly to another. In rapidly cl-ranging regior-is, such as Southeast Asia, the organization
rnay have to r.rpdate its performance plai-rs more often than once a year.

Feedback is another area iu rvhich differences can occur. Employees arourd the rvorld
appreciate positive feedback, but U.S. ernployees are iluch more r-rsed to direct feedback
thau are en-rployees in other countries. In Mexico managers are expected to provide
positive feedback before focusing the discussion or-r behaviors rhe employee needs to
improve.ll At tl-re Thai office of Singapore Airlhres, lnanagers resisred giriing negarive
feedback to ernployees because they feared this u’ould cause rhem ro have bacl karma,
contributing to their reincarnation at a lorver level in their next life.lz The airlines
therefore allorved the managers to adapt their feedback process to fir local cuirures.

fl*m:per:satfng effi iruC#$-ffieef*rna{ W*rkfmre*
The chapters in Part 4 explained that compensatior-r includes decisions about pay
structure, incentive 1.,a1′, and ernployee benefits. Al1 these decisions become more
cornplex r.r’hen an organization has an international u’orkforce. In a recent survey of
ernployers with international operations, 85 percent said they have a global compen-
sation stralegy to guide compe-nsation decisions for ernployees at all leveis and in all
countries r.vhere they op”tut”.l3 Still, HR specialists may need to make extra efforts
to administer these systems effectiveiy. In iraif of the companies surveyed, the person
in charge of HRM in one country rellorts to the head of that company’s operations,
rather than to the leader of HRM ar headquarrers.

Pay $tructure
As Figure 15.3 shows, market pay strllctures car-r differ substantialiy across countries
in tertns of both pay 1evel and the relative u’orth of jobs. For example, compared
w’ith the labor rnarket in Gert-rany, the market in Mexico prorrides rnuch lower pay
leve1s overall. In German1,, bus drivers average higher pay tl-ran kindergarten reachers,
u4-rile tl-re relative pay of teachers is much greater in Mexico and South Korea. For
all the types of jobs shor.r’n, the pa1, differences betu’cen jobs are rnuch less dramatic
in Gertlany than in tl-re other two countries. One reason for such differences is the
suppll, of qualified labor. In Nigeria and China, for example, the suppiy of managemenr
talent has not caught up to the demand, so in those countries there is a large gap
betu’een tl-re pay for rnanagernent jobs and the pay for clerical lvork”rr.l4

Dil{erences sr-rch as these create a dilernma for global cornpanies: Should pay levels
and difTerences reflect n’hat workers are used to in their own colrntriesl Or should
they reflect the earnings of colleagues in the couirtry of rhe facility, or earnings at the
company headquarters? For exarnple, sirould a German engineer posted to Bombay be

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CHAPTER 15 Managing Human Resources
Globaily 473

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Figure’15’3
Earnings in Selected Occupations

in Three Countries

at’

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paidaccordingtothestandardinFr.ankfurtorthestandardinBornbay?iftheStandardiS
Frankfurt, the engineeriffi;;;;;;i1111″1′;tt

ih” Gt’*”””ngineer’s pav as unfair’
If

rhe stanclarct i, Bo,obayl iil. #;i”; “‘riiir.”ru i'”Jiii*po”iule
to. persuade a Ge*nan

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compensatiol’t straregy i’iporta'”‘t
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thai employees bring to the

organization’

ih”r” decisions “ff;;
company’s costs ani ability to compete’

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hourlv labor costs i’-‘ i”’dtt’t’iali’ei countries
tff;t;h;l]’-‘it”d Stattt’ Germany’ and

Iaoan are far higher ri’a;;t.r;:.:” ‘” “*”rol”J”rt*r,*a
countries sltch as Mexico’

Htng Ko.g, u,’,d B,”‘ii'””’A;; ;i” ‘* tr’j”‘*.'”*
trt’lu’s’ labor costs are roo high

to allorv U.S. .o*pu.i., – .o-p.r” “n”.rlu.iy.rr-riess
the companies shift operarions

to iorv-cosr foreign ,J;-#;.Tir^1.””.r”uJn
o””ttit plifies the situation for *rany

companie-s’ Merely comparing
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skills’ and pro-

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s.orkforce, rh. high., *;;;,il;”‘**rn,1,?.”rr.
n.tiO.t ihis, if the organization

has mai’ry positions ttq’.’i’lng hr.ehlv ‘k’ll”d;;;;;’;;;;;;t”d
to operate in (orhire

irnrnigranrs from) a .o.,rrnyi”ith a stfong
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of labor costs’

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“br oth”, fa.rors, such as transportation

co)ts

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procluction process is highiy automateJ’

:,-,…r-.-t :r, 1:’i”-: irr:tS m’a! l-rot be significant’

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474 PART 5 Meeting Other HR Goals
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Cultural differences also play a role in pay structure. This became evident in the
recent recession, when companies in many parts of the world, including the United
States, were slashing payrolls. Even fast-growing India experienced some downsiz-
ing, but many of the cuts came from U.S.-based companiei. Indiat business cukure
tends to be more “paternalistic,” with managers feelit’tg responsible for employees,
weli-being. So when business slowed, Indian companies were more likely to .”ri..r..
ture, hold back on salary increases, and institute hiring freezes than to take actions
like laying off employees or even reducing rheir hours.37

lncentive Pay
Besides setting a pay structure, the organization must make decisions with regard to
incentive pay’, such as bonuses and stock opdons. Although stock options became a
common form of incentive pay in the United States during the 1990s, European busi-
nesses did not begin to embrace this type of compensadon until the end of thar decade.

However, the United States and Europe differ in the way they award stock options.
European companies usualiy ilnk the options to specific performance goals, such as
the increase in a company’s share price compared with that of its competitors.

Employee Benefits
As in the United States, cornpensation packages in other countries include benefits.
Decisions about benefits must take into account the larvs of each country involved, as
r,l’ell as employees’expectations and values in those countries. Sorne countries require
paid maternity leave, and some countries have nationaiized health .u.. ,yrt”*r,
which would affect the value of private health insurance in a compensarion package.

Figure ‘15.4

Average Hours Worked in
Selected Countries

Pen’
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0 s00 1000 1500 2000 2s00
Average Hours Worked Per Year

S0URCE; Data {rom Susan E. Fleck, “lnternational Comparisons of Hours Worked: An Assessment o{ the Statistics,”
Monthly Labor Review, May 2009, pp. 3-31.

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CHAPTER 15 Managing Human Resources Globally 475

Pension plans are more widespread in parts of \Testern Europe than it-l the Ur-rited

Stut”, urrd Japan. Over 90 percent of r,vorkers in SwitzerLar-rd har-e pellsion
plans, as

do all workets in France. Among \\’orkers r’vith pension plans, U.S. \vorkers are sig-

nificantly less likely ro have defined benefit plans than workers in Japan or Germany’

Paid vacation, discussed in Chapter 13, tends to be more generous in Western
Europe than in the United States’ Figure I5’4 compares rhe nrrmher of hours the
avef;ge employee $,orks in various countries. Of these countries, onl)’ i11 South Korea

do .”o-rk.r, pllt in ntore hours than U.S. rvorkers. In the olhel collntries, the norm is

to rvork ferver hours than a U.S. rvorker over the colrrse of a vear’

Enternat*pnaI Labor Rslatians
Companies that operate across natlonal boundaries oftet-r need to n’trrk ri’ith unions in

more thal-r one coLlntry. Organizations establish policies and g.rals ior labor relations,

for overseeing labor
^gr””–“r’rrr,

and for monitoiing labor p’ertornr,rnce (for example,

ourput ancl pioclucti.,ily).3E The day-to-day decisions abor.rt labor relations are usually

hu”di.d by each foreign subsidiary. The reason is that labor relatii-,ns on all interna-
tional scale lnvolrre diff”r.rr.”, in lau’s, attitudes, and economic sr-stems. as u’ell as
differences in negotiation styles’

At least in coinparison u’ith European organizatious, U.S. organl:ations exert
rnore centralized control over labor relations in the l’aLiou-s cc-rttntties u’here they
op”.ut”.3g U.S. management therefore must recognize differet-rces in horv various
co.,r-rt.ies understand and regulate labor relations. For example, in rhe Unrted States,

collective bargaining ust,ully involves negotiations betu’een a uuion itrcal and an

organizationt management, blrt in Srveden and Germany’, collectir’.- L’arlainir-rg gen-

erally involves negotiations be[r.veen an ernployers’ organi:ation .1nJ a uuiou repre-

senting an errrire i1drstry,s e,nplo1,ees.4J Legal di{ferences rar}g( lr,,nr rr’lrrr nral form

u 1,nii ro how rnuch latirude an organization is allolved in lar ins cff ,r’trrkers. In
Chi1a, fot example, the government recently passed a lau’re.luirir-rg cmplo)’ers to
giye new err-rploy”es shorter probationary periods, consider \\’L)rkers’ dependents in

taking layoif clecisions, pay se\rerance to fired ‘uyorkers, and gile the Comrnunist
Party*run union more potu”, in negotiating contracts and q’ork .iiles.jl In Gefinany,
because labor representatives participate on com-
panies’ boards of directors, the u’a)t managelnen[
handles labor relations can affect a broad range of
decisions.ll V[anageilent tl-rereiore has an incen’
tive to bui1.1 cooperative relationships.

International labor relations mr:st also take inro
account that r-regotiatior-rs betu’een labor and rnan-
agement take place in a different social co11text,
not just different economic and le-val contexts. Cul-
tural differences that affect other iureractions come
into play in labor negotiatiolts as tleli. \egotiators
u’ill approach the process differentlr’ .lepel.ling on
u,hether ti-re culture yier’,’s the process a-. prirnarily
cooperative or colnpetilive a11cl lr’herher it i-s local
practice to r-regotiate a deal bl, startil’Ig rl itl’r the spe-
cifics or agreeir-rg on overall principles.-‘ \\ orking
u,ith host-colrntry natior’rals can help organL:riiiotls
navigate such differences in negotiation str 1e.

Due to the Multi Fibre Agreenrert which goverrr: trade itr the

textile and clothing industry, the onct prosperous clclhillg industry

in Carnboclia is falling to competilors ir coi;ntries s’-:ch as China’
i\4any iear employees being Iaid off i”ill he p’.;’i;:ti lo prostifutioir or
become r.ictims of hutran trafficking

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