Case-1-8 “Spanning The Globe” – International Human Resource Management : Book Guide

This Document Contains Cases 1 to 8 Part II: Case Notes Case 1 “Spanning the GLOBE” Allen D. Engle, Sr. Overview This case presents at least three interdependent issues: 1) role expectations in career planning, 2) predeparture and in-country training curriculum and 3) the issue of repatriation. Tex-Mark has grown to the point that many employees should reasonably expect one or more international assignments during their career. Assigned employees need to accept a larger, more ongoing and proactive role in developing their global capabilities. Management (particularly the HR staff) needs to accept the role of communicating these long-term, global career development expectations to employees and codifying the firm’s expectations as well as creating more complete models of careers. Employees in different locales need to accept more completely the role of mentor to these international assignees. Extending the time horizon for global career training and development and coordinating and sharing the development process among assigned employees, management and the HR staff, and employees in other countries acting as local mentors are necessary steps if Tex-Mark is to continue to grow and meet cost requirements. The predeparture and in-country training curriculum is what one might expect from a firm in the growth stage. Predeparture activities do not now include preliminary visits and the language courses are elective and not mandatory. Outsourcing country briefings is typical, but Eric needs to ensure the quality of these activities. Reading assignments can be useful if the firm has a cultural norm of keeping up with outside readings, but such activities can easily slip away in the face of day-to-day responsibilities. The in-country training and development seems inadequate to Tex-Mark’s growing needs. Local mentors need to be developed and assigned and these mentors need to be seen as an integral part of that long term, global career development team described in the paragraph above. These local mentors have a key role to play in changing Tex-Mark’s existing start and stop, ignore and then intensely train system. By extending the window of training and integrating the “soft” cultural and practical training into the “hard” technical training Tex-Mark can average their costs out over a more extended period of time, focus on strategically relevant training and diffuse the economic and personhour costs across units and geographic locations. The issue of repatriation is critical at Tex-Mark. Comments in the case suggest that debriefing and career counseling before and after assignments were a major problem. More timely and coordinated communication between the returning employee, the HR staff and the now more significant local mentors is necessary if the firm is to capture the additional skills acquired and search for ways to reduce international assignment costs. A potential fourth issue is the issue of costs. We have attempted above to step back and recommend a more long-term integrated career model so that career development costs are spread out over longer time periods and so that the employee and the local operations that enjoy the benefits of these employees share their costs. Another way to look at this longerterm, wider net of global career development is to create the expectation that international assignments involve three parties. The expatriate is required to work closely with a local mentor, but the expatriate is, in turn, immediately expected to mentor a HCN or TCN in those aspects of the assignment (technical expertise, control and supervision, linking local operations to regional or global concerns, troubleshooting or problem solving) that required the expatriate’s presence on site. In this way “double loop” mentoring and training occurs and Tex-Mark gives two employees career development at one cost. This early utilization of the expatriate to develop a local replacement will be critical given the size and scale of the Chinese operations. Over longer time frames these requisite mentoring relationships may stimulate the development of “cadres” of international teams. Combining shorter assignments with “virtual team” activities, as presented in Chapter 5 in the text, may also reduce costs. Possible Answers to the Questions In the role of Eric: Summarize your thoughts on the problems at hand, alternative solutions and your strategy on how to proceed at the forthcoming meeting. As stated before the problem has four sections: The expectations of expatriates, predeparture and in-country training, repatriation and the costs and use of expatriates vs. HCNs or TCNs. Alternatives range from “tactical” (expand and formalize the predeparture training, making language training mandatory) to more “strategic” (revising roles to require mandatory mentoring by the local host and the expatriate, longer term, more complete and planned out career dynamics). The strategic solution is riskier, yet Tex-mark’s move into China will require more strategic changes in how employees view their role in international assignments if we are to avoid the problems characterized by Fred’s experience. Eric should present the tactical and strategic options and argue for the more strategic option. How will your proposal solve the problems you have defined? Assignment expectations will be more realistic, given role clarification; predeparture training will no longer bear the brunt of responsibility, but be balanced with in-country mentoring and practical assistance; repatriation will be considered as part of longer, more diffused and planned out global career processes; and training costs will be used to train expatriates, but also to provide mentoring for local employees, thereby providing for faster, more effective assignment take over by locals and reduce costs. How can you defend your solution from budgetary concerns? In what way is your approach both a solution to the problems of expatriates at Tex-Mark and a good economic investment? As stated above, we are attempting to spread both the costs and risks of international training and development. This is done by redefining costs, from assignment costs (borne by Tex-Mark over a limited time period) to career costs (borne by the firm, the employee, the local mentor and local trainee/protégé over longer time periods). It is also done by spreading the risks by asking employees to take a more proactive role in their own career development as well as the careers of other Tex-Mark employees. Stepping back out of role: Does Eric’s personal background assist in his assessment of the problems he faces? Eric’s experiences and comfort with moving across cultures is contrasted in the case to Fred’s lack of experience and obvious discomfort with cross-cultural work teams. Many people in international HR have a combination of personal histories, natural capabilities and career experiences that combine to make it difficult for them to appreciate how difficult cross cultural assignments are for “normal” employees. Eric’s personal background assists him as long as he does not begin to assume that everyone at Tex-Mark is or should be as culturally fluent as he seems to be. Would you have approached this situation differently? If so, what benefits would your different approach provide for Tex-Mark? Here we are giving the instructors and the students a chance to step back from the case and discuss some of the more basic, fundamental issues from the text. Are expatriates as relevant to the firm as they have been in the past? Perhaps a strategy pursuing HCNs or TCN for these jobs might be more useful in the long term. Should the firm follow a strategy of recruitment and selection that only hires those employees that already have far more of the functional, cultural and product experiences required for the Tex-Mark strategy? In this way the tasks of training and development may be less daunting. Further Reading Dickmann, M. and Baruch, Y. (2011) Global Careers. New York: Routledge. Caligiuri, P. and Tarique, I. (2006) ‘International Assignee Selection and Cross-cultural Training and Development’, in G. Stahl and I. Björkman (eds), Handbook of Research in International Human Resource Management, Cheltenham: Edward Elgar, pp. 302–22. Festing, M. 2012. State of the Art: International Human Resource Management and Cultural Learning: 59-76. In: Gertsen, M. C., Söderberg, A.-M. & Zölner, M. (Eds.). Global Collaboration: Intercultural Experiences and Learning. Palgrave Macmillan. Case 2: “Quality Compliance at the Hawthorn Arms” Allen D. Engle Sr. Overview This case is presented to highlight the complex and dynamic relationship between an international assignment and the selection of a qualified expatriate manager for that assignment. The changing nature of the job – from a Plant Manager of a wholly owned subsidiary to a Quality Compliance Officer in a ten year joint venture – combines with a cast of three interesting and yet very different potential assignees to show how potentially complex such global selection decisions can be. The importance of personal networks (Alistair meeting the candidate Sinead recently and his efforts to get in touch with Gunther in Germany) and the ambiguity and unexpected timing of these critical HR decisions are also dealt with in this case. One of the issues in the case is the trade-off between the specifics of a focal job description and the availability of candidates for the assignment. Instructors may wish to work with their class to write up a job description for the “Quality Compliance Officer” and then look at how that job description relates to each of the three candidates – there is no perfect candidate. A more sophisticated approach might be to step back and consider the best of the three candidates overall and then revise the job description to that candidate’s strengths and provide outside help from other managers on site in Hungary or in the region in order to insure that critical activities outside of the selected candidate’s background. This would give students an opportunity to manipulate variations between the nature of a job and the nature of the abilities and experiences of close-fitting candidates. Possible Answers to the Questions 1. Consider the three candidates in Exhibit A. If forced to make a decision tomorrow, which candidate should Alistair choose for the job? As stated above, there is no perfect candidate. Marie Erten-Loiseau may be the best match. She ranks high on technical ability, cultural suitability, family status, a facility with languages and, perhaps most importantly, she will be able to ably represent the interests of Trianon in the inevitable day to day negotiations required when starting up a joint venture. She has a wealth of experience with the firm in a wide range of assignments. She has never been involved in a joint venture and her experiences in Poland and Czechoslovakia may not translate into success in Hungary. Janos Gabor has the advantages of cultural suitability, facility with languages and family status. He lacks technical ability and, given his short tenure with the firm, may lack an in-depth understanding for and empathy for the Trianon position. His contacts with the political elite in Hungary will only be of use if Janos is able to use these contacts for the long term good of Trianon. The potential for a conflict of loyalties between these local contacts and Trianon is a potential source of concern. Sinead Marrinan-McGuire has the impressive strengths in technical ability – particularly in the complex field of joint ventures, an understanding of the display systems technology that must be diffused to the Hungarian operation and an in depth corporate level perspective. Her weaknesses are in the areas of cultural suitability, having spent most of her career in Western Europe, language concerns and family status. Her spouse has a culturally-embedded career in Ireland and she has three young children. Dual career couples issues and potentially “family friendly policies” from Chapter 5 of the text can be discussed in a presentation of her candidacy. What major factors should determine his choice? Again, the three candidates represent a balance of strengths and weaknesses. Marie represents organizational and technical process abilities, Janos represents local cultural understanding and some local product knowledge, and Sinead represents global product knowledge and organizational process abilities in the area of joint ventures. By weighting which of these abilities is most crucial to the success of this assignment, students can determine the optimal if not perfect expatriate/local for the job. Your sense of Sinead’s ability to negotiate the problems inherent with dual career couples is critical in your choice process. She has both the greatest strengths and the greatest weaknesses. Selecting Sinead is a riskier choice. Marie is less risky, but she lacks specific joint venture skills. Janos may be the most risky choice, given his short time frame with Trianon and a potential to side with local managers in joint venture processes. If Janos is able to balance his perspective, his contacts could provide Trianon with significant advantages in the long term. 2. We are told nothing of the process that Trianon uses to recruit candidates for this level of final selection. Given what you know about the firm from the case, outline a general recruitment and selection process for Trianon. Describe how your proposed process fits with “best” selection practices as well as the strategic need of this company. The three candidates that made the final list have met at least two or more criteria: Technical ability, Cross-Cultural Suitability, Family requirements (all on the Individual side) and/or Country-Cultural requirements, Language and MNE Requirements (on the Situational side). The fact that the final three candidates have such wide ranging backgrounds and combinations of strengths and weaknesses would lead you to conclude that the recruitment and selection process at Trianon is not very explicit and systematic. Going back and defining the job of Quality Compliance Officer, particularly on the administrative side, will allow you to weigh each of these six criteria (High, Medium and Low for example) and try to look at the candidates with the most important qualities. Here you may present the discussion of “formal/open” or “formal/closed” selection from chapter 4 in the text. Another way of looking at this issue is to look beyond the job description to the long term goals of the assignment – “tight control” of the operation and making “ministry officials in Budapest happy” are the two competing qualities presented in the case. In the short term there are issues of joint ventures and the transfer of technology. In the long term there are issues of developing relationships with governments and local and regional suppliers and customers. In terms of issues from Chapter 5 in the text, if the expatriate’s critical role is “position filling”, Sinead has the best background. If the critical role is “management development”, Marie may be the best choice. If the critical role is “organizational development”, then Janos may have the most to gain and contribute to Trianon. We see the decision in terms of providing “direct control”, then Sinead may have the strategic perspective. If we see the assignment in terms on “boundary spanner” or “agent for socialization” we might look to Marie. In terms of “language node” Janos may have some advantages. 3. Should HR staff be involved in strategic decisions relating to international business operations such as finalizing a joint venture agreement? Obviously HR staff should be involved, but this case was written to point out that sometimes decisions are made for “business reasons” and the HR staff are handed the decision with orders to find a person to fill a position with very little time. The joint venture process of due diligence is so complex and specialized that often this process is handled by outsourced consultants and the corporate HR staff in recruitment and selection and training and development are divorced from the specifics of the process. Increased coordination between the consultants and the firm’s HR staff could provide for a smoother transition from strategic choice to strategic implementation. Further Reading H. Scullion and D. Collings, ‘International Recruitment and Selection’, in H. Scullion and D. Collings (eds.), Global Staffing, (London, New York: Routledge, 2006), pp. 59–86.
Case 3: Wolfgang’s Balancing Act: Rewarding Healthcare Executive in a Dispersed yet Integrated Firm Marion Festing and Allen D. Engle Sr. Overview This case study addresses the design of a transnational compensation system in a German pharmaceutical company called Healthcare. The case is a real case, however, the company name and some details have been changed to protect the anonymity of the company. The case study takes the perspective of Wolfgang Hansen, the new HR manager, who is in charge of globally standardizing compensation for top managers while considering local requirements. Folder one includes some general information about the Healthcare Group; folder two gives insights about the personnel structure; folder three outlines the leadership competence set; folder four includes corporate human resource policies; folder five the global performance system and the compensation policy, which are closely linked to each other; folder six gives an overview on recent changes in the corporate and HR strategy. Then, some bumps on the road to international coordination at Healthcare Group are outlined. The conclusion includes Wolfgang’s thoughts about adjusting Healthcare’s pay strategy to the transnational corporate strategy. His suggestion is depicted in Figure 2 (p. 307) and should lead to an in-depth analysis and a challenging discussion. For students this real case provides an excellent opportunity to learn more about possibilities to globally standardize one part of the HR strategy and about the limits: here, we take the example of the pay strategy. The discussion can be placed in the context of Chapter 3 on the host country context of IHRM (but also Chapter 2 on the Cultural Context), which addresses exactly these factors. This is reflected in Question Block A. Furthermore, the case study can also complete Chapter 8 on international compensation when compensation details are in the center of interest. These issues are covered more in depth by Question Block B. Objectives of the Questions Block A Standardization vs local responsiveness of compensation systems? Should Wolfgang move some of the existing pay elements across the T account in Figure 2, shifting them from globally standardized to locally customized? Should he add or delete some existing practices from the T account? Should he change the weights or emphases (percentages) of existing elements of the pay system? This question block has been designed to deepen the understanding of the case. A good way to address these questions is to first analyze in detail Figure 2. The following chart including specific questions can help to do so. Questions one through four address the left side of the Taccount and questions five through seven address the right side. As has been mentioned above, this question block rather reflects issues raised in Chapter 3 (host-country context of IHRM). Comments on question 1: For information about the internationalization strategy of Healthcare refer to Figure 1 in the textbook (p. 305). While the extent of geographical dispersion is slightly increasing the need for transnational coordination increases tremendously. If the HR strategy is designed to support the corporate strategy this means that all HR measures must be coordinated on a transnational level. This is also true for the pay strategy in order to ensure that policies and practices are essentially the same on a transnational level. Of course, in a first step, this mainly applies for the top management level and not for all employee groups. Comments on question 2: Here, the influence of culture can be discussed. Risk aversion and risk-taking orientations can be deduced from intercultural management studies such as Hofstede or Globe (see Chapter 2). For a definition of the respective Globe dimension refer to pp. 35/36 in Chapter 2. Here, it could be referred to the dimension of „uncertainty avoidance“. The suggestion is that if countries are rather risk-taking they would prefer a high proportion of performance-related pay. Comments on question 3: The bonus composition reflects a standardized policy because the components are the same in every location. For a detailed description of the components at Healthcare see pp. 304/305. Comment on question 4: Standardized long-term incentives can be stock options or pension plans. Comments on question 5: Ranges in the bonus potential means that the proportion of fix and variable pay can vary. Reasons can be found, for example, in the cultural environment (see examples for cultural dimensions such as uncertainty avoidance). Comments on question 6: Both, Japan and the U.S., have strong currencies and people are used to calculate in their own currency. This partly reflects the institutional context (see pp. 306). For the locals it would be difficult to accept the rule of basing all compensation issues on the Euro. The same is the case in other countries. The fact that there is an exception for the US and Japan reflects the high power of these two subsidiaries. For an explanation refer to Chapter 3. Comments on question 7: Usually fringe benefits reflect the local culture. So, here, standardization is more difficult if not impossible. Many employers provide fringe benefits as noncash compensation. If specific guidelines are met, the benefits are may not be taxable to the employees, and their cost is deductible by the employer. Examples: An employer-provided automobile; Free employer-provided tickets to sporting or entertainment events; • Free travel on an airplane provided by an employer; Working-condition fringes. Conclusion on Question Block A: The discussion of alternatives leads to an in-depth analysis of the case. Take examples from different countries, different subsidiary roles etc. to clarify. There is no final answer to these questions. They offer a basis to discuss intensively the issue we have raised when explaining Figure 2. This is a real suggestion which has been made at Healthcare. It was subject to internal discussion and finally approved by the board of the firm. Objectives of Question Block B Job-based vs. competency-based compensation How can the firm communicate to the geographically dispersed executives the need to acquire and maintain those management competencies that have been defined in the competency set (in Folder 3)? Would a purely competency-based system be somehow more flexible? But then again, what about the standardization Healthcare has just achieved through job descriptions across units? How would he take these three competency-based categories and use them to develop a series of measurable, behavioral indicators to be used to assess an executive’s contributions to Healthcare? In what sense should these new behavioral indicators be customized to local (regional) contexts? How can Wolfgang go about this process to ensure a balance of organizational standardization and local relevance? As has been mentioned above, this question block rather deepens issues raised in the chapter on international compensation (Chapter 8). Comments on Question B1: Measures creating and communicating the HRM balance are described starting on p. 57. Comments on Question B2: There are pros and cons for competency-based pay. However, Healthcare‘s major goal was to increase the performance orientation within all parts of the firm. While competencies ensure similar behavior in the firm they are not directly related to a measurable output and thus are more distant with respect to the performance orientation. Comments on Question B3: Here, the relationship between job descriptions reflecting task-related criteria and competencies reflecting individual criteria can be discussed. Both levels must not contradict each other. Comments on Question B4: It is most important that cultural and institutional influences are taken into account when introducing and especially when measuring these competency-based categories. While the firms may have many reasons for standardization this may not always be possible in any location (refer again to Chapter 3 for the arguments leading to global standardization and those associate with localization). For the process of developing a common set of competencies and valid measurement instruments refer to p. 57. Further reading For further reading about this case and theoretical arguments refer to: Festing, M., Eidems, J., Royer, S. (2007): Strategic Issues and Local Constraints in Transnational Compensation Strategies: An Analysis of Cultural, Institutional and Political Influences, in: European Management Journal, Vol. 25. Nr. 2, 2007, pp. 118-131. Festing, M., Eidems, J., Royer, S., Kullak, F. (2006): When in Rome pay as the Romans Pay? Considerations about a transnational compensation strategy for managers, ESCP-EAP Working Paper Nr. 22, Berlin, 2006 (PDF-Download at http://www.escpeap.de/?id=353#zeitschrift%20fe). Festing, M., & Eidems, J. (2011). A Process Perspective on Transnational HRM Systems - A Dynamic Capability-based Analysis. Human Resource Management Review 21: 162-173. Festing, M. (2012). Strategic Human Resource Management in Germany: Evidence of Convergence to the U.S. Model, the European Model, or a Distinctive National Model? In: Academy of Management Perspectives Vol. 26, (2), 37-54.
Case 4: Strategic Forecast and Staffing Formulation: Executive and Managerial Planning for Bosch-Kazakhstan Marion Festing and Manfred Froehlecke Overview This case study is mainly related to Chapter 5 addressing the issue of staffing, which, of course, requires planning processes and the consideration of key orientations in staffing such as EPRG. Personnel planning and staffing issues are critical success factors in foreign subsidiaries of multinational enterprises, and they must be designed in the context of corporate goals and issues and the specific situation in the host country. From a firm-internal perspective, human capital/talent planning and staffing decisions are related to a company’s corporate strategy and embedded in the corporate human resource strategy. Thus, planning and staffing decisions must be coordinated with other HR activities within the MNE, such as human resource development. This perspective must then be balanced with a careful consideration of the particularities in the host country context and the availability of qualified individuals within the external labor market. Within this case study, students have the opportunity to exercise a real planning and staffing project experienced by Bosch from the perspective of an HR manager. At the end of this case the real figures Bosch used in the personnel planning process are provided. However, to guarantee some confidentiality, Kazakhstan as the target country of this case study is only comparable to the country where this case happened in reality. Possible Answers to the Questions 1. Considering the facts about Kazakhstan, please discuss which staffing strategy—according to the EPRG Model by Perlmutter—would be the most suitable for Kazakhstan. Please justify your answer. Comment on the advantages and disadvantages of your decision. The answer to this question requires a consideration of the company as well as of the foreign market. The company is best described by considering the corporate philosophy, which goes back to the founder Robert Bosch. He gave the company his name and created values that still apply today: ‘It is my intention, apart from the alleviation of all kinds of suffering, to promote the moral, physical and intellectual development of the people.’ One of the most important achievements of technological progress has been the growth in productivity that gives us more free time. Robert Bosch introduced the eight-hour day in his plants as early as 1906. Free Sunday afternoons and regular holidays followed a few years later. Besides social responsibility, Bosch saw his strength in the following six core competencies: Strategic far-sightedness. Innovative strength. Efficient processes. Quality and reliability. Global presence. Human resource development. Apart from these core competencies, the company is structured differently in comparison to other multinational companies. It is not a public listed company, but a foundation with major objectives in the human charity fields. The Robert Bosch Foundation continues to pursue the social principles of the company's founder. With respect to the environmental conditions in the host country, Kazakhstan is described in the case study as a country with a relatively small population and relatively few adequately qualified university graduates. The education system is a concern, not only for the country, but also for foreign investors. Although labor costs are relatively low, not enough skilled labor can be found to serve in the new factories. As a result, expatriates from Bosch are needed to build up and run Bosch operations in the short and the long term. This is important to consider in the planning process. Recruiting talented staff is a vital prerequisite for the further success of the entities. Corporate strengths and constraints include that Bosch introduced a variety of HR tools that apply on a worldwide basis. EMP, MED, MDP, and JUMP are but a few examples. The international application of these tools gives Bosch an advantage in recruiting talented staff from major universities and faculties in many countries. Employee development opportunities are key motivators beside market-oriented and performance-related payment. Alongside the fast introduction of HR tools in Kazakhstan, it is also important to make this information available to potential future employees. HR marketing aligned with good brand building can help to overcome shortages in the labor market. With respect to staffing there are four primary attitudes—ethnocentric, polycentric, regiocentric, and geocentric—toward building a multinational enterprise, based on top management assumptions upon which key product, functional, and geographical decisions are made (see Chapter 5, pp. 114-118). In the first phase of activities taking place in Kazakhstan an ethnocentric approach to staffing seems to be adequate. In ethnocentric firms, few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters. In addition, key positions in domestic and foreign operations are held by managers from headquarters, and subsidiaries are managed by staff from the home country (PCNs). There are often sound business reasons for pursuing an ethnocentric staffing policy. In this case, business reasons for building up a subsidiary in Kazakhstan, the lack of qualified local personnel, and the will to develop personnel on an international level may account for a rather ethnocentric approach to staffing. Advantages of the alternate staffing approaches are summarized in the text. For the ethnocentric approach this includes the following: Advantages A perceived lack of qualified host country nationals (HCNs). The need to maintain good communication, coordination, and control links with corporate headquarters. For firms at the early stages of internationalization, an ethnocentric approach can reduce the perceived high risks inherent in these novel environments. When a multinational acquires a firm in another country, it may wish to initially replace local managers with PCNs to ensure that the new subsidiary complies with overall corporate objectives and policies, or because local staff may not have the required level of competence. Thus, an ethnocentric approach to a particular foreign market situation could be perfectly valid for a very experienced multinational. Having your own person, in whom you can place a degree of trust to do the right thing, can moderate the perceived high risk involved in foreign activities. Disadvantages: It limits the promotion opportunities for HCNs, which may lead to reduced productivity and increased turnover among that group. The adaptation of expatriate managers to host countries often takes a long time, during which PCNs often make mistakes and poor decisions. When PCN and HCN compensation packages are compared, the often considerable income gap in favor of PCNs may be viewed by HCNs as unjustified. For many expatriates a key overseas position means new status, authority, and an increase in standard of living. These changes may affect expatriates’ sensitivity to the needs and expectations of their host country subordinates, which may be quite different to the perceptions of the PCN manager. The firm may wish to move towards another staffing approach in the future. 2. Analyze the company and country-specific situation by using the steps outlined in Figure 4. Plan the number and nature of short/medium-term (2013-2016) as well as long-term (2017-2020) staffing requirements for Bosch Kazakhstan in an analogy to the company’s strategic goals. The staffing plan should consider the sources of staffing (expatriates, employees from the local management development plan or special programs such as the JMP program, or external local staff). The first three steps to be carried out according to this chart have already been answered under Question 1. The development of objectives, goals, and strategies is described below. Develop objectives and goals: The key is to find the right people for the sites and to develop them within Bosch so that the organization can rely on a stable and Bosch-minded workforce in the future. To achieve this vision we should define short/medium- and long-term objectives and goals: • Development of programs and recruitment activities to attract associates for Bosch. This could include programs focused on higher numbers of graduates, e.g. in a comparable situation we introduced a program named “120 plus 20” to attract 120 engineers and 20 commercial professionals within the years to develop a stable and well-qualified base. The entrance level of these candidates is lower than for international programs like JUMP. Parallel introduction of programs to attract top talents in the country, e.g. JUMP. Parallel acquisition of experienced managers from the labor market. Introduce employee development tools as standard within Bosch. Assign local managers to Germany, with the aim of replacing expatriates after their return. Develop Strategies: It is mentioned in the case study that only one location (Diesel) is growing quickly, while the others are already consolidated. Therefore, major activities are focused on this site. Although it is the long-term target to run the business with only a few expatriates and with associates from within, it is not realistic in the next three to four years (short/medium term) to achieve this target fully. If you refer to the chart, the overall demand of associates over the next eight years is 203, where 111 meet short/medium-term and 92 long-term staffing needs at all levels. Simply planning a complete allocation with MDP or with associates who have completed the above-mentioned programs is not realistic at middle and upper management levels, and it is completely unrealistic in the short term. However, in the medium term we can develop some good candidates from this pool. Fill in your figures in the chart below (see Figure 5). In a comparable situation, Bosch planned the staffing sources as follows: Expatriates: Short/medium-term high numbers of expatriates (60), long-term (38) = 98. MDP: Short/medium-term (30), long-term (35) = 65. Programs, e.g. JUMP: Short/medium-term (3), long-term (5), but only for lower management levels. External hires: Short/medium-term (18), long-term (14), but only for lower and middle management levels. See details in the chart used by Bosch:
Table for Strategic HR Planning
Staffing need Current 2013 - 2016 Prognosis 2017 - 2020
Sources LM MM UM LM MM UM total
Expatriates 34 24 2 15 12 2
Local MDP attendents 23 7 0 23 12 0
Development Program (JMP) 3 0 0 5 0 0
External hires 14 4 0 11 3 0
Total Staffing need 74 35 2 54 36 2 203
List of Bosch-specific Abbreviations and Definitions: MDP/DG = Management-Developing-Program / Development Group JMP = Junior Managers Program LM = Lower Management, MM = Middle Management, UM = Upper Management 1

As a result, nearly 50 % of the staffing sources will be expatriates, although this is expensive and not the target of the company. In the long term, however, this amount will go down, as the local MDP will be the major source in the long run, but not in the next eight years. Although programs are important for Bosch in many countries, we do not believe that in the next eight years we can find enough qualified personnel in Kazakhstan which meet the standard we are looking for. We believe that only 4-5% of all staffing sources come from these programs. The Kazakhstan case study is imaginary but is derived from the real case of a comparable country. Finally, prepare an action plan describing how you will meet managerial staffing targets. Look especially at information provided in the ‘Employee development’ and ‘Talent management’ sections of the case for activities and timetables. Write down your action plan. The action plan results from the development of objectives, goals, and strategies. As stated before, Bosch mainly relies on hiring and developing talent from within the firm. Thus, the action plan could describe how the various instruments described in Figure 2 (pp. 310-311) may contribute to personnel development when considering the various development programs. Consequently, it is important to focus on the acquisition of qualified university graduates and professionals to meet a wider range of potential future managerial requirements. Besides direct entries and local programs, Bosch has a standardized Bosch-wide entry program for junior managers (JUMP). The goal of the program is to recruit junior managers (Master’s degree with up to three years of professional experience) with the potential to assume a middle management position in six to eight years. The program lasts one-and-a half to two years and comprises three to four stages, including a six-month stay abroad as well as a crossdivisional assignment. This form of training emphasizes a common set of worldwide standards, experiences, and activities and is designed to permit more rigorous and systematic preparations for a range of management tasks. Concerning the attraction of talent from the local labor market, measures of personnel marketing should be used. Employer branding measures, sponsored chairs at universities, an internship program for retaining good interns, etc. could be appropriate actions for Bosch. Further Reading Beechler, S. and Woodward, I.C. 2009 ‘The Global ‘War for Talent,’ Journal of International Management, Vol. 15, No. 3, (2009), pp. 273-285. Scullion, H. and Collings, D. 2010 Global Talent Management. (London: Routledge, 2010). Case 5: Local and International? Managing Complex Employment Expectations Maike Andresen Overview The starting point for this case study is that globalization creates the need to rethink approaches to international assignments. Here, a local international policy is suggested, which is described as follows (p. 318): ‘The local international policy came about last year as a response to an emerging need, especially in Asia. We saw that owing to globalization there were many foreigners coming here on an expatriate assignment, and many of these foreigners also had a wish to stay. This resulted in a need to use a locally based contract which would still attract foreigners to travel here. As a purely local contract would not be able to attract these employees, we decided to provide some extra benefits to these local international hires. The local international contract fits between an expatriate and a local package. Even though these transfers are partly employee initiated, we provide a slow landing into the new country. This means that the host country provides some kind of support’ (for a summary of some key issues see Figure 2 on p. 318). This case study offers many opportunities to discuss various ways of managing international assignments, and it can be linked to international compensation (Chapter 8), to various types of international assignments (Chapter 5), and also be used for students specializing in human resource management to discuss various theoretical perspectives related to international assignments such as strategic perspectives (see question 2), the psychological contract (question 3), or equity theory (question 4). Possible Answers to the Questions 1. Describe the content of a “traditional” expatriate package, and the reasons for the company providing such benefits. What limitations do you see in this contract when it comes to handling the company’s emerging needs? The content of a “traditional” expatriate package can be based on the section ‘The key components of an international compensation program’ (Chapter 8, pp. 224-228). It includes: Base salary: Cash compensation serving as a benchmark for other compensation elements (such as bonuses and benefits). A basis for in-service benefits and pension contributions. A foundation block for international compensation. Foreign service inducement and hardship premium: Salary premium. Foreign service inducements are usually represented as a salary percentage (e.g. 540% of base pay). Benefits: Pension plans are very difficult to deal with. Issues concerning benefits: Transferability of pension plans. Medical coverage. Home country benefit programs or host country benefit programs. Home country or host country social security benefits. Allowances
Cost-of-living allowance (COLA) Housing allowance Relocation allowance Education allowance
• International comparison of cost of living is difficult and can be problematic Also include payments for housing and utilities, personal income tax or discretionary items ORC Worldwide or ECA International provide information • • Ability to live on the same standards in the foreign country Housing cost differential paid by the employer Moving, shipping and storage charges, temporary living expenses, subsidies regarding appliance or car purchases (or sales) and down payments or lease- related charges Contingency upon tax- equalization policies • Expatriates’ children Tuition, language class tuition, enrolment fees, books and supplies, transportation, room, board and uniforms
Reasons for the company to provide such benefits: Increase the willingness to relocate; the policy must work to attract and retain staff in areas where the MNC has the greatest needs and opportunities. Transparency. Justice. The policy must give due consideration to equity and ease of administration. The policy should be consistent with the overall strategy, structure, and business of the MNC. The policy should facilitate the transfer of international employees in the most costeffective manner for the firm. As a discussion of different compensation strategies, the students can be encouraged to look into the differentiation between the balance sheet approach and the going rate approach (pp. 228-230). The balance sheet approach retains the international mobile employee in the home country salary structure and provides allowances in order to maintain home country purchasing power for the assignee. The home country salary is compared with host country costs in terms of income taxes, housing, goods and services, and reserves (pension contributions, savings, and investments). As costs are typically higher abroad, the employer makes up the difference, thus enabling the expatriate to maintain a standard of living broadly similar to that enjoyed at home. The going rate approach is based on local market rates, relies on survey comparisons among local nationals, and base pay and benefits may be supplemented by additional payments for low-paying countries. Limitations in the “traditional” expatriate contract in view of the company’s emerging needs Regarding the limitations of this kind of expatriate contract, students should point out the dilemma indicated in the case whereby the company needs an alternative in the changing environment of more global movers. Expatriation is very cost-intensive due to high levels of allowances, benefits, and additional organizational costs. However, in order to be able to stay on a high global level regarding the fulfillment of consumer needs, talents need to be developed and knowledge needs to be shared worldwide. For this purpose the company has to send even more people abroad. Examples of limitations that can be mentioned include the following: The expatriate package is home-based regarding tax and social security. In many cases, the company needs to pay taxes for one employee in two countries, thus creating some challenges in the practical use of the package. When people stay abroad for several years, what sense does it make to keep them on their home-based terms? The expatriate package is based on a perception that people need to be enticed to go abroad by extensive benefits etc. As people these days are more eager to go abroad, this package may not be necessary any longer. This might also be reflected by the fact that it is mostly based on the expatriate population as we see it now, being male, Caucasian, mid 40’s with two or three children, while the company wishes to approach a different population of younger employees with high potential for development. Make a SWOT analysis of the local international policy by using information from the case study as well as taking into account your own information. Arguments might include the following:
Strengths Weaknesses
Reduced operating costs with use of local international contract compared to expatriate contract Increasing equity of salaries between employees in similar positions within countries Softens the transition from local international to local contract … • Requires a substantial amount of explanatory support in order to explain differences between contracts and their applicability in order to minimize perceptions of unfairness Difficult to standardize across different countries (e.g. due to cultural differences; example: Chinese people might be in general more focused on the amount of salary in the present (security through collectivism) whereas European people prefer to be covered by insurance – e. g. health, pension – regarding the future (security through individualism)) …
Opportunities Threats
• Step towards a global internal job market with an increasingly intercultural • Inconsistency in execution due to adaption to local circumstances Increasing competition for internationally
• • workforce Opportunity to benefit from local regulations (e.g. low tax advantage in The Netherlands and Denmark) and to attract employees … • competent employees might raise the need for expatriate contracts in order to attract/retain IMEs Family and personal circumstances are a primary reason to turn down international assignments; the comparably low support of family members (low and temporary schooling allowance and missing Dual Career Couple Policy) can be a negative factor
• Higher effort needed in order to mobilize a sufficient number of international mobile employees (IMEs) due to perceived inequity among local international and expatriate contract etc.
• …
Compare employer and employees’ needs regarding international mobility on a local international contract. What elements would have to be included in a package if they were to answer to these needs? Needs regarding international mobility on a local international contract An analysis of the needs for a local international policy may include the following:
Employer needs Employee needs
• • • • • • • One global framework for the company in order to support the strategy to become “one company” Consistency in the use of the package and the decision tree Attract good, qualified international managers Reduce costs compared to expatriation package Locals and international hires should be treated as equal as possible Flexibility for country specificities … • • • • • • • • Individuality and flexibility of the package offered Support in every step of the relocation process Attractive policy to move on a local contract Keeping same level of living conditions Quick on the new job Information about all of the consequences on beforehand Practical guidelines with suggestions and recommendations in order to facilitate the relocation Feeling safe
• …
Most of the needs can be found in the case study. Some points are linked more to general HR knowledge such as, for example, a compensation and benefits package that should attract employees. Students can find more information related to the objectives of compensation packages, particularly international packages, in general HR books. Elements to be included In this question, the psychological contract theory as well as other contract theories can be useful to answer the question regarding what one might need to include in a contract. The psychological contract deals with expectations of the employee and what impact a breach of these contracts due to unfulfilled expectations might have on the individual. Contract theory deals with challenges in differing access to information and differing objectives. 4. To what extent do you believe the distinction between the three groups of assignment packages (an expatriate contract for expatriates, a local international contract for local international hires, and a local contract for external international new recruits) is fair? To this end, (a) refer to Adams’ equity theory and determine the referent person in each of the three cases and (b) discuss the role of procedural justice. What can the company do to provoke positive behavioral intentions in reaction to the packages? In order to answer this question, students are asked to refer to expectancy, equity, and procedural justice theories. Students must start by describing different potential reactions of the interest groups involved (i.e. traditional expatriates, local international hires, external international mobile employees, local employees) to the case scenario and evaluate the fairness of the case. More specifically they are asked to discuss the distributive justice characteristics of the scenario, specifically by using expectancy theory to determine their choice of inequity-reducing mechanisms, as articulated by Adams’ equity theory. For this purpose they need to determine adequate referent persons and identify the outcome of the case for the focal person and the referent, as well as the respective inputs of the focal person and referent. Students should realize that the result depends on the referent person chosen, e.g. whether Akiko compares her situation with a traditional expatriate or a local employee. Students need to realize that despite the apparent inequity between the three groups: internationally mobile employees might feel fairly treated if procedures are reasonable. Students can refer to Leventhal’s rules of procedural justice in order to analyze the scenario in the case above. They must also recognize the importance of providing adequate explanations for contract decisions in order to help employees understand any justification for the outcomes. With respect to behavioral intentions in reaction to the case, students are asked to give several examples of effective strategies according to the theories mentioned above. Students that perceive the procedures to be fair will typically report intentions to react in a more positive manner (e.g. work harder, develop skills, etc.) than those who perceive the procedures to be unfair (e.g. intentions of quitting or reducing work effort). Students will become aware of the apparent paradox of an unfair outcome resulting from fair procedures, and that equity judgments are perceptual in nature and, as such, are subject to perceptual bias. Finally, students are asked to discuss managerial interventions that may help to improve perceptions of injustice or that provide a motivational basis for positive—rather than negative—reactions to perceived injustice. Implications for managers include inter alia: Being honest and courteous. Respecting the rights and opinions of internationally mobile employees (IMEs). Providing IMEs with timely feedback about how they are doing. (Part of the talent pool? Policy applicable?). Allowing employees to contribute their own viewpoints, opinions, and perspectives to the decision-making process. Explaining how they assess inputs, how they appraise performance, and how they decide how to distribute outcomes. 5. What does the company need to take into consideration in order to make the local international policy for this new international employee population applicable on a global basis? Formalize your arguments and propose a suggestion for a policy framework. In this question, the student should take the considerations made through the former reflection questions and formalize a suggestion for a new framework for handling local international hires. Students can refer to the corporate structure and the way it might affect international mobility. The company is structured in a cross-matrix of responsibilities between the different countries and business units in the three sectors. This is one example of difficulties in creating a global standard policy. Students can learn from the case that the company started with a great degree of decentralization of its business units, with headquarters playing quite a small role. This is still the case to some extent, but the company is now trying to focus more on having a standardized approach that should be applicable across nations. This might enhance the possibility of expatriation, as it is easier to move employees when systems are more synchronized. Regarding responsibilities, differentiation with respect to different kinds of internationally mobile employees is needed. Whereas traditional expatriation can best be managed centrally, local international hires are best managed by the host countries. In addition, the following might also prove useful considerations in this context: Global vs. local One aspect of the challenges is that this policy is supposed to be a global one, even though there are a lot of local matters to take into consideration: Host country/home country combination: this combination will affect the packages, as the employee will always compare his new situation to his previous one and will try to at least get the same level of life conditions. From low salary to high salary countries. From and to same level of salary countries. From high to low salary countries. Comparable considerations regarding taxes. Host country regulation: as this contract is a local one, you enter into the hiring and firing accountability of the country. Each country has its own labor laws, and therefore some aspects of the international local policy might not be applicable worldwide. Different way of living/cultural impact. The students may want to look into literature regarding balancing between the standardization and localization of HRM in MNEs (refer, for example, to Chapter 3). The future of international mobility The study of different generations and their specificity towards international moves provides a future picture of how international assignments might evolve. Generation Y in particular is interesting to study, as they are employees that would benefit from this policy in the future. Some main points related to Generation Y and international mobility are: Entered the workforce in a post-9/11 expansive world open and replete with ubiquitous and inexpensive global communication tools. International education: learned different languages (often including mandarin), studied abroad, international campus, etc. Global exposure and knowledge, both physically and virtually. Sense of immediacy for obtaining information: will look for houses, things to do, etc. The opportunity to live abroad is an exciting adventure. May be looking to become more marketable overall rather than just climb the ranks within their current company. o The motivation to perform well is not limited to monetary incentives. Further Reading Festing, M. & Perkins, S. 2008. Rewards for internationally mobile employees. In M. Dickmann, C. Brewster, & P. Sparrow (Eds.), International Human Resource Management: A European Perspective, 2 ed.: 150-173. London: Routledge.
Case 6: Expatriate compensation at Robert Bosch GmbH: coping with modern mobility challenges Ihar Sahakiants, Marion Festing, and Manfred Froehlecke Overview This case is a fictional narrative about the development of a new international assignment policy by Klaus Meier, an imagined employee of the company, in Robert Bosch GmbH. However, the story is based on the real-life biography of another employee of Robert Bosch, presented in the case under the fictional name Hendryk van den Bosch, and is supported by actual calculation sheets and company information. The objective of the present case study is threefold. Firstly, it sets out to present to the students the logic behind and real-life examples of balance sheet calculations. Secondly, it introduces the latest research data on cost reduction policies during international assignments, and thirdly, it provides the students with an impetus to argue on ways to increase the cost-efficiency of international assignments. The case should be discussed in the context of Chapter 8 on International Compensation, where key components of an international compensation program for expatriates, and approaches to international compensation of expatriates, are discussed. Possible Answers to the Questions Why did Bosch state the cost-of-living allowance amount as a CEHB-based sum and a separate cost-of-living supplement in the first and the second years of the assignment in the balance sheet for Korea? Here, it is necessary to refer to the description of the rationale of the Cost Effective Home Base (CEHB) index on p. 326. The use of this index, starting from the third year of the assignment, is in line with the overall cost reduction policy implemented by the company. Important in this respect is the correct interpretation of the balance sheet calculation presented in Figure 4 on p. 327, which might be confusing for someone unfamiliar with the assignment policies of Robert Bosch. The CEHB Index is used to calculate the host country’s spendable component (65% of the comparable net domestic salary). However, during the first two years of the assignment, a so-called cost-of-living supplement is provided additionally. In the third year of the assignment, when the expatriate employee is expected to have adapted to local purchasing behavior, the cost-of-living supplement is deleted from the balance sheet without changing the basis of COL calculations (CEHB Index). Which expatriate compensation elements at Bosch Group were already based on cost reduction considerations listed in the case study? Please suggest ways in which these could be improved further. Expatriate compensation elements at Bosch Group that were already based on cost reduction considerations include the provision of the cost-of-living allowance based on the CEHB Index (see the note to question 1), cost-efficient travel expenses, e.g. ‘economy class’ flights as the standard option. Further improvements to the efficiency of these measures could, for instance, include the earlier introduction of the CEHB Index for calculating the cost-of-living allowance. This could be achieved by more intensive consultation on local living standards, shopping opportunities, and local substitutes for everyday consumption goods typically used in the home country. Additional savings with respect to travel costs could be achieved by optimizing the travel booking system (using bonus and discount schemes) as well as by considering alternative transportation methods (e.g. railway connections for short-distance travels). What further cost reduction measures could be implemented? Please refer to the list of cost-reducing solutions in accordance with the ‘Global Assignment Policies and Practices’ survey by KPMG on pp. 326 and 328. In addition to the possibility of a more efficient calculation of the cost-of-living allowance and reducing travel expenses discussed above, there is a growing trend nowadays to ‘provide lump sum payments at the beginning and the end of an assignment’ (p. 326) instead of a typical relocation allowance, to introduce caps for allowances based on the income level of the expatriate employee by reducing housing costs. Further options for cost reduction could be the use of alternative assignments (refer to question 6 of this note), pay methods (e.g. host-based approach), or outsourcing (question 5 of this note). Do you believe it was possible to design a Bosch Group international assignment policy covering both expatriate and inpatriate employees at all international locations? Theoretically, it is possible to design such a policy, for instance based on global pay rates (the so-called headquarters or global compensation approach), for both expatriate and inpatriate employees. However, this approach would be inconsistent with the balance sheet approach currently used by the company for expatriate assignments. Moreover, taking into consideration large pay differentials between the countries, this expatriate compensation method would be very costly to the company (cf. it is stated in the case study on p. 323 that there were 400 inpatriate employees in 2010, mainly from Asia, the Americas, and Europe). On the other hand, the use of a home country-based balance sheet approach for inpatriate employees would in many cases (e.g. with respect to inpatriates coming from Asian or eastern European countries to Germany) result in inpatriate pay packages, which would be significantly lower than compensation levels in the host country. One of the measures used to reduce the costs of expatriation was to outsource elements of the administration function to external service providers. Please discuss the advantages and disadvantages of such a policy. According to the KPMG report cited in the case study, about 6% of the participants in the survey used outsourcing to reduce costs, while 47% of the respondents viewed it as a means ‘to gain access to service providers’ global resources and expertise’ (p. 5), tax and immigration services being among the most frequently used external services. However, as noted by Reynolds, it is necessary to differentiate between the outsourcing activities and using the external consulting services. Apart from cost savings, the expertise of external providers of international compensation and benefits services might be useful in designing expatriate pay packages most suitable for the local markets and thus increase the satisfaction of employees on foreign assignments. On the other hand, by outsourcing this function companies are faced with problems related to strategic issues linked to expatriate compensation, including repatriation and long-term career development. Do you believe that alternative assignments can substitute for traditional expatriate assignments in the long run? Please discuss any major opportunities and barriers. For a discussion of alternative assignments please refer to Chapter 5 (pp. 121-123) of the book. Traditional expatriate assignments are those lasting from one to five years. Alternatively, the use of the following assignment types could contribute to significant cost reductions: Short-term (with a duration of up to three months) assignments. Commuter assignments. Rotational assignments. Contractual assignments. Virtual assignments. Self-initiated assignments. It is important, however, to consider the disadvantages of the respective approaches. Take for an example differences including advantages and disadvantages presented in Table 5.2 on p. 122. For instance, the advantages of short-term assignments related to cost-effectiveness, compared to traditional assignments, have to be juxtaposed with disadvantages such as problems with integration in local teams, more complex taxation, or work permit issues. What are the major barriers to the localization of expatriate managers? The use of the localized compensation package is often seen as the major alternative to the home country-based balance sheet. This approach has great cost-saving potential (related to both administrative expenses and international assignment allowances) and is likely to promote distributive and procedural justice in the host country teams. It is reported that localized compensation packages for expatriate employees are increasingly used in locations with comparable salary levels. For example, PricewaterhouseCoopers stated in their 2002 survey that local market rates are quite often used in the majority of European countries to calculate expatriate salaries. The major disadvantages of this approach are related to the large differences between countries—especially between industrialized and emerging/developing economies—with respect to pay levels and social security systems. Firstly, the use of the localized packages might decrease the initial attractiveness of international assignments, first of all due to the absence of expatriate allowances and potential additional expenses in the host country related to the loss of spousal income or paying for an international school for school-age children. Secondly, it might negatively affect the perceived fairness of the compensation system with respect to expatriate employees working on localized contracts in low and high income countries. Finally, the use of localized packages might make repatriation more difficult, especially after assignments in countries with a higher salary level or quality of life. Many international companies do not provide additional foreign assignment allowances (e.g. a relocation or hardship allowance). Do you think it would have been feasible to implement this system at Bosch? What would be the related advantages and disadvantages? Various foreign assignment allowances are increasingly used to facilitate the international mobility of employees, especially to countries with low levels of living infrastructure development and dangerous conditions. As a result, only a small portion of companies do not offer such allowances to their expatriate employees (cf. the KPMG study cited in the case study). The advantages of not providing expatriate allowances related to the increased cost control of international assignments and the equal treatment of all expatriate employees worldwide juxtapose with a series of problems related to motivating employees to relocate (for instance, by leaving their houses in the home country, to compensate for the loss of the spousal income, to organize day care or schooling for their children), especially to developing countries. Further Reading Festing, M. & Perkins, S. 2008. Rewards for internationally mobile employees. In M. Dickmann, C. Brewster, & P. Sparrow (Eds.), International Human Resource Management: A European Perspective, 2 ed.: 150-173. London: Routledge. Case 7: Balancing Values - An Indian Perspective on Corporate Values from Scandinavia Martine Cardel Gertsen and Mette Zølner Overview This case deals with challenges inherent in the translation of corporate values, developed in one societal and cultural context, to the context of a subsidiary elsewhere in the world. It centers on a pharmaceutical company, Pharmaz, headquartered in Denmark, and its Indian subsidiary. Pharmaz, as a research-oriented company, aims towards a corporate culture that encourages learning and creative collaboration. The three corporate values formulated in accordance with this ideal are empowerment, equal opportunities, and openness in communication. Pharmaz is increasingly focusing on India, and top managers at headquarters want the corporate values of empowerment, equal opportunities, and openness to be implemented fully, or “lived” as they like to put it, in the subsidiary. In order to highlight the subsidiary’s perspective, an Indian senior financial manager, Amrita Chopra, is the protagonist. The headquarters’ perspective is represented mainly by her superior, the Danish expatriate financial director Niels Nielsen. The text is divided into three acts and each is followed by one or more questions so that the instructor can pause for discussion. Act 1 sets the scene by introducing the company and the main characters while also outlining the case’s major problem areas. Act 2 describes a meeting between Amrita Chopra and Niels Nielsen, during which they discuss plans for the alignment of local work procedures with Pharmaz’s corporate values. Act 3 describes the situation some months later when some of the issues have been solved but others remain problematic. Comments on questions Due to the nature of the topic, the questions in this case do not have definite and absolute answers – they may be answered in different ways. But of course, some issues to discuss (including theoretical concepts from the textbook such as cultural values presented in Chapter 2, staffing and cultural adaptation processes discussed in Chapter 5, or intercultural training issues addressed in Chapter 7) are more relevant than others, and some of these are touched upon in the following sections. Possible Answers to the Questions Act 1 1.) Identify the main issues raised and discuss how they may be explained in terms of the cultural and institutional contexts of Pharmaz in general and Pharmaz India in particular. Among the main issues raised are: Different leadership ideals appear to prevail in both the headquarters and in the subsidiary, which contributes to making Amrita feel “squeezed” in her middle management position. The cultural clash of the Indian and Scandinavian cultures could induce a discussion on the cultural awareness of expatriates. These issues may be discussed, for instance, by addressing Hofstede’s concept of power distance. According to his study, Denmark and India are placed at different ends of the high/low power distance continuum. In addition, the balancing act of standardizing and localizing HMR in MNEs is a general challenge and can be discussed, too. Collaboration problems (internal misunderstandings and lack of communication) in one team may be discussed, for instance, by using the concepts of individualism vs. collectivism (Hofstede), institutional/in-group collectivism (GLOBE), and in-group/out-group definitions. A further approach may be to conceptualize the Indian culture in reference to the Model of Schein. Within this discussion, the influence of underlying assumptions and the former caste system can be addressed (see Chapter 2 for details on all of these points). This could already be an opener for a convergence-divergence debate (details on this discussion can be found in Chapter 5). Different staffing approaches (ethno-, geo-, poly-, and regiocentric) could be another subject (see Chapter 5). High and low context communication (Hall and Hall) is another issue – it may be a challenge to get used to a communication style that is perceived as more direct, as the value of openness in communication may well be interpreted and put into practice differently by people socialized to high context or low context communication, respectively. Different concepts of time (Schein, Trompenaars and Hampden-Turner, Hall and Hall) may be discussed, too. The notion of performance orientation (GLOBE) may be relevant in connection with the motivation of employees. A further subject may be the form of social roles attributed to gender by society (not a main point here, but it plays a role in Amrita’s life and her former work experience (GLOBE). Act 2 In the role of Amrita: 1.) Which proposal would you make to Niels Nielsen and how would you argue in order to convince him? Implementation of corporate values: The problem is not that the employees are unfamiliar with the values and the ways in which they are put into words by the company, because although they know the formulations by heart, they do not know how to put them into practice. This is not surprising, since the corporate cultural context is alien to them, and implications of “empowerment” and “open communication” that seem obvious to Danish management may not be so to the local employees. If the company insists that the values must be practiced as uniformly as possible and wishes to make sure that headquarters’ understanding of them prevails, a way to integrate corporate values, especially empowerment and knowledge-sharing, could be to explain the background to and reasoning behind the values (i.e. make visible the values and underlying assumptions upon which these are built) in a very concrete way. Realizing HQ’s frame of reference may help the Indian employees to understand these values and possibly conclude that some align with their own values. Some kind of “learning by doing” may be required as well, which could be stimulated by more intense supervision and immediate feedback, although this is, inevitably, somewhat time-consuming and not in line with the new team leaders’ job descriptions from Denmark, which stipulate that less time should be spent on supervision and checking up. Another way to integrate the corporate values could lie in the very explicit communication of expectations in the form of new job descriptions. Empowerment can be clarified through explicit responsibilities and expected decisions, while knowledge sharing should be noted as a key responsibility. Although it may not be felt necessary at headquarters to be very explicit about which decisions each employee is empowered with and encouraged to make independently, it may be a good idea to spell it out, at least initially, so that employees feel they can act safely. The drawback, of course, is that this also adds to the bureaucracy that empowerment is actually intended to minimize. Differences in socialization and educational institutions may also be included in the discussion. Amrita finds it likely that some of her employees who prefer explicit directions in their work do so because this manner of working has been encouraged throughout their education. To mediate between different concepts of time, a clear expectation could be formulated about the time slot, for example, for answering mails. However, this requires various amounts of feedback from both parties. Another way of implementing knowledge-sharing could be the institutionalization of a short meeting every morning, which should be moderated by Amrita (as the Indian culture has a high score in power distance). Amrita’s role in this process could include observation as well as feedback and discussion afterwards with the team leaders a few days a week. Motivation and retention of talented employees: The discussion on motivation issues would have to include some consideration of the importance of status and pay in a highly competitive Indian society. The case shows this to be somewhat difficult to understand for the Danish managers, who take their point of reference from a Scandinavian egalitarianism/welfare society. Some kind of compromise seems to present itself as the best solution here – it may not be realistic to retain ambitious and qualified employees if they do not feel adequately rewarded for their efforts, especially in the Bangalore context where the best employees are much sought after. Ways to motivate and retain employees could involve promoting them through a more differentiated title structure as well as the awarding of prizes (e.g. for the employee of the quarter), as this is appreciated in the Indian context. It seems a good idea to introduce a reward system that takes knowledge-sharing and collaboration abilities into account, especially given the apparent importance of rewards to the employees. The team bonus suggested in Sebastian’s mail might also be an idea to consider, as this is in line with the collectivistic culture. Act 3 Step out of Amrita's role and answer the following: Do you feel the measures taken to implement corporate values and reorganize work in the financial services center have been appropriate? Taking the perspective of Pharmaz’s top management, and especially the CEO, their measures to implement corporate values in India are comprehensible, particularly given the fact that the company sees itself as value-driven. The issue is that they have chosen very culture-specific values, so it seems that there is room for more localization of HRM practices. There are some indications that the rating of colleagues may not work as intended and may indeed be misused. If interpersonal issues within the group are not solved, one way to handle this would be to return to the concept of rating by superiors, but with special emphasis on the types of behavior in question. Still, it may not always be obvious to superiors as to who shares what with whom. Would you have done anything differently? Amrita could take more of a coaching role, asking her employees about their ideas to implement values instead of telling them how to do it. In this problem-based learning scenario, the employees could be encouraged to create their own concrete implementation suggestions, make their own plans for their days and learn how to delegate tasks. As a consequence, Amrita could support this process, without having to issue concrete instructions. Concerning the differentiation of the title structure, one could keep a balance between the HQ and the subsidiaries. This means that a bit of localization with more titles is adequate, but it should not be exaggerated. How should one proceed now to achieve the best possible result for Pharmaz India’s financial services center? First, the term ‘results’ has to be differentiated: It can comprise motivation and retention or the incorporation of values. In my opinion, in order to be successful and sustainable, it is inevitable that one should localize more and adapt management practices (communication, leadership, team processes, promotions, etc.) to the Indian culture and the historical context (war of talents, growth), as well as to liberate oneself slightly from the idea that one’s own way is the best option to take. It is important to note that employee’s needs have to be met in order to enable retention. In General: Take time to implement values, and be aware that such things take some time. Be aware of and live your own set of standards (e.g. English as the corporate language). Show profound respect and appreciation for every person as well as for countries, which should smooth the way for more direct communication. Build awareness and respect the particularities of the Indian context (e.g. communication, power distance, time concept, and motivational tools). A way to minimalize the given issues in the future may be to recruit people that fit better into the organization. In the recruitment and selection process, the main focus should be on similar values. Another focus should be on communication and behavior styles that are in line with the corporate culture, in order to take into account the difficulties that stem from differences on this level. Try to recruit more EHCNs (ex-host country nationals) as employees, as these people tend to have more of a global mindset. Once HCNs’ training needs have been identified, offer training and development (as in the case of Amrita), in order to provide a frame of reference for the corporate culture. Make this culture, which is in line with Scandinavian culture, graspable and understandable – explain yourself. Offer training in intercultural conflict management for managers and team leaders, as well as in intercultural communication. Establish a tangible consciousness of their own culture (especially of values and unconscious underlying assumptions), as well as of the Scandinavian culture, e.g. with respect to the Model of Schein. Develop existing and future staff through international assignments, and send employees as inpatriates to HQ in order to enable, for example, organizational learning, knowledge transfer, and a global perspective. International assignments are also employed for developing shared values by normative control through socialization, and they act as a method for encouraging different inputs into decisions and problem solving. Cultural awareness training for expatriates should be binding (see Chapter 7). Continue reward programs for achieving desired attitudes and behaviors. The rewards should have a strong emphasis on collectivism, and motivational tools should be more social, interpersonal, and spiritual. Continue with the differentiated title structure, as this is a good motivator and fits into the cultural context. Institutionalize open communication: Knowledge-sharing on a digital platform, meetings directed by a manager or team leader. Evaluation (e.g. through interviews with trained interviewers) should take place regularly. Additional Question 4. Which issues appear to be at stake in Balvinder’s team? What would you do in Amrita’s position in order solve these problems? Please motivate your suggestion. Individual versus group performance (perhaps address notions of performance orientation, ingroup collectivism, and individualism). Amrita should talk to the team members individually in order to clarify the situation and make sure no one loses face. It is indicated in Acts 1 and 3 that Shankar has a good relationship with the regional manager, Ganesh Karanth, something which may be discussed in terms of in-group/out-group considerations. It is indicated that attitudes towards caste may be at stake here, but we cannot be certain based on the information in the text. Caste-based discrimination is illegal, but it remains a sensitive issue that is considered taboo in many contexts in Indian society. Although its importance and relevance in a modern Indian organization may be denied, sociological research indicates that prejudice based on caste is still widespread. Balvinder Singh’s surname also indicates that he probably belongs to the Sikh religion, but the case contains no clues as to whether or not this may be a problem. The handling of issues such as caste and religion does represents not only a managerial problem, but also an ethical one because if some kind of discrimination based on caste or religion is indeed in play, it poses a particular problem in a company that has a stated corporate value of equal opportunities. The fact that Sebastian mentions the two other corporate values, but not equal opportunities, in his mail could be an indication that he has a sense that it may be problematic, but is undecided as to what should be done about it. Should Pharmaz be pragmatic or idealistic? Addressing the issue directly may be risky and result in a number of negative reactions and maybe even the loss of qualified employees. On the other hand, the argument could also be made that idealism would be the best business strategy in the long run. In any case, the caste issue should probably be addressed cautiously, and only if there are strong indications that this is actually at the root of the problem. Further Reading Gertsen, M. C., Söderberg, A.-M. and Zölner, M. (Eds.). Global Collaboration: Intercultural Experiences and Learning. Palgrave Macmillan.
Case 8: Just another move to China? The impact of international assignments on expatriate families Yvonne McNulty Overview The case covers family issues during expatriation, including the trailing spouse, dual-career issues, third culture kids, family finances, and ‘career expatriates’. The case outlines the challenges of the MacDougall family as they contemplate relocating to China, their third international move in 12 years. The objective of the case is to highlight that expatriation becomes increasingly more complex when families are involved, in terms of decision-making and the longer-term implications of continuous global mobility. The case is related to Chapter 7. Possible Answers to the Questions In what ways does the MacDougall family represent a rare and valuable resource to a multinational firm? Barriers to mobility represent a crucial challenge for MNCs, mostly because of family reasons – with spouses’ career or employment, and/or children’s education being at the top of the list. Global families such as the MacDougalls, i.e. families that expatriate continuously from assignment to assignment, oftentimes perform better than those families on a first assignment, because of the skillset they acquire to adapt and thrive in each subsequent new location. The MacDougall’s are a rare resource because few families are willing to relocate, let alone continuously over many years; and valuable, because as the demands of global staffing increase, more expatriates (and their families) will be needed. Reflecting on Lisa’s dual-career trailing spouse journey, how would you have approached the situation differently? Some ideas include: Going home after the initial 18 months in Chicago to resume her career Seeking more information before leaving Australia regarding the work permit situation – if a different visa had been available that would have permitted her to work, she and Lachlan could have delayed their first assignment until that visa could be obtained Lisa could have started a family earlier than she did, thereby giving her something worthwhile to fill up her time In Singapore, Lisa could have taken a part-time ‘job’, as opposed to pursuing a full-time career. What problems do you foresee for Amelia and Emily if the MacDougall family undertakes another move after Shanghai? TCKs generally feel a sense of rootlessness and connection to a ‘home country’. This often presents as a lack of belonging, with associated anxiety and frustration. Amelia and Emily were born onto the international scene and generally have no memory of a home country. We can therefore postulate that the MacDougall girls may face no problems at all and will embrace their ‘global citizen’ status as a result of feeling no connection to their home country; or, as they get older, they may long to have the stability of calling somewhere ‘home’ by attending university in their home country. While the research on TCKs remains in its infancy, research on Adult TCKs (ATCKs) shows that the problems associated with being a TCK during childhood typically manifest in early adulthood when questions about life choices emerge (which college to attend, which profession to pursue). Although not discussed, what impact do you think international mobility has had on the MacDougall’s marriage? There is virtually no research on expatriate marriage, with the only book on the topic published by Robin Pascoe at www.expatexpert.com. Relationship stress is frequently very high during international assignments because one spouse often gives up their career in order for the other to expatriate. As a result, marriage dynamics often change from one of equality to dependence (a type of parent-child relationship). Lisa MacDougall talked about this when deciding whether to go to China, notably that she did not want to return to a ‘stay at home wife’ situation. Lachlan is clearly the breadwinner, and may (or may not) understand why his wife values her independence. Successful marriages require a lot of work; because of the additional stress that expatriation creates, small issues in a marriage may be exaggerated or even impossible to overcome, as the expatriate couple loses their support network through each subsequent move. Expatriate separation and divorce, while uncommon, does happen. Further Reading Pascoe, R. (2003). A moveable marriage: Relocating your relationship without breaking it. North Vancouver, BC: Expatriate Press Limited. McNulty, Y. (2012). ‘Being dumped in to sink or swim’: An empirical study of organizational support for the trailing spouse. Human Resource Development International, 15(4), 417-434. Peterson, B., & Plamondon, L. (2009). Third culture kids and the consequences of international sojourns on authoritarianism, acculturative balance, and positive affect. Journal of Research in Personality, 43, 755-763. Fail, H., Thompson, J., & Walker, G. (2004). Belonging, identity and third culture kids: Life histories of former international school students. Journal of Research in International Education, 3(3), 319-338. Weeks, K., Weeks, M., & Willis-Muller, K. (2010). The adjustment of expatriate teenagers. Personnel Review, 39, 24-43. Cole, N. (2011). Managing global talent: Solving the spousal adjustment problem. International Journal of Human Resource Management, 22(7), Solution Manual Cases for International Human Resource Management Peter J Dowling, Marion Festing , Allen D. Engle 9781408032091