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This document contains Chapters 16 to 17 PART FIVE: BUILDING EFFECTIVE EMPLOYEE–EMPLOYER RELATIONSHIPS CHAPTER 16 LABOUR RELATIONS REVIEW AND DISCUSSION QUESTIONS 1. Cite three examples of unfair labour practices on the part of management and three on the part of unions. Unfair Labour Practices – Management Interfering with the employees’ right to select the union of their choice for collective bargaining purposes, or discriminating against employees for union activity. Unilaterally changing the terms of collective agreements, or changing or threatening to change wages and working conditions during certification proceedings or collective bargaining, if the purpose is to undermine the union. Refusing to bargain in good faith – that is, failing to make a serious attempt to reach a collective agreement. Unfair Labour Practices – Union Attempting to persuade an employee to become or continue to be a union member, at the workplace during working hours, unless employer consent has been obtained. Refusing to bargain in good faith. Intimidating or coercing employees to become or remain members of the union. (page 432) Explain three of the challenges facing the union movement in Canada today. Three challenges facing the union movement today are global competition and technological change, privatization and the unionization of white-collar employees, and innovative workplace practices. Global competition and technological change have led to massive job losses for Canadian union members. Unionization of previously nonunion white-collar workers such as service sector employees has created a new source of union members. Innovative workplace practices such as increased autonomy and decreased supervision have lowered the perceived need for a union. (page 429) Describe five signs to which managers should be alert to detect an organizing campaign. disappearance of employee lists or directories. more inquiries than usual about benefits, wages, promotions, and other HR policies and procedures. questions about their opinions of unions. an increase in the number or nature of employee complaints or grievances. a change in the number, composition, and size of informal groups at lunch and coffee breaks. (page 432) 4. Explain the bargaining zone and draw a diagram to illustrate this concept. Management Resistance Point Target Point Initial Point Figure 16.2 (page 435) Bargaining zone is the area defined by the bargaining limits (resistance points) of each side, in which compromise is possible, as is the attainment of a settlement satisfactory to both parties. In order for each issue on the table to be resolved satisfactorily, the point at which agreement is reached must be within limits of the bargaining zone that the union and employer are willing to accept. If the solution desired by one party exceeds the limits of the other party, then it is outside of the bargaining zone. Unless that party modifies its demands sufficiently to bring them within the bargaining zone, or the other party extends its limits to accommodate such demands, a bargaining deadlock is the inevitable result. 5. Explain six common forms of the union security clause. Union security clause is the contract provisions protecting the interests of the labour union, dealing with the issue of membership requirements and, often, the payment of union dues. There are 6 forms of union security clauses: Closed shop is the most restrictive form of union security. Only union members in good standing may be hired by the employer to perform bargaining unit work. This type of security clause is common in the construction industry. Union shop – membership and dues payment are mandatory conditions of employment. Although individuals do not have to be union members at the time that they are hired, they are required to join the union on the day on which they commence work or on completion of probation. Modified union shop – the individuals who were bargaining unit members at the time of certification or when the collective agreement was signed are not obliged to join the union, although they must pay dues, but all subsequently hired employees must do both. Maintenance-of-membership arrangement – individuals voluntarily joining the union must remain members during the term of the contract. Membership withdrawal is typically permitted during a designated period around the time of contract expiration. Dues payment is generally mandatory for all bargaining unit members. Rand formula is the most popular union security arrangement. It does not require union membership, but does require that all members of the bargaining unit pay union dues. It is a compromise arrangement that recognizes the fact that the union must represent all employees in the bargaining unit and should therefore be entitled to their financial support, but also provides the choice to join or not join the union. Open shop is a type of security arrangement whereby union membership is voluntary and non-members are not required to pay dues. (page 439) 6. Explain how arbitration differs from conciliation and mediation, and differentiate between interest arbitration and rights arbitration. Conciliation is the use of a neutral third party to help an organization and the union representing a group of its employees to come to a mutually satisfactory collective agreement. The only means available to a conciliator to bring the parties to an agreement is through persuasion. The conciliator is not permitted to have any direct input into the negotiation process or to impose a settlement. Mediation is the use of a neutral third party to help an organization and the union to come to a collective agreement. A mediator role is active and is permitted to have direct input into the negotiation process but unable to impose a settlement. On the other hand, arbitration is the use of an outside third party to investigate a dispute between an employer and union and to impose a settlement. The arbitrator’s decision is final and binding and cannot be changed or revised. Interest arbitration is the position of the final terms of a collective agreement. They settle interest disputes regarding the terms of a collective agreement. This is legally mandated for workers who are not permitted to strike. Rights arbitration is the process involved in resolving grievances relating to the interpretation or administration of the collective agreement. (pages 437, 439, 442) CRITICAL THINKING QUESTIONS “If supervisors communicate effectively with employees, deal with their concerns, and treat them fairly, employees are far less likely to be interested in forming or joining a union.” Do you agree or disagree with this statement? Why? The work environment that is least conducive to unionization is one that is participative and where the company acknowledges the individual, and where managers understand their obligations to workers. Even the most experienced union organizer will find it difficult to organize a well-managed, successful organization. Firms in which supervisors ignore employee well-being and treat employees unfairly are more likely to support a union movement. Employees often aim to overcome their individual lack of power and improve their quality of work life by organizing a union and bargaining with the employer collectively. Additional evidence to support this statement can be found in numerous research studies. Key reasons for unionizing include: job dissatisfaction, especially with pay, benefits, and working conditions; lack of job security; unfair or biased administration of policies and practices; perceived inequities in pay; and lack of a desired amount of influence or participation in work-related decisions. While supervisors do not determine the compensation package, they are responsible for planning labour needs, selecting employees, orienting and training employees, managing compensation, ensuring effective two-way communication, ensuring fair treatment, appraising performance fairly, handling complaints and grievances fairly, and ensuring compliance with human rights and occupational health and safety legislation. (page 431) Two possible approaches to labour relations are union acceptance and union avoidance (union substitution or union suppression). Determine which of these strategies seems to have been adopted in a firm in which you have been employed or with which you are familiar. Provide evidence to back up your answer. Answering this question requires an understanding of the material on management’s labour relations strategy. Managers in firms choosing a union acceptance strategy view the union as the legitimate representative of the firm's employees. This strategy is likely to result in labour–management cooperation and a harmonious working relationship. Managers select a union avoidance strategy when they believe that it is preferable to operate in a nonunionized environment. There are two approaches that firms can adopt to avoid unionization – one proactive (union substitution) and the other employing hardball tactics (union suppression). Union substitution, also known as proactive HRM, involves being so responsive to employees' needs that there is no incentive to unionize. Managers ensure that the treatment employees receive, as well as their pay, benefits, and working conditions, are equal to or better than that in comparable unionized firms. Firms adopt a union suppression approach when there is a desire to avoid a union at all costs. "Hardball tactics,” which may or may not be legal, are employed to prevent a union from organizing the firm's employees or to get rid of an existing union. (page 426) As the LR specialist, what steps would you take in order to prepare the firm and management team if you believed that a strike was a possible outcome of the upcoming negotiations? It is important to identify what key areas under negotiations could lead to potential strike action, and prepare to address those issues with fairness. The management team needs to be prepared in terms of looking at the following areas: how well informed the union is in regards to the financial situation of the company. If the union believes the company is financially sound yet refuse a pay increase the strike action can be a possible outcome. The management team should look into the past relationship between the union and the management and grievances that have come up during the term of the agreement. These could give an insight to the kinds of issues the union wants addressed. The management team should identify skilled negotiators if they are expecting possible strike action. It’s important to advise management in regards to the legal environment – i.e. some provinces allow the use of temporary workers during strike action, which favours the employer in carrying out its businesses without the normal workforce, or whether the union is required to take a strike vote. Think of an organization with which you are familiar, in which there is a harmonious labour–management relationship. Compare and contrast the steps taken to build such a relationship with the guidelines provided in this chapter. Union help is sought only when workers are dissatisfied and believe that they are without the ability to change the factors causing dissatisfaction, except through collective actions. There are a number of ways to promote cooperation between management and labour, as follows: Instituting an open-door policy where key managers involved in labour–management relations welcome employees into their offices to discuss any problems or concerns, and employees feel comfortable in doing so. Many issues can be resolved informally. Extending the courtesy of prior consultation to the union if any actions that might affect union members are discussed with the union executive first, the likelihood of grievances is greatly reduced. Demonstrating genuine concern for employee well-being, and management always help build mutual trust and respect. This involves fair treatment and communication going well above and beyond the requirements of the collective agreement. Forming labour–management committees to investigate and resolve complex issues can lead to innovative and creative solutions, as well as to a better relationship. APPLICATION EXERCISES RUNNING CASE: LearnInMotion.com (page 447) Do you think that it is important for LearnInMotion.com to have a formal grievance procedure? Why or why not? Yes, it is important for the company to have a formal grievance procedure. According to the situation described, Jason is not the only employee who seems to be frustrated by how they are being treated, and the company does not seem to have a union at present. Employee dissatisfaction is one of the reasons for union movements to start within an organization. Therefore, it will be in the best interests of the company to establish a formal process for airing grievances. Based on what you know about LearnInMotion.com, outline the steps that you think should be involved in the firm’s grievance process, should they decide to implement one. Considering that the company is not unionized, it can establish a simple grievance process as outlined in chapter 15 with FedEx and GFTP. It contains three steps: management review where the complainant contacts HR to submit a written complaint to a senior person within the department; an officer complaint where the complaint is submitted to the head of the organization if the management review is unsatisfactory; and an executive appeals review where the complaint is submitted to the employee relations department if the first options fail. What else could Jennifer and Pierre do, other than implement a grievance process, to ensure that complaints and grievances get expressed and handled? The company would benefit by establishing a human resources department with a specialist in employee relations to address issues and concerns of employees. Pierre and Jennifer will need to train the line management to handle such grievances before they are brought to the management table and to handle grievances fairly. They should make it a point to train the staff on the new grievance process so that future complaints can be escalated appropriately. CASE INCIDENT: Strategy (page 447) Discuss the plight of public sector unions faced with the reality of a limited tax base and public pressure to lower taxes. Public sector unions have been affected negatively by the limited tax base and the public pressure to lower taxes. With the federal government debt situation, the two options have been to increase revenues by raising taxes or decrease expenditures by cutting costs and services. The political environment would not allow for the first option which led governments to adopt the objective of reducing labour costs. Collective bargaining is used to attempt to reduce labour costs by demanding reductions in wages and benefits, and with threats to contract out or privatize since the private sector is perceived to be leaner and more efficient by the public. Another approach has been to change compensation and working conditions unilaterally by passing legislation that imposes restrictions on compensation. Is the town clerk right? Is the town in a good bargaining position? Explain your answer. Considering the plight of public sector unions, one can argue that the town is in a good bargaining position. Such hikes in wages can ultimately to lead to raises in taxes in order for the government to reduce its losses, which will not be perceived well by the public. It has the ability to contract out the work at a much lower rate or go in for privatization. By creating an advertising campaign, the town can swing the perception of the public to its advantage. On the other hand, there are other factors that may need to be considered before concluding that the town is in a strong position. Some Canadian jurisdictions do not provide for contracting out during a strike situation. If this is the case then the employer will be at a disadvantage. The public will not react favourably to a strike by the garbage collectors since it leads to spread of diseases, pollution, and inability to access public places such as parks and recreation areas due to garbage pileups. What strengths does the union have in its position? The public will not want any disruptions to garbage collection and failure to collect garbage can result in chaos in the community. The public will fear pollution, spread of diseases, dirty public places such as parks preventing children/adults from accessing such areas, smell of rotting garbage, etc. The position of the union can be strengthened depending on the season. If a strike situation occurred during summer, pressure would be on the town to resolve the issue as quickly as possible. If you were a labour relations consultant, would you agree with the present strategy? What alternatives, if any, would you propose? No I would not. The strategy that is being discussed in the case has a win–lose strategy (distributive bargaining). From the information presented, it is not clear what trends and data were considered when arriving at the strategy. It would be best to gather more concrete data in regards to wage rates in other public sector organizations and prepare for a win–win strategy rather than a win–lose strategy, which could lead to a strike situation that is not favourable to either party. EXPERIENTIAL EXERCISES (page 448) Assume that you are the vice-president of HR at a relatively new non-union firm that has been experiencing rapid growth. In view of the management team’s desire to remain non-union, you have been asked to prepare a report to the other senior management team members, making specific recommendations regarding strategies that the firm should adopt to help to ensure that the employees will have no desire to unionize. Research studies have demonstrated that the desire to unionize results from a combination of worker dissatisfaction and the belief that collective action is the only means of changing the factors causing the dissatisfaction. Answers to this question should incorporate the various factors associated to workers’ desire to unionize. The material on union substitution provides strategies and guidelines for firms wishing to avoid unionization. (page 498) Working with two or three classmates, devise a management counter-campaign to a unionization attempt, ensuring that all recommended courses of action are legal. Absolutely critical to the success of a company's counter-campaign is the training of supervisors. They need to be informed about what they can and cannot do or say during the organizing campaign, to ensure that they do not violate LR legislation, and to avoid actions that might inadvertently provide fuel for the union's campaign. When an unfair labour practice is committed by any member of management, it can lead to an expensive and time-consuming lawsuit, and may result in automatic union certification. Even when management actions are legal, union leaders may claim credit for any new policies or practices that are favourable to employees. When planning a counter-campaign, data collection is essential. As much information about the union as possible should be obtained, pertaining to dues, strike record, salaries of officers, and any other relevant facts that might cause employees to question the benefits of unionization. Armed with this detailed information, communication strategies can be planned, with the aim of reminding employees about the company's good points, pointing out disadvantages of unionization, and refuting untrue union claims (if there are any). The employer's case for remaining non-union should be presented in a factual, honest, and straightforward manner. Answering questions is an important part of an effective counter-campaign. A good strategy is to set up an "information line" so that supervisors and employees can get quick answers to questions raised during the organizing campaign. Other communication strategies include preparing speeches outlining the benefits of remaining non-union, writing factual articles for the company newsletter, or preparing a letter to send to the home of each employee. Under the law, employers are granted the right to: express their views and opinions regarding unions in general and the organizing union in particular; state their position regarding the desirability of remaining non-union; prohibit distribution of union literature on their property on company time; increase wages, make promotions, and take other HR actions, as long as they would do so in the normal course of business; and assemble employees during working hours to state the company’s position, as long as employees are advised of the purpose of the meeting in advance, attendance is optional, and threats and promises are avoided. Employers must ensure that they do not: hold "captive audience" speeches, sessions at which employee attendance is mandatory; grill employees about union activities; increase wages and benefits in a manner that could be perceived to be a bribe for remaining non-union; use coercion, intimidation, threats, promises, or undue influence; or refuse to answer legitimate employee questions about the impact of unionization. The distinction between expressing one's views and exerting undue influence is not always clear, and many of the cases that come before the LRB pertaining to organizing campaigns revolve around this issue. When unfair practices are alleged, the LRB looks at all employer actions in the context of the employer's total response to the organizing campaign. Where there is evidence of strong anti-union propaganda, for example, what might ordinarily appear to be innocent language or actions could be viewed by the Board as less than benign. Employers must not only be cautious about what they say or do during an organizing campaign, but must also ensure that legitimate employee questions are dealt with in a proper manner. Failure to answer a question may be perceived as an implied threat to job security. VIDEO CASE – Lakeside Packers (page 449) Lakeside Packers is a slaughterhouse in Brooks, Alberta, owned by Tyson Chicken of Arkansas. The plant processes 4000 cattle a day. Workers are fired if they complain or get sick, which is common in the slaughterhouse industry. Alberta is in the midst of an economic boom and job opportunities are plentiful. Brooks is a redneck town, and most residents do not welcome unions. However, hundreds of Lakeside Packers workers are on strike to get their first contract. Hundreds of others have been willing to cross that line just to keep working. Since Alberta has no anti-scab legislation, strikers can only stop replacement workers for three minutes before letting them into the plant. One-third of the workers are immigrants from poor countries making much more money than they ever could at home, and they are not interested in striking. Residents of Brooks don’t understand the strike – they think the workers should just quit and get another job if they are dissatisfied. Questions Why are workers striking when they could easily quit and get another job? They are striking in order to improve their working conditions. Why have so many workers decided to cross the picket line as “scabs”? Many workers just want a job, even if the working conditions are not great. In particular, foreign workers from countries where wages are much lower want the jobs at Lakeside Packers. Why are the other people in Brooks so opposed to the strike? There is general anti-union sentiment in the town and in the province of Alberta in general. They don’t understand why workers would go on strike when they could just quit and get a better job down the road quite easily. Source: Based on “Brooks,” CBC: The National (October 20, 2005) PART SIX: GLOBAL ISSUES IN HUMAN RESOURCES MANAGEMENT CHAPTER 17 MANAGING HUMAN RESOURCES IN A GLOBAL BUSINESS REVIEW AND DISCUSSION QUESTIONS 1. What are some of the specific uniquely international activities that an international HR manager typically engages in? From a practical point of view, an international HR manager has to address issues such as: Candidate identification, assessment, and selection. In addition to the required technical and business skills, key traits to consider for global assignments include cultural sensitivity, interpersonal skills, and flexibility. Cost projections. The average cost of sending an employee and family on an overseas assignment is reportedly between three and five times the employee’s pre-departure salary; as a result, quantifying total costs for a global assignment and deciding whether to use an expatriate or a local employee are essential in the budgeting process. Assignment letters. The assignee’s specific job requirements and associated pay will have to be documented and formally communicated in an assignment letter. Compensation, benefits, and tax programs. There are many ways in which to compensate employees who are transferred abroad, given the vast differences in living expenses around the world. Some common approaches to international pay include home-based plus a supplement and destination-based pay. Relocation assistance. The assignee will probably have to be assisted with such matters as maintenance of the person’s home and automobiles, shipment and storage of household goods, and so forth. Family support. Cultural orientation, language training, education assistance, and emergency provisions are just some of the matters to be addressed before the family is shipped abroad. That is just the tip of the iceberg. Cross-cultural, technical, and language training programs will probably be required. The complex and differentiated tapestry of labour laws and rules from country to country, and provisions for reassimilating the expatriate when he or she returns home, are some of the other issues that must be addressed. (page 451) 2. Explain three broad global HR challenges. Three broad global challenges are: Deployment: Easily getting the right skills to where they are needed in the organization regardless of geographical location. Knowledge and innovation dissemination: Spreading state-of-the-art knowledge and practices throughout the organization regardless of where they originate. Identifying and developing talent on a global basis: Identifying who has the ability to function effectively in a global organization and developing these abilities. (page 452) What special training do overseas candidates need? In what ways is such training similar to and different from traditional diversity training? One firm specializing in such programs prescribes a four-step approach. Level One training focuses on the impact of cultural differences, and on raising trainees' awareness of such differences and their impact on business outcomes. Level Two focuses on attitudes, and aims at getting participants to understand how attitudes (both negative and positive) are formed and how they influence behaviour. Level Three training provides factual knowledge about the target country, while Level Four provides skill building in areas like language and adjustment and adaptation skills. The depth of training is of the utmost importance. If firms are going to provide cross-cultural training, it needs to be in-depth and done with care. For example, language training must include non-verbal communication awareness, as it varies so widely across the world. Beyond these special training practices, there is also the need for more traditional training and development of overseas employees, such as a series of rotating assignments, management development centres, and classroom programs to hone functional skills. In addition, international management development often aims to foster improved control of global operations by building a unifying corporate culture. The assumption here is that the firm should bring together managers from its far-flung subsidiaries and steep them for a week or two in the firm's cherished values and current strategy and policies. The managers should then be more likely to consistently adhere to these values, policies, and aims once they return to their assignments abroad. (page 461) How does appraising an expatriate's performance differ from appraising that of a home-office manager? How can some of the unique problems of appraising the expatriate's performance be avoided? Several issues complicate the task of appraising an expatriate's performance. For one thing, the question of who actually appraises the expatriate is crucial. Obviously, local management must have some input in the appraisal, but the appraisals may then be distorted by cultural differences. On the other hand, home-office managers may be so geographically distanced from the expatriate that they cannot provide valid appraisals because they are not fully aware of the situation that the manager actually faces. This can be problematic: the expatriate may be measured by objective criteria such as profits and market share, but local events such as political instability may undermine the manager's performance while remaining "invisible" to home-office staff. Five suggestions for improving the expatriate appraisal process include: (1) stipulating the assignment's difficulty level, so that such difficulty-level differences can be taken into account; (2) weighting the evaluation more toward the on-site manager's appraisal than toward the home-site manager's distant perceptions; (3) acquiring background advice from a former expatriate from the same overseas location to help to ensure that unique local issues are considered, if the home-site manager is responsible for writing the appraisal report; (4) modifying the normal performance criteria used to fit the overseas position and characteristics of that particular locale; and (5) taking the expatriate manager’s recommendations and insights into account, not quantifiable criteria. (page 464) What accounts for the fact that worker participation has a long and relatively extensive history in Europe? How has this relatively extensive participation affected the labour relations process? Worker participation has a long and relatively extensive history in Western Europe due to the much lengthier history of the union movement there, and the fact that, in Europe, governments generally do not regulate the bargaining process but are much more interested in directly setting the actual terms of employment than is the case in North America. The aim is to create a system by which workers can participate in a meaningful way in the direct management of the enterprise. In many countries in Western Europe, works councils are required. A works council is a committee in which plant workers consult with management about certain issues or share in the governance of the workplace. Codetermination is a second form of worker participation in Europe. Codetermination means that there is mandatory worker representation on an enterprise's board of directors. It is especially prevalent in Germany. (page 466) This relatively extensive participation has led to some important differences between labour relations practices in Europe and North America: Centralization In general, collective bargaining in Western Europe is likely to be industry-wide or regionally oriented, whereas North American collective bargaining generally occurs at the enterprise or plant level. Union structure Because collective bargaining is relatively centralized in most European countries, local unions in Europe tend to have much less autonomy and decision-making power than in North America, and they basically concentrate on administrative and service functions. Employer organization Due to the prevalence of industry-wide bargaining, the employer's collective bargaining role tends to be performed primarily by employer associations in Europe; individual employers in North America generally (but not always) represent their own interests when bargaining collectively with unions. Union recognition Union recognition for collective bargaining in Western Europe is much less formal than in North America. Union security Union security in the form of formal closed-shop agreements is largely absent in continental Western Europe. Labour-management contracts As in North America, most European labour-management agreements are legally binding documents, except in Great Britain where such collective agreements are viewed as "gentlemen's agreements" existing outside the law. Content and scope of bargaining North American labour-management agreements tend to focus on wages, hours, and working conditions. European agreements, on the other hand, tend to be brief and simple and specify minimum wages and employment conditions, with employers free to institute more generous terms. Grievance handling In Western Europe, grievances occur much less frequently than in North America; when raised, they are usually handled by a legislated machinery outside the union's formal control. Strikes Generally speaking, strikes occur less frequently in Europe. This is probably due to industry-wide bargaining, which generally elicits less management resistance than in North America, where demands cut deeper into the individual enterprise's revenues. (page 465) 6. Describe five actions that can be taken by expatriate managers in other countries to increase their personal safety. Expatriate managers in other countries can take the following measures to increase their personal safety: take general training about travelling and living abroad, and specific information about the country or region they are going to arrive at airports as close to departure time as possible and wait in areas where they are not easily observed install security systems at home and on the car vary departure and arrival times and take different routes to and from work keep current on crime and other problems by regularly checking travel advisory services and consular information sheets remain confident at all times (page 466) CRITICAL THINKING QUESTIONS You are the president of a small business. In what ways do you expect that being involved in an international business activity will affect HRM in your business? Being involved in international business activity will require that cultural, economic, labour cost, and industrial relations differences be taken into account. Depending on countries chosen from which to purchase goods and/or services and/or to which to supply goods and/or services, differences in these factors have the potential to affect virtually every aspect of HRM. If there is a decision to open a branch facility in another country, the following HRM issues will have to be addressed: international staffing policy; candidate identification, assessment, and selection; employee orientation and training; compensation and benefits; performance appraisal; international industrial relations; ensuring safety and fair treatment abroad; and perhaps repatriation issues. A firm is about to send its first employees overseas to staff a new subsidiary. The president asks why such assignments fail, and what can be done to avoid such failures. Write a memo in response to these questions. In a recent survey, the reasons reported for expatriate failure differed between the U.S., European, and Japanese multinationals. For American multinationals, the reasons in descending order of importance included inability of spouse to adjust, managers' inability to adjust, other family problems, managers' personal or emotional immaturity, and inability to cope with larger overseas responsibility. Managers of European firms emphasized only the inability of the manager's spouse to adjust as an explanation for the expatriate's failed assignment. Japanese firms emphasized (in descending order) inability to cope with larger overseas responsibility, difficulties with new assignment, personal or emotional problems, lack of technical competence, and finally, inability of spouse to adjust. Factors identified by Canadian firms as important to expatriate success include flexibility, language ability, and family adjustment. These findings underscore a truism regarding selection for international assignments, namely that it is usually not inadequate technical competence but family and personal problems that undermine the international assignee. Thus, to avoid such failures, international managers should be screened for traits that predict success in adapting to what may be dramatically new environments. A list of such expatriate selection traits would include: job knowledge and motivation; relational skills; flexibility/adaptability; extra cultural openness; and family situation. The most important of these is family situation. Adaptability screening is generally recommended as an integral part of the expatriate selection process. A realistic job preview should be provided, as well as extensive orientation and training. (page 460) What can an organization do to ensure that the skills acquired on an international assignment are utilized when an employee returns to his or her home country? Refer to page 468 which lists a number of steps that can be taken by multinationals to avoid many of the repatriation problems. Regarding the use of skills acquired on an international assignment, there are a number of ways that an organization can use them. Depending on the structure of the organization, the returning employee can be assigned to the geographical department to support/supervise the overseas area that he or she has just left; some line positions can be reserved with a prerequisite of overseas experience; similarly promotions to some or all senior positions can require foreign experience. Returning employees can also provide significant contributions in training and mentoring roles. How would you implement a geocentric staffing policy? A geocentric staffing policy selects the best person for the job from anywhere in the organization, no matter what nationality. Therefore, all job openings must be made known to all employees worldwide through global job posting (probably on a company intranet). Relevant language requirements, country-specific knowledge, and key factors regarding the host country culture should be specified along with the technical requirements of the job. All applications would be assessed against the job requirements and the best few candidates would be interviewed. References from a current manager and others with whom the candidates interact would be easily obtainable and would be reviewed. Then the best-qualified candidate would be selected and moved to the country where the position is located. APPLICATION EXERCISES RUNNING CASE: LearnInMotion.com (page 472) Going Abroad What are the main HR-related implications and challenges as a result of opening the operation in London? The main HR-related issues are training for understanding the British culture, and hiring British employees to manage the operation in a few months’ time. There are also compensation issues for the three Canadian employees who go to London, which is a very expensive city to live in compared to Ottawa. Business objectives must be determined for performance appraisal purposes. How should the person who will be the permanent manager for the new operation be chosen? Should he or she be hired locally, or should one of the people from the existing operation be used? Why? From a business perspective, it would be preferable to have one of the Canadian employees live in London and manage the UK operation. He or she could then hire British staff. However, if no Canadian employees are interested in staying on in London, then a British manager will have to be hired. He or she should ideally have some understanding of Canadian culture and business practices as well as the dot-com business environment. Based upon any sources available to you, including the Internet, research the comparative cost of living in London and Ottawa, including housing and transportation, as well as comparative salaries. The cost of living in London will be much higher than in Ottawa. Salaries will be higher in London as well. Write a short position paper on the subject: a list of HR-related things we need to do in sending our three people abroad? Refer to Figure 17.2 (page 457) on Ten Best Practices for Foreign Assignments which outlines what needs to be done. Position Paper: HR Considerations for Sending Employees Abroad As LearnInMotion.com expands its operations internationally, it is imperative to address key human resources (HR) considerations when sending employees abroad. Here's a list of HR-related tasks and considerations for sending our three people abroad: 1. Cross-Cultural Training: • Provide comprehensive cross-cultural training to help employees understand and adapt to the cultural nuances and business practices of the destination country. • Cover topics such as communication styles, etiquette, work norms, and cultural sensitivities to facilitate effective integration into the new environment. 2. Visa and Immigration Assistance: • Assist employees in obtaining necessary visas, work permits, and other immigration documents required for their assignment abroad. • Ensure compliance with local immigration laws and regulations to avoid any legal complications or delays. 3. Health and Safety Precautions: • Arrange for appropriate health insurance coverage and medical services to ensure employees' health and well-being during their international assignment. • Provide information on potential health risks, vaccination requirements, and emergency protocols in the destination country. 4. Housing and Relocation Support: • Offer assistance with housing arrangements, including temporary accommodations or long-term rentals, in the destination country. • Provide support for relocation logistics, such as shipping personal belongings, securing local transportation, and navigating administrative tasks. 5. Compensation and Benefits Adjustments: • Review and adjust compensation and benefits packages to align with the cost of living and market norms in the destination country. • Consider factors such as currency exchange rates, taxation laws, and local labor market conditions when determining salary adjustments and benefits eligibility. 6. Legal and Employment Compliance: • Ensure compliance with local labor laws, employment regulations, and tax obligations in the destination country. • Provide guidance on employment contracts, termination procedures, and employee rights to mitigate legal risks and ensure fair treatment of employees. 7. Family Support Services: • Offer support services for employees' families, including spouse/partner employment assistance, schooling options for children, and cultural integration resources. • Address any concerns or challenges related to family relocation to facilitate a smooth transition for all members. 8. Ongoing Communication and Support: • Establish regular communication channels and support networks to keep employees informed, engaged, and connected during their international assignment. • Provide access to HR representatives or expatriate support teams to address any concerns or issues that may arise during the assignment period. By proactively addressing these HR-related tasks and considerations, LearnInMotion.com can ensure the successful deployment of employees abroad while supporting their well-being, productivity, and overall success in the international context. CASE INCIDENT: “Boss, I Think We Have a Problem” (page 474) 1. Based on this chapter and the case incident, compile a list of 10 international HR mistakes Mr. Fisher has made so far. Among his mistakes: Fisher has not properly identified candidates; cultural sensitivity, interpersonal skills, and flexibility have not been included as required job skills; there is no system in place to assess candidates for proper skills; the company does not have realistic cost projects for cross-border operations; the company has not determined whether it would be cost-effective to have an expatriate manager; there are no assignment letters documenting the scope of the job; there is no international compensation system in place; the company has not taken into account differences in foreign expenses; the company has not taken into account foreign taxes; there is no formal relocation assistance program in place; the company has not considered the importance of family support; and there is no cultural orientation program in place for expatriate mangers or their family members, among others. 1. How would you have gone about hiring a European sales manager? Why? I would have investigated the market to determine the appropriate level of compensation and benefits. Expatriate compensation packages should consider tax equalization clauses or other measures for dealing with differing costs of living. The company should also have retained consul on European labour laws/practices. The location of the office should be carefully selected for favourable labour and tax laws. Like Fisher, I would have wanted a large pool of potential applicants, but given Fisher’s inexperience, he may have benefited from the use of an outside agency (search firm). Finally, Fisher’s stereotypes of European managers may have clouded his judgment with his existing pool of applicants. 2. What would you do now if you were Mr. Fisher? Fisher needs to consult legal counsel in regard to his labour situation. He is likely in the wrong, in which case he will need to reinstate the employees and apologize. He will in all likelihood need to start over and find an appropriate sales manager with knowledge of the local culture and business practices. EXPERIENTIAL EXERCISES (page 474) Choose three traits useful for selecting international assignees, and create a straightforward test (not pencil and paper) to screen candidates for these traits. The most important trait is family willingness to support the international posting, but this is more effectively assessed through interviews than paper and pencil testing. The traits for which screening tests are to be devised should be extra cultural openness, flexibility/adaptability, and relational skills. There are numerous types of tests that would be appropriate, including the Overseas Assignment Inventory, work sampling, an in-basket exercise, a leaderless group discussion, some type of management game, an individual presentation, and a role-play or simulation exercise. (page 459) Describe the most common approach to formulating expatriate pay. Use a library source to determine the relative cost of living in five countries as of this year, and explain the implications of such differences for drafting a pay plan for managers being sent to each country. The most common approach to formulating expatriate pay is to equalize purchasing power across countries, a technique known as the balance sheet approach. The basic idea is that each expatriate should enjoy the same standard of living he or she would have had at home. With the balance sheet approach, four main home-country groups of expenses – income taxes, housing, goods and services, and reserve – are the focus of attention. The employer estimates what each of these four expenses is for the expatriate's home country, and also what each is expected to be in the expatriate's host country. Any differences are then paid by the employer. In practice, this usually boils down to building the expatriate's total compensation around five or six separate components. For example, base salary will normally be in the same range as the manager's home-country salary. In addition, however, there might be an overseas or foreign service premium. This is paid as a percentage of the executive's base salary, in part to compensate the manager for the cultural and physical adjustments he or she will have to make. There may also be several allowances, including a housing allowance and an education allowance for the expatriate's children. Income taxes represent another area of concern. In many cases a Canadian manager posted abroad may have to pay not only Canadian taxes, but income taxes to the country to which he or she is posted as well. (pages 462–463) VIDEO CASE: Handmaster Plus – Made in China (page 475) Dr. Terry Zachary is a chiropractor who has developed a product called “Handmaster” to strengthen all the muscles in the hand. It is comprised of a polyurethane sponge ball and an elastic cord. He has decided to make the product in China because the manufacturing cost will be half of what it would be in Canada. He has also decided to use separate manufacturers for each component in order to avoid counterfeiting. He has 10 days to visit eight manufacturers in five cities in China, and to shoot a video chronicling his trip. Communication is a challenge, but with the help of interpreters, he gets the information he needs. When he is finished, he chooses to have the ball made by the Yuming company in the city of Changzhou, and the cord made by the Lelpro company in the city of Wuxi. Six weeks later, he returns to view samples and runs into some difficulty with discrepancies between what is said to him and what actually happens. However, in the end a problem with the cord is resolved, and Zachary’s mission is accomplished. His Chinese manufacturing partners are happy and are eager to do more business with other Canadian companies. Why is the cost of manufacturing half as much in China as in Canada? The manufacturing cost is less because the cost of labour is much lower in China. Are there any additional benefits to manufacturing in China? There is less government regulation in China, and the Chinese manufacturers are eager to do business with Canadian companies. Unionization is not an issue in China. There is a huge supply of labour motivated to work hard to improve their standard of living. China is a huge market that may have growing demand for the Handmaster product, and shipping costs will be tiny compared to shipping goods manufactured in Canada to China. What are some potential problems associated with manufacturing in China? The language difference can present problems related to communication and understanding. The cultural differences can present many difficulties in working together. The political situation is not completely stable. The economy is growing extremely fast and is difficult for the government to control. Workers may not be concerned with the quality of the goods they are manufacturing. What could Zachary do to utilize Canadian talent to improve communication with his Chinese manufacturing partners? He could hire Canadians who are bilingual in English and Mandarin to work for him in China. If they have previous work experience in China, this would be even more beneficial in improving communications with Chinese manufacturing partners. Source: Based on “Handmaster Plus – Made in China,” CBC Venture 918 (March 14, 2004). Solution Manual for Human Resources Management in Canada Human Resources Management in Canada Gary Dessler, Nina D. Cole 9780132270878, 9780134005447
