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Rewards and Benefits Management
Prior to beginning work on this assignment,
•
•
Review Chapter 6 and Chapter 8 in your textbook.
Research total rewards models.
There are advantages and disadvantages to having a benefits package that is fixed versus having
one in which the employee can select the desired benefits within an approved dollar amount. An
umbrella program such as this is referred to as a “flexible bundle.” For example, a young
employee may want more vacation days but not wish to have life insurance. A flexible bundle
allows for this. In this assignment, you will analyze compensation strategies and structures to
ensure success and motivation. Furthermore, like previous assignments, this assignment will
become a part of your final paper for this course.
For this assignment, you will propose a compensation plan for the selected foreign country that
you have used for your assignments in this course.
In your compensation plan,
•
•
•
•
•
•
Explain the rewards and type of benefits package to be supplied for your foreign
country’s employees.
Construct a total rewards model for hedging diversity as a resource for organizational
competitiveness.
Assess whether a fixed benefits package or a flexible bundle (in which the employee
selects the benefits desired) would best fit these employees.
Discuss the benefits of your plan and your decisions.
Explain whether the compensation will consist of hourly, salary, or contingent base
selection.
Explain how the elements of your compensation structure compare to the competition
in your selected foreign country.
o Consider such tools as benchmarking and positioning of the competition.
The Rewards and Benefits Management paper,
•
Must be three to five double-spaced pages in length (not including title and references
pages) and formatted according to APA Style
• Must include an introduction and conclusion paragraph. Your introduction paragraph needs
to end with a clear thesis statement that indicates the purpose of your paper.
• Must use at least two scholarly, peer-reviewed, or credible sources in addition to the course
text.
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6
Global Staffing
LEARNING OBJECTIVES
After reading this chapter you should be able to
• describe the four types of staffing strategy,
• describe the reasons why an organization might choose to fill a position with an expatriate,
• outline the criteria used to select expatriates,
• describe important differences in staffing across countries, and
• discuss the issues associated with implementing global staffing and talent management programs.
A Manager for Russia
Ben Cohen, cofounder of Ben & Jerry’s, had been interested in starting a venture in Russia since he first visited there in 1986. Now Jeff
Furman, a longtime friend of Ben’s and in charge of partnership opportunities, was searching for an American to head up Ben & Jerry’s
anticipated joint venture in Karelia, Russia. Karelia was a beautiful resort region near the Finnish border and was the sister state of
Vermont, where Ben & Jerry’s started and is still home to its headquarters. Jeff had interviewed numerous business school graduates who
spoke Russian, but none of them seemed to fit with Ben & Jerry’s culture of social responsibility. So Jeff posted the job internally.
Responding to the ad, Dave Morse, a production supervisor who had worked for Ben & Jerry’s for five years, encouraged Jeff and Ben to
reconsider the type of person they were looking for. Dave had reached the limit of his potential in production and had read about Russia
and its history, and he was ready for an adventure. He argued that it was more difficult to learn how to make super premium ice cream than
anything else the job would require. Anyone else would take at least a year to learn the basics and still would not have Dave’s knowledge of
the industry, sources of equipment and raw materials, in addition to his technical knowledge of ice cream production. Even though he had
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no overseas experience, could not speak Russian, and had no formal business training, Dave’s energy and can-do attitude impressed Jeff. He
was selected to be the first manager of the Russian joint venture.1 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn1)
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Introduction
Finding and keeping the people they need to be competitive is a challenge for all organizations. And as organizations cross borders and
cultures, the task becomes more critical as well as more difficult. Two trends make this activity even more complex today than it was for Ben
and Jerry’s when they were first becoming international. First, as discussed in the opening chapter, the number and character of permanent
migrants is changing the composition of the workforce in many countries. As boundaries to migration become more permeable, migration
resulting from economic, political, and social factors increases. Following World War II, the dominant migration pattern was low-skilled
workers from less developed to more developed countries. While economic factors continue to be a major influence on migration, today’s
migrant (in part because of skills-related immigration systems2 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn2) and the
globalization of some professional labor markets3 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn3) ) is much more likely to
be highly skilled.4 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn4) Second, regardless of economic swings, the demand for
skilled workers is outstripping supply. This ranges from finding skilled expatriates to help organizations expand into emerging markets, to
accessing short-term or temporary talent for specific projects, to cadres of highly mobile elite managers to build global networks and
facilitate knowledge transfer.5 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn5) In fact, shortages on international
management talent have been shown to be a significant constraint on implementation of global strategies.6
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn6)
Thus, MNEs are now often competing for the same global talent pool.7
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn7)
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6.1 Approaches to Global Staffing
Increasingly, global organizations are recognizing the influence that matching staffing strategy with organizational strategy has on the
performance of the organization.8 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn8) For the multinational enterprise, staffing
decisions typically revolve around choices among parent country nationals (PCNs), host country nationals (HCNs), and to a lesser extent,
positions in their headquarters and subsidiary operations.9
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn9)
Managerial attitudes towards staffing with these three categories of
employee have resulted in the classification of staffing strategies as ethnocentric, polycentric, geocentric, and regiocentric.10
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn10)
In an ethnocentric strategy, key decision-making positions at both
headquarters and in the foreign subsidiary are filled by PCNs. In a polycentric strategy, subsidiaries are more autonomous, and key
managers are usually HCNs. A geocentric strategy reflects a more global approach to staffing and is reflected in a mix of PCNs, HCNs, and
TCNs both at headquarters and in subsidiaries, with a focus on the unique requirements of each situation. And in a regiocentric strategy, the
staffing of the foreign subsidiary reflects the geographic strategy and structure of the MNE. For example, the organization might be
subdivided into regions within which a great deal of mobility occurs, but mobility outside the region would be limited. While these
approaches to staffing strategy may reflect the preferences of management, in many cases organizations may have a somewhat ad hoc
policy toward their use of PCNs, HCNs, and TCNs. Also, actual staffing patterns may be based on a variety of contingency factors discussed
third
country
nationals
(TCNs)
for
filling
key
ahead.11 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn11) Regardless, a number of advantages and disadvantages of
staffing
with
particular
employee
types
have
been
identified
and
are
presented
in
Table
6.1
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_56#table6.1) .
Staffing Contingencies
While management attitudes may reflect the general strategies outlined previously, it seems that many firms do not have a clearly stated and
uniform global staffing policy. It was once thought that the staffing patterns of international organizations followed a pattern consistent with
their stage of internationalization.12 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn12) The use of PCNs in overseas posts
would predominate in the early stages of internationalization, with the use of HCNs increasing as the technology of the firm was
disseminated among foreign subsidiaries. However, more recently other factors not related to the stage of internationalization have been
shown to be more important to actual staffing patterns.13 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn13) These include
the country of origin of the MNE, the size and task complexity of its foreign affiliates, their performance and strategic importance for the
MNE, and the cultural and institution distance of an affiliate from headquarters.
Table 6.1 The Advantages and Disadvantages of Using PCN, HCN, and TCN
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Source: Borg & Harzing (1995, p. 186)
Individual staffing decisions reflect the overall staffing strategy of the firm, whether or not this strategy is made explicit. And much of what
we know about staffing strategy comes from understanding why a company will send a PCN to the foreign operation rather than fill the job
locally. An important early study of why organizations might fill an overseas position with a PCN suggested that individuals would be
transferred internationally for one of three reasons: to fill a technical requirement, to develop the individual, or to develop the organization.14
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn14)
These three basic reasons for sending an expatriate reflect either demand
driven (filling a position) or learning driven (developing the individual or organization) motives on the part of the organization.15
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn15)
Filling a position because of the need for a specific technical requirement seems to be the key reason for staffing with a PCN.16
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn16)
The 2012 Global Relocation Trends Survey Report reported that for 55%
of expatriate assignments the objective was to fill a managerial or technical skills gap. However, the country of origin of the firm seems to be
influential as well. For example, Japanese firms tend to use more PCNs in their foreign operations than do their U.S. or European
counterparts.17 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn17) This may be because Japanese firms rely more heavily on
the use of expatriates as a means of management control.18 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn18) In contrast,
New Zealand firms are more likely to report that the reason for sending expatriates on assignment is for development of the organization
or the individual. And for Korean firms, the reason most often given for staffing with a local national instead of an expatriate is the lack of
local knowledge.19 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn19) Further, we have evidence that suggests that the
importance of the different reasons for staffing with expatriates differ between subsidiaries in MNEs from different home countries and
between subsidiaries in different host regions. Filling positions is more important for subsidiaries of U.S. and British MNEs located in the
Latin American and the Far Eastern region. In contrast, management development is more important for German, Swiss, and Dutch MNEs
and tends to occur more in the Anglo-Saxon region than in the Far Eastern region. Transfers for organizational development appear to be
most important for German and Japanese MNEs in host-countries that are culturally distant from headquarters.20
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn20)
Thus, these practices suggest an implicit staffing strategy among firms of
different national origins.
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A number of other factors also relate to the use of PCNs (expatriates), including the task complexity found in the foreign operation and the
cultural distance of the foreign operations from headquarters. For example, subsidiaries with more complex operations are more likely to
be staffed with expatriates.21 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn21) And as the cultural distance between
headquarters and the foreign subsidiary increases so does the tendency to use expatriates. However, this tendency decreases over time.22
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn22)
This same effect is also evident with regard to differences among
institutions in home and host countries. Firms rely more heavily on expatriates for staffing subsidiaries in institutionally distant
environments. This seems to be because of the need and perceived ease of transferring management practices and firm specific capabilities
through the use of PCNs.23 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn23) And of course there is more of a need for
knowledge transfer in technology and knowledge- intensive industries.24 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn24)
These facts may account for the increased use of expatriates by firms25 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn25) as
they respond to the need to compete in a knowledge-based economy.
While it might be desirable for the staffing strategy of organizations to match their firm-level management strategy, the evidence that firms
actually do this is far from compelling. One study has found that the use of developmental versus technical requirements type of assignments
differed based on the firm-level management strategy. Firms with a global strategy made greater use of a developmental approach to the
use of expatriates, had a higher number of senior managers with overseas experience, and had a stronger focus on leadership
development.26 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn26)
Expatriate Roles
The complexity of the global environment in which multinational organizations operate gives rise to the need for continuous environmental
scanning and information exchange as well as the need for seamless coordination and control of geographically dispersed operations.27
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn27)
The top reason for sending expatriates remains filling positions for which
no local skills are available. However, more recently the increasing strategic importance of using these assignments as a means of
organizational development has been recognized.28 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn28) The role expectations
that organizations have for expatriates reflect these organizational needs and might vary considerably in the extent to which they
emphasize coordination and control or boundary spanning.
Expatriates as Agents of Control
Control means ensuring that employee behavior conforms to the expectations of the organization. Expatriates can act as agents of control
either directly or indirectly. Their assignments may contain formal authority to implement policies and procedures that are mandated from
headquarters and are internally consistent throughout the subsidiaries of the organization. Their responsibilities can also include direct
surveillance of subsidiaries to ensure that subsidiary activities are consistent with headquarters mandates, norms, and expectations.
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Alternatively, they may exert control indirectly through a more informal mechanism, such as transferring corporate values and beliefs
throughout the subsidiaries of the organization, sometimes likened to honey bees pollinating flowers.29
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn29)
Another control role available to expatriates is as the disseminator of knowledge from the parent to the subsidiary. This knowledge can be
in the form of technical expertise but might also involve work practices in a variety of areas, such as occupational health and safety or
quality control. The adoption of uniform practices throughout the organization can be viewed as a form of control. Also, expatriates can
establish interpersonal linkages with individuals in the various organizational units with which they have contact. These networks of
relationships (like the web of a spider) can also serve as a means of informal control through establishing specific channels of information
exchange.30 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn30)
Expatriates as Boundary Spanners
Expatriates, because of their position in the organization, occupy roles that span both internal and external boundaries.31
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn31)
They exist on the boundary between headquarters and the subsidiary and
also on the boundary between the home and host country cultures. Boundary spanning roles involve not only information exchange across
organizational units but also roles such as bicultural interpreter and national advocate that have long been thought to be important to the
success of the multinational organization.32 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn32) Expatriates often identify their
roles as involving such boundary-spanning activities as representing the organization to customers and the public, transferring information
across strategic units, and establishing interpersonal bonds with host nations.33
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn33)
These activities are obviously beneficial to the organization, but boundaryspanning behavior can also have benefits to the individual, including higher job satisfaction and more power in their own organizations.34
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn34)
Expatriate boundary spanners can also act as culture brokers to connect
groups and resources throughout the organization or as language nodes upon return to headquarters by bridging different language
groups within the organization.35 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn35)
Inpatriates
A variation on the expatriate role occurs when individuals are transferred not from the home country to a foreign subsidiary but from
foreign locations to headquarters. This type of role (called inpatriate) involves transfers of both HCNs and TCNs and indicates a particular
staffing strategy. The expectation is that inpatriates will transfer knowledge about the local subsidiary to headquarters while also learning
headquarters routines and procedures that can be transferred back to the foreign subsidiary.36
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(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn36)
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There are four key circumstances in which inpatriation appears as part of
an organization’s staffing strategy.37 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn36)
• Desire to create a global core competency, a diversity strategy perspective, or a multicultural frame of reference in the top
management team
• Need to develop emerging markets which are recognized as being difficult assignments for expatriates, which reduces the available
talent pool
• Desire to increase the capability of the organization to think globally but act locally, which can be achieved by involving inpatriates in
decision making
• Desire to provide career opportunities for high potential employees of host countries
All of these might be seen as a more strategic approach to management development in the global business environment as discussed
ahead in Chapter 7 (ch0007.xlink.html) . The number of inpatriates is small as compared to expatriates, but there seems to be a trend toward
this activity in some industries.38 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn38) However, despite the potentially strategic
role of inpatriates, they typically hold only a peripheral status in multinationals and have a rather low level of social influence and
credibility. This makes it difficult for them to highlight their unique role and their potential contribution to the MNE and creates substantial
barriers to sharing and transferring knowledge. Therefore, inpatriate assignments are probably most valuable in organizational cultures
that truly value diversity, are open to accepting knowledge originating in subsidiaries, and create adequate support and integration
mechanisms for inpatriates.39 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn39)
The expectations that the organization has for the employees it transfers internationally can involve any combination of these roles. These
role expectations, along with the expectations of local employees, influence the entire process of global staffing, beginning with recruitment
and selection.
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6.2 Global Recruitment and Selection
Recruitment is the process of assembling a pool of potentially qualified applicants for a specific job, while selection is the process of
evaluating and deciding among these candidates. These staffing issues are much more complex in a global environment, with two factors
being distinctively different from staffing in a purely domestic context. The first is that individuals must be recruited and selected to take up
assignments in foreign locations. The second is that recruitment and selection processes and procedures vary because of the different
cultural and institutional context that exists in the different countries in which the multinational firm operates. In the following, we first
discuss recruitment and selection for foreign assignments and then present a comparison of these activities across countries.
Recruiting and Selection for Foreign Assignments
The first key challenge for staffing foreign assignments is the supply side issue of availability of individuals to fill the pool of potentially
qualified applicants. The availability of potential foreign assignees is limited by the following five factors. The first of these is shortage of
experienced and competent individuals on a global basis.40 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn40) Demand for
individuals with the managerial and/or technical skills required in these managerial roles is outstripping supply at an increasing pace,
creating what has been called a war for global talent. And because most expatriates are sourced internally41
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn41)
managers may be reluctant to release their best employees, creating
competition within the firm for these individuals. The second factor is the increasing prevalence of dual-career couples. Individuals targeted
for overseas assignments are no longer limited to male sole breadwinners whose spouses are willing and able to follow them on their
assignment. The willingness of the spouse to relocate has always been a key factor in employee’s acceptance of overseas assignments.
However, families have become less willing to endure the disruptions to the spouse’s career (and children’s education, etc.) that an overseas
assignment poses42 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn42) , resulting in a worldwide problem for multinationals.
A third and related factor is the increased participation of women in the workforce. Interestingly, despite the shortage of management
talent, the number of women on overseas assignment remains relatively low (discussed in more detail ahead in Chapter 9
(ch0009.xlink.html) ). There is an apparent lack of willingness on the part of management to recruit women for overseas assignments based
on the mistaken beliefs that they are not interested in taking assignments, or if they are, cannot perform effectively once posted abroad. By
ignoring the increasingly large percentage of women in the workforce, management thus significantly restricts the size of the applicant
pool.43 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn43) The fourth factor that limits the size of the pool of potential
applicants has to do with repatriation and career issues (seeChapter 9 (ch0009.xlink.html) ). Employees typically look to overseas
assignments as a way to enhance their career.44 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn44) But because firms
typically do not have programs that effectively integrate the overseas assignment into individuals’ career progression, employees are
increasingly less willing to accept these postings. A final factor affecting recruitment for overseas assignments is the general weakness of
global talent management systems. There is little evidence that global organizations practice talent management in a coordinated and
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efficient way, with many firms unaware of where their best talent is located or unable to identify their high performers.45
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn45)
Thus the pool of potential applicants for an overseas posting is limited by
a number of factors, including restrictions imposed by the labor market, by other organizational factors, and by individuals themselves.
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6.3 Selecting Expatriates
Given that firms send expatriates on assignment primarily to fill a managerial or technical need that they cannot staff with a local employee,
it is not surprising that technical competency (as in the Ben & Jerry’s case that opened this chapter) has traditionally been and continues to
be
the
primary
decision
criterion
used
by
organizations
to
select
employees
for
these
assignments.46
(http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn46)
Other criteria that can have an important influence on employee’s
performance on overseas assignments seem to be generally neglected. This overemphasis on technical competence as a selection criterion
may result because selection based on technical competence presents a lower perceived risk of adverse consequences to the selecting
manager.47 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn47) It is easier to defend a selection decision based on past
performance, which is relatively easy to measure as compared to more subjective criteria.
Effective Expatriates: Beyond Technical Competence
Organizations are of course concerned with selecting individuals for overseas assignments who can perform effectively. However, whether
an overseas assignment is viewed as a success or failure depends in part on the definition of success. Effectiveness of a global assignment
can include direct measures of performance, such as accomplishment of the assigned task and developing productive relationships with
host nationals, and also more indirect indicators, such as job satisfaction, organizational commitment, and intention to remain on
assignment.48
While accomplishing the assigned task is of course the key objective of both the organization and the employee, the most common (and the
most studied) measure of expatriate effectiveness (failure) has been the failure to remain on the overseas assignment the agreed upon
length of time. This measure is attractive not only because it is easy to assess but also because organizations are concerned with the
expense that turnover of expatriates creates.49 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn49) However, the exact rate of
premature return from overseas assignments is difficult to pinpoint. Many firms do not keep track of this statistic, and academic research
has reported widely varying figures, often based on outdated studies.50 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn50)
The 2010 Global Relocation Trends Survey Report reported that 7% of expatriates returned early and 7% of families returned early leaving
expatriates behind.51 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn51) The inadequacy of premature return as a measure
of effectiveness is obvious. Expatriates who stay on assignment but behave inappropriately or perform inadequately are conceivably more
of a failure than those who return early. Conversely, staying on assignment the agreed-upon length of time is not a guarantee that tasks have
been accomplished, relationships formed, or personal development achieved. Finally, even though the term of the assignment has been met,
the failure to reintegrate into the sponsoring organization52 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn52) or to
capitalize on the skills gained overseas53 (http://content.thuzelearning.com/books/Thomas.5874.18.1/sections/nav_61#fn53) can also be regarded as a failure.
https://content.uagc.edu/print/Thomas.5874.18.1?sections=nav_54,nav_55,nav_56,nav_57,nav_58,nav_59,nav_60,nav_61&content=all&clientToken=4ee1f5f9-deb1-eabd-d356-eff531b9895e&np=n…
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Two facets of expatriate performance have a long history of being considered. These are task-based and relationship-based (or contextual)
aspects of performance. The first of these involves the accomplishment of goals, meeting objectives, which of course can be established
from a variety of sources. The second involves establishing and maintaining relationships and effectively interacting with coworkers,
supervisors, and so on.
