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Study On Expatriate's Compensation Policies Of Companies

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Added on  2020-02-05

Study On Expatriate's Compensation Policies Of Companies

   Added on 2020-02-05

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The payment system of MNCs are highly complex, as subsidiaries in different countries havedifferent legislation, standards of living and average wages. To what extent can an MNCpursue an integrated pay policy without creating or perpetuating discrimination. INTRODUCTIONGlobalization has developed the business economics widely within the market. Politicalreformation and open trade policies have integrated business practices effectively within theeconomy. Competency of the business is managed and maintained by enhancing decisionmaking process for the growth and development of organization (Kraimer, Bolino and Mead,2015). Multinational business units are the companies which are operating its operations in atleast one other country than its home country. In order to manage and maintain the businessactivities in multiple locations, trends for international assignments have widely increased.Companies send their key staff to different countries for managing their business operationsthere and develop their potential for career development as well as personal growth (Chang,Gong and Peng, 2012). Managing expatriate is a critical challenge for the business unit as thecompensation policies of the business unit has to adjust and develop as per the businessstandards and policies of host companies. Kossek and, (2015) analysed stated in thefindings that research on compensation of expatriates is an underdeveloped area and has widescope for analysis. Reviewing the journals reflected that compensation for expatriate revealedwide number of issues. Moreover, it was also evaluated that academic research undertaken on thetopic 'expatriate compensation' is very limited hence there is immense opportunity to evaluate thetopic and attain in-depth understanding for the same. The present study will focus on undertaking extensive research on the compensationpolicies of the companies for expatriate. It will analyse the policies, standards and issues facedby the business unit while developing the international assignment philosophies (Doherty, 2013).Moreover, factors undertaken to develop effective strategies for managing international HR inthe company will also be analysed. In addition to this the research will investigate about thecomplex payment system of MNCs and strategies that the business adopts for attaining high andeffective business results as well. The discriminatory policies adopted while developing thecompensations policies will also be evaluated in the study (Muenjohn, 2015). Hence, theoreticaland practical understanding about the stated topic will be developed for attaining high growthand development aspects in the industry.1
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Rapid development of global business unit has created a vast impact on business growthin the present. Integrating global business practices has become a common practice in the market(Peltokorpi and Froese, 2014). Researches revealed that present cultural aspects thirst for growthwithin employees has and enhanced the number of employees who are ready to relocate for asmall period of time. This has helped the companies in enhancing the global performance in theeconomy and creating high impact on issues regarding international human resourcemanagement. Dutta and Beamish, (2013) analysed that past ten years of business operations havehelped the business units in creating a significant impact on the global strategies adopted by thecompanies and its impact on employee management strategies as well. However, Pattie and, (2013) criticised the practice of international assignments for abusiness due to associated cost hikes with the process. Research reveals that cost of sending anemployee for a long term assignment is very high thus affects the budgets and monitoringexpenses of the business widely. Similarly, Harris and, (2014) stated in the study that therate of international assignments have fallen in past 5 years as the stated measure increased costand pressure for the business. It was also evaluated through research that the rate of employeeturnover significantly increases for the business before and after an international assignment.Different policies and strategies of the business unit has been revealed regarding expatriatemanagement for the business. According to Martini and Niemann, (2013) companies make the choices for expatriate onthe basis of availability of skilled and qualified employees in the business. Researches haverevealed that top business position of the companies are often occupied by expatriate which helpsin developing internal competencies and management of business operations for the company. Itgives business units an opportunity to grow and develop in the competitive business environmentas it creates pool of talent. Factors of international mobility are rising increasingly and areexpected to grow by 28% by the next decade. It will help the business units in creating valuablegrowth impact (Yao and Arrowsmith, 2013).Wild, Wild and Han, (2014) stated in the findings that the pressure to control the cost ofexpatriate is significantly high on the business. But management of global operations demandsflexible workforce who is ready to relocate and operate the business operations efficiently in theeconomy. Different companies have adopted unique management strategies for enhancing theimpact of organizational operations on the business growth (Shortland and Perkins, 2016). This2
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has created a well developed impact on business management and growth strategies for thebusiness. Researches resealed that developing effective measures for managing the cost ofinternational assignments is the priority of the business. Hence, the companies need to strivecontinuously to attain high effectiveness while closely monitoring the compensation budgets ofthe business. This is a well developed approach for creating a balance between the businessobjectives and organizational operations. Terpstra, Foley and Sarathy, (2012) observed that to deal with the issues of costenhancement businesses in the present era has adopted two trends in expatriate managementwhich involves flexible policies which move away from fixed formulas of compensation and thesecond approach focuses on containment. However, the practical application of the statedmeasure in practice revealed that the impact financial pressure of cost reduction results increating a negative perception for overseas packages totally. This results in developingineffective working culture in the businesses (Ritchie and Payspan, 2013). Moreover, facts hasalso revealed that workforce dissatisfaction is one of the major outcome of flexible compensationsystem. It is significant for the business to manage international HRM because different businesslocations work collectively to attain the common business goal. According to Kimes and Collier,(2014) different roles are managed and maintained by IHRM which has created an effective andwell developed control over the business operations. Integrated business practices presentlyfocus on analysing the efficiency and effectiveness of every business locations and provide themwith required resources in order to meet the ultimate business requirements. For example: HDFCBank focuses on developing and establishing its operations in every part of the business andadopts local policies. However, business works to attain the set objectives laid for the growth anddevelopment (Horwitz and Budhwar, 2015). Modern concepts such as knowledge management,career development and work force diversity have developed the trends of internationalassignment to employees in order to manage and maintain productivity and efficiency of thebusiness. Regulatory policies, integrated business practices and employee management functionshelp in managing decisions for the company. The role of compensation however is crucial for managing and maintainingorganizational operations in the business unit. Compensation policy is the basic needs ofemployees which helps in developing an effective and well developed impact on employees3
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