International Human Resource Management

This essay delves into the complexities of expatriate compensation within multinational corporations (MNCs) and the challenges faced in implementing integrated pay policies. It discusses the impact of globalization on business practices, the importance of effective compensation strategies for expatriates, and the various approaches MNCs adopt to manage international human resource management. The analysis highlights the need for balancing cost control with employee satisfaction and the implications of discrimination in compensation policies.

INTERNATIONAL HUMAN
RESOURCE
MANAGEMENT

The payment system of MNCs are highly complex, as subsidiaries in different countries have
different legislation, standards of living and average wages. To what extent can an MNC
pursue an integrated pay policy without creating or perpetuating discrimination.
INTRODUCTION
Globalization has developed the business economics widely within the market. Political
reformation and open trade policies have integrated business practices effectively within the
economy. Competency of the business is managed and maintained by enhancing decision
making 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 at
least one other country than its home country. In order to manage and maintain the business
activities in multiple locations, trends for international assignments have widely increased.
Companies send their key staff to different countries for managing their business operations
there 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 the
compensation policies of the business unit has to adjust and develop as per the business
standards and policies of host companies. Kossek and et.al., (2015) analysed stated in the
findings that research on compensation of expatriates is an underdeveloped area and has wide
scope for analysis. Reviewing the journals reflected that compensation for expatriate revealed
wide number of issues. Moreover, it was also evaluated that academic research undertaken on the
topic 'expatriate compensation' is very limited hence there is immense opportunity to evaluate the
topic and attain in-depth understanding for the same.
The present study will focus on undertaking extensive research on the compensation
policies of the companies for expatriate. It will analyse the policies, standards and issues faced
by the business unit while developing the international assignment philosophies (Doherty, 2013).
Moreover, factors undertaken to develop effective strategies for managing international HR in
the company will also be analysed. In addition to this the research will investigate about the
complex payment system of MNCs and strategies that the business adopts for attaining high and
effective business results as well. The discriminatory policies adopted while developing the
compensations policies will also be evaluated in the study (Muenjohn, 2015). Hence, theoretical
and practical understanding about the stated topic will be developed for attaining high growth
and development aspects in the industry.
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Rapid development of global business unit has created a vast impact on business growth
in 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 growth
within employees has and enhanced the number of employees who are ready to relocate for a
small period of time. This has helped the companies in enhancing the global performance in the
economy and creating high impact on issues regarding international human resource
management. Dutta and Beamish, (2013) analysed that past ten years of business operations have
helped the business units in creating a significant impact on the global strategies adopted by the
companies and its impact on employee management strategies as well.
However, Pattie and et.al., (2013) criticised the practice of international assignments for a
business due to associated cost hikes with the process. Research reveals that cost of sending an
employee for a long term assignment is very high thus affects the budgets and monitoring
expenses of the business widely. Similarly, Harris and et.al., (2014) stated in the study that the
rate of international assignments have fallen in past 5 years as the stated measure increased cost
and pressure for the business. It was also evaluated through research that the rate of employee
turnover significantly increases for the business before and after an international assignment.
Different policies and strategies of the business unit has been revealed regarding expatriate
management for the business.
According to Martini and Niemann, (2013) companies make the choices for expatriate on
the basis of availability of skilled and qualified employees in the business. Researches have
revealed that top business position of the companies are often occupied by expatriate which helps
in developing internal competencies and management of business operations for the company. It
gives business units an opportunity to grow and develop in the competitive business environment
as it creates pool of talent. Factors of international mobility are rising increasingly and are
expected to grow by 28% by the next decade. It will help the business units in creating valuable
growth impact (Yao and Arrowsmith, 2013).
Wild, Wild and Han, (2014) stated in the findings that the pressure to control the cost of
expatriate is significantly high on the business. But management of global operations demands
flexible workforce who is ready to relocate and operate the business operations efficiently in the
economy. Different companies have adopted unique management strategies for enhancing the
impact of organizational operations on the business growth (Shortland and Perkins, 2016). This
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has created a well developed impact on business management and growth strategies for the
business. Researches resealed that developing effective measures for managing the cost of
international assignments is the priority of the business. Hence, the companies need to strive
continuously to attain high effectiveness while closely monitoring the compensation budgets of
the business. This is a well developed approach for creating a balance between the business
objectives and organizational operations.
Terpstra, Foley and Sarathy, (2012) observed that to deal with the issues of cost
enhancement businesses in the present era has adopted two trends in expatriate management
which involves flexible policies which move away from fixed formulas of compensation and the
second approach focuses on containment. However, the practical application of the stated
measure in practice revealed that the impact financial pressure of cost reduction results in
creating a negative perception for overseas packages totally. This results in developing
ineffective working culture in the businesses (Ritchie and Payspan, 2013). Moreover, facts has
also revealed that workforce dissatisfaction is one of the major outcome of flexible compensation
system.
It is significant for the business to manage international HRM because different business
locations 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 and
well developed control over the business operations. Integrated business practices presently
focus on analysing the efficiency and effectiveness of every business locations and provide them
with required resources in order to meet the ultimate business requirements. For example: HDFC
Bank focuses on developing and establishing its operations in every part of the business and
adopts local policies. However, business works to attain the set objectives laid for the growth and
development (Horwitz and Budhwar, 2015). Modern concepts such as knowledge management,
career development and work force diversity have developed the trends of international
assignment to employees in order to manage and maintain productivity and efficiency of the
business. Regulatory policies, integrated business practices and employee management functions
help in managing decisions for the company.
The role of compensation however is crucial for managing and maintaining
organizational operations in the business unit. Compensation policy is the basic needs of
employees which helps in developing an effective and well developed impact on employees
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rights and needs (Janssens and Steyaert, 2012). The flexible compensation policies focuses on
seeking cost-cutting measures for the balancing the growth objectives of the company. In
addition to this it has also been analysed that companies often fluctuate the remuneration of an
employee in home counties to attain effective business policies. All these issues have created an
insignificant impact on overall growth and development of business (Kraimer, M., Bolino and
Mead, 2015). In addition, it also results in reducing employee motivation and trust for the
business which results in increasing high rate of employee turnover for the business.
International regulations defines the rights of the employees for equal opportunities and
non discrimination in terms of opportunities, remuneration or growth as well (Lee and Kwak,
2015). Moreover, the trade union policies of the business revealed that international human
rights for collective bargaining, equal opportunities, rights to strike etc. are clearly stated in the
legal books and standards. The active role of trade union regulations and international
regulations for the effective and unbiased selection process is missing. An analysis regarding the
selection process of the companies revealed that closed and informal approach for selection of
international candidates severely restricts the pool of potential female assignees.
Inspite of an effective and well developed impact of regulatory frameworks in businesses
and legal policies regarding equality and non discrimination, the data reveals a biassed results for
Compensation system for the payment measures for international assignments. Few employees
has been witnessed to get the opportunities to manage business opportunities in the intentional
country (Altman and Baruch, 2012). The International assignments are preferably given to
employees due to variety of factors with financial and cultural impact on the business
development.
It has been analysed that business units adopt three strategic approaches while analysing
the expatriate compensation measures. Every measure focuses on different strategy and results in
different business outcome for the organizations. Chung, Sparrow and Bozkurt, (2014) stated
that strategic measures adopted by the company helps them in creating a significant business
impact in the market. Moreover, it also helps in analysing the employee needs and demands for
attaining high and effective business objectives. It has been analysed that employee mobility is
often planned in countries where the organzational operations are not managed effectively and
businesses demand an effective and well trained employee to manage the business operations.
The selected strategy helps the company in attaining the stated objective. However Collings,,
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Wood and Caligiuri, (2014) stated that employee mobility has different challenges associated.
The challenges regarding splitting families, dependant cost, relocation cost, compliance issues,
cultural issues, location concerns are associated with the business.
In order to overcome the above mentioned challenges faced by the business units,
companies have developed different approaches to deal with the employee compensation issue.
Ritchie and Payspan, (2013) stated these approaches in the research to develop a clear and
effective understanding about the concept of the term. The author stated that companies often
diffuse the policies of the host country with home country in order to attain effective business
objective for the research. Home country approach is an effective and well developed strategy
adopted by the business unit for attaining business objectives for the company. This approach of
the business develops employee compensation on the basis of home country remuneration plus
allowances top compensate the cost of living in the foreign country.
This is a common and most effective business strategy adopted by the business. Wild,
Wild and Han, (2014) analysed the strategy as a decentralised approach because here the
business unit adopts flexible approaches to provide cost of living allowance for the employee. In
addition, this strategy helps in stabilizing the cost for business as well. The above stated
approach is widely accepted by the business unit however the impact of the same is ineffective
for the global employee management.
Host country approach is another measure which is adopted by the business unit in order
to create a significant business impact on organizational operations in the market. This is a
managed approach where compensation of employees are calculated and set equivalent to the
local employee in foreign country and additional expatriate allowance is also provided for the
business unit (Yao and Arrowsmith, 2013). Here the employees are also given additional
responsibilities and roles to motivate them for effective performance. This measure has been
analysed as a well developed approach by Pattie and et.al., 2013 however it has been analysed
that this approach is effective for the developed countries. Underdeveloped countries with low
value will not be effective for the stated approach for the business. For example an employee
from Africa can be relocated in USA adopting the stated approach. This will help in motivating
employee and attaining high morale. However, for the business unit the cost of international
assignment will rise significantly.
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The third system of compensation adopted by the business units is hybrid or integrated
system of compensation. This approach is effective and highly effective for the managing and
maintaining the global workforce in the economy (Dutta and Beamish, 2013). The strategy
stabilises the reward system of two distinctive countries and develop a well developed reward
system for the employees. Both push and pull forces of compensation are evaluated and
neutralise for attaining effective results and strategic growth for the business. This approach
adopts the policy of normal home country payment for the business plus adjustments as per host
country in the economy (Muenjohn, 2015). The impact of this strategy can be effectively
analysed by evaluating the employee satisfaction factors for the business unit. The integrated
approach is one of the most common and effective means of managing expatriate assignments
for the business units as it results in developing high and effective employee growth. Moreover,
employee satisfaction for the employees is also relatively high for the companies. It has also
been analysed that level of discrimination is low in integrated compensation system as
employees at global level are value in a well defined manner creating a significant impact on
overall business development.
The above research reveals that compensation is a significant part of international
assignments for the business unit. The impact of the same is analysed effectively on the business
performance of the company. There are different factors which contributes in developing an
overall compensation package for the employee. Pattie and et.al., (2013) analysed that different
components of employee compensation plays a significant role in policies and measures. The
awareness about the same helps the company in creating a well impact on overall growth of the
company. The components of expatriate compensation system includes basic salary which is also
called spendable allowance for employee. This consists of the basic cash component of the salary
and any additional allowance for the employee by the business unit (Doherty, 2013). The non
spendable income is not included in the stated measure as it focuses on additional income or
allowance for the employees.
Non-spendable income are the additional allowance for the business unit which the
company provides to the employee for spending an effective living standard in the region. The
focus of this measure is on providing well developed means of spending for the staff members.
Guaranteed payment is yet another significant component of the compensation package for the
business (Chang, Gong and Peng, 2012). This helps the company in creating a significant impact
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on the business growth. This helps the company in creating a well developed impact on
employee motivation and growth as well. Cost of living allowance is a well defined means of
employee benefits. This helps the company in creating a significant impact on employees'
performance of the business. In addition to these benefits related to employee mobility, medical
allowances, annual assignment packages, bonuses, incentives, transportation allowances, family
expenses etc. constitutes in creating a well developed package for the international assignment of
employees (Kossek and et.al., 2015). Moreover, the effective inclusion of these factors in salary
package of an employee helps in creating a significant impact on employee morale.
Doherty, (2013) analysed that the flexible compensation system of the company often
seeks to develop adjustments in the salary adjustment strategies for the employees which helps
the company in regulating the cost of international assignments. This strategy also creates a high
impact in the employee development and growth for the business unit in the current competitive
market. However, it has been analysed that companies seek effective strategies to control the
employee package in international markets in indicter measure where the allowances are
effectively managed and regulated by the business unit which results in high employee
dissatisfaction. Muenjohn, (2015) analysed in the study that companies has regulated the policy
of international assignments from last five years because managing cost of expatriate is very and
significant for the business. Researches thus revealed that companies often adopt home Country
compensation system for the same. However, the long term effect for the same is highly
ineffective for the business unit.
The integrated system of compensation is significantly growing the significance in
international market in the present economy. Kossek and et.al., (2015) analysed that the global
business management in the present competitive market is crucial business need. Companies are
drifting their ways towards it for managing the global business operations while managing
retention rate of the business. Kraimer, Bolino and Mead, (2015) stated that the cost of replacing
and employee is high and significant for the company as it creates a positive growth measures for
the business. Companies such unilever, P&G, Hilton international, Deloitte etc. are the well
established business units which has adopted the approach to enhance global business presence
unit the economy. In addition, the impact of the strategy has developed a positive business
impact on employee growth and development in the business (Terpstra, Foley and Sarathy,
2012). The company has successfully managed a team of motivated employees with committed
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aspirations to work. The impact of the stated strategy has a positive growth impact on the
company and brand image of the business as well.
Enhancing the practice in the market will help the business unit in enhancing growth and
development aspects for the economy (Wild, Wild and Han, 2014). Global management of
human resource has created a well defined impact on business growth and development. In order
to attain positive business results for the same companies must effective develop strong training
and dvelopment platform for employees. Moreover, cross-cultural trainings is another significant
measures for enhancing employee performance in international markets. In addition to this
developing regulatory means of operating business operations will also help the companies in
creating wide growth opportunities for the employees (Martini and Niemann, 2013). This may
involve the growth and development opportunities regarding effective training and development
programs within the business. The overall analysis of the company has effectively reflected that
the business development opportunities for the business will be wide with a well structured and
developed means of business operations. The companies will create an effective and valuable
impact on the overall growth and development of business unit.
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REFERENCES
Books and journals
Altman, Y. and Baruch, Y., 2012. Global self-initiated corporate expatriate careers: a new era in
international assignments?. Personnel Review. 41(2). pp.233-255.
Chang, Y. Y., Gong, Y. and Peng, M. W., 2012. Expatriate knowledge transfer, subsidiary
absorptive capacity, and subsidiary performance. Academy of Management Journal.
55(4). pp.927-948.
Chung, C., Sparrow, P. and Bozkurt, Ö., 2014. South Korean MNEs’ international HRM
approach: Hybridization of global standards and local practices. Journal of World
Business. 49(4). pp.549-559.
Collings, D., Wood, G. T. and Caligiuri, P. M., 2014. The Routledge companion to international
human resource management. Routledge.
Doherty, N., 2013. Understanding the self‐initiated expatriate: A review and directions for future
research. International Journal of Management Reviews. 15(4). pp.447-469.
Dutta, D. K. and Beamish, P. W., 2013. Expatriate managers, product relatedness, and IJV
performance: a resource and knowledge-based perspective. Journal of International
Management. 19(2). pp.152-162.
Harris, C. D. and et.al., 2014. WHAT INFLUENCES AMERICANS VERSUS KUWAITIS TO
ACCEPT AN INTERNATIONAL ASSIGNMENT?. The Journal of International
Business Research and Practice (JIBRP) Volume 8, 2014. 8. pp.5.
Horwitz, F. and Budhwar, P., 2015. Handbook of Human Resource Management in Emerging
Markets. Edward Elgar Publishing.
Janssens, M. and Steyaert, C., 2012. Towards an ethical research agenda for international HRM:
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Kimes, S. E. and Collier, J., 2014. Customer-facing payment technology in the US restaurant
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Kossek, E. E. and et.al., 2015. Rating Expatriate Leader Effectiveness in Multisource Feedback
Systems: Cultural Distance and Hierarchical Effects. Human Resource Management.
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Peltokorpi, V. and Froese, F., 2014. Expatriate personality and cultural fit: The moderating role
of host country context on job satisfaction. International Business Review. 23(1).
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Ritchie, B. L., Payspan, Inc., 2013. Customizable payment system and method. U.S. Patent
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Shortland, S. and Perkins, S. J., 2016. Long-term assignment reward (dis) satisfaction outcomes:
hearing women’s voices. Journal of Global Mobility: The Home of Expatriate
Management Research. 4(2).
Terpstra, V., Foley, J. and Sarathy, R., 2012. International marketing. Naper Press.
Wild, J., Wild, K. L. and Han, J. C., 2014. International business. Pearson Education Limited.
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