Deck 15: Managing Human Resources Globally

Question 1

As a Japanese expatriate in charge of US operations of Yamakawa Corporation, you scratch your head confronting a difficult decision: Cut salaries across the board or cut jobs when confronting a horrific economic downturn with major losses? Headquarters in Osaka has advised that earnings at home are bad, and that you cannot expect headquarters to bail out your operations. Too bad, US government bailouts are only good for US-owned firms and are thus irrelevant for your unit, which is 100% owned by the Japanese parent company.
As a person being brought up in a collectivistic culture, you instinctively feel compelled to suggest an across-the-board pay cut for all 1,000 employees in the United States. Personally, as the highest-paid US-based employee, you are willing to take the highest percentage of a pay cut (you are thinking of 30%). If implemented, this plan would call for other executives, who are mostly Americans, to take a 20% to 25% pay cut, mid-level managers and professionals a 15% to 20% pay cut, and all the rank-and-file employees a 10% to 15% pay cut. Indeed, in your previous experience at Yamakawa in Japan, you did this with positive results among all affected Japanese employees. This time, most executive colleagues in Japan are doing the same. However, since you are now managing US operations, headquarters in Osaka (being more globally minded and sensitive) does not want to impose any uniform solutions around the world and asks you to make the call.
As a conscientious executive, you have studied all the HRM books-in both Japanese and English-that you can get your hands on for this tough decision. While you understand that US executives routinely undertake reduction in force (RIFs), which is a euphemism for mass layoffs, you have also noticed that in the recent recession, even "bona fide" US firms, such as AMD, FedEx, HP, and New York Times, have all trimmed the base pay for all employees. If there is a time to change the norm moving toward more acrossthe- board pay cuts in an effort to preserve jobs and avoid RIFs, this time may be it, according to some US executives quoted in the media.
At the same time, you have also read that some experts note that across-the-board pay cuts are anathema to a performance culture enshrined in the United States and taught in virtually all HRM textbooks. "The last thing you want is for your A players- or people in key strategic positions delivering the most value-to leave because you have mismanaged your compensation system," said Mark Huselid, a Rutgers University professor and a leading expert on HRM, in a media interview. You have also read in a recent (September 2009) Harvard Business Review survey that, despite the worst recession, 20% of high-potential players in US firms have voluntarily jumped ship during the 2008-2009 recession, in search of greener pastures elsewhere. Naturally, you are worried that should you decide to implement the across-the-board pay cuts you have envisioned, you may end up losing a lot of American star performers and end up with a bunch of mediocre players who cannot go elsewhere-and you may be stuck with the mediocre folks for a long time, even after the economy recovers.
After spending two days reading all the materials you have gathered, you still do not have a clear picture. Instead, you have a big headache. You scratch your head again. How would you proceed?
Case Discussion Questions :
How would you advise this Japanese expatriate working in the United States?

Answer 1

Suggestions to J expatriates:
J expatriate working in the United States has to act prudently in such situations. They have two options, either to cut pay across the board or to reduce the force.
• The company can use across the board pay cuts in an effective manner like to retain and motivate the star performers. They should implement across-the-board-pay cuts to all the employees.
• The company can give them some percent of stock option in lieu of pay cuts.
• They themselves should take the highest percentage cut which would create a team approach and also motivates employees.
As the recession has hit badly all the firms, even the bona-fide US organizations such as FedEx, HP, and AMD etc. had to trim the base pay. The norm is changing which has resulted in prevention of jobs and avoidance of RIFs.

Question 2

ON ETHICS: As HR director for an oil company, you are responsible for selecting 15 expatriates to go to work in Iraq. However, you are personally concerned about the safety there. How do you proceed?

Answer 2

As an HR Manager, one would be responsible for the welfare of the organization as well as the employees. If the manager needs to select 15 expatriates who will be serving in the subsidiary in Iraq, he/she would have to discuss the concern with the management. This would include issues with regards to the safety issues of the employees. The manager will also have to discuss with them to approve the training and development program to help these expatriates adjust in the culture of that country.
Also, he/she will discuss my concern with the employees and will ask them about what steps can be taken according to them for resolving the issue. Also, I will ask the volunteers who wish to go for this project. These volunteers, along with the management approval will decide who all needs to be sent for the same.

Question 3

ON CULTURE: How would you use training for spouses of expatriate employees to improve employee performance and the duration of service overseas?

Answer 3

Training refers to imparting practical skills and knowledge related to specific useful competencies. It is provided with the aim of improving employee's capability, capacity, productivity and performance. Whenever any organization send its employees or their families for projects in other countries they should provide them with sufficient training which will help them to adapt and adjust in that country's culture and as a result will have improve performance.
In many cases it was found that the main reason for expatriate failure was that the expat's spouses were not able to adapt in the culture of the country. Thus the organizations should provide training to the spouse and their family members accompanying them which will help a easy stay and adapt to cultural diversity which will further help the employee to perform better and complete his work in a better way.

Question 4

ON CULTURE: Describe some of the problems experienced by repatriates and how training and development may alleviate those problems.

Question 5

In relation to expatriate compensation, what is the difference between the going rate approach and the balance sheet approach?

Question 6

What are some of the problems inherent in evaluating an expatriate's job performance?

Question 7

Why has union power declined in developed countries?

Question 8

If you were trying to establish a multinational labor organization, what barriers would you
need to overcome?

Question 9

As a Japanese expatriate in charge of US operations of Yamakawa Corporation, you scratch your head confronting a difficult decision: Cut salaries across the board or cut jobs when confronting a horrific economic downturn with major losses? Headquarters in Osaka has advised that earnings at home are bad, and that you cannot expect headquarters to bail out your operations. Too bad, US government bailouts are only good for US-owned firms and are thus irrelevant for your unit, which is 100% owned by the Japanese parent company.
As a person being brought up in a collectivistic culture, you instinctively feel compelled to suggest an across-the-board pay cut for all 1,000 employees in the United States. Personally, as the highest-paid US-based employee, you are willing to take the highest percentage of a pay cut (you are thinking of 30%). If implemented, this plan would call for other executives, who are mostly Americans, to take a 20% to 25% pay cut, mid-level managers and professionals a 15% to 20% pay cut, and all the rank-and-file employees a 10% to 15% pay cut. Indeed, in your previous experience at Yamakawa in Japan, you did this with positive results among all affected Japanese employees. This time, most executive colleagues in Japan are doing the same. However, since you are now managing US operations, headquarters in Osaka (being more globally minded and sensitive) does not want to impose any uniform solutions around the world and asks you to make the call.
As a conscientious executive, you have studied all the HRM books-in both Japanese and English-that you can get your hands on for this tough decision. While you understand that US executives routinely undertake reduction in force (RIFs), which is a euphemism for mass layoffs, you have also noticed that in the recent recession, even "bona fide" US firms, such as AMD, FedEx, HP, and New York Times, have all trimmed the base pay for all employees. If there is a time to change the norm moving toward more acrossthe- board pay cuts in an effort to preserve jobs and avoid RIFs, this time may be it, according to some US executives quoted in the media.
At the same time, you have also read that some experts note that across-the-board pay cuts are anathema to a performance culture enshrined in the United States and taught in virtually all HRM textbooks. "The last thing you want is for your A players- or people in key strategic positions delivering the most value-to leave because you have mismanaged your compensation system," said Mark Huselid, a Rutgers University professor and a leading expert on HRM, in a media interview. You have also read in a recent (September 2009) Harvard Business Review survey that, despite the worst recession, 20% of high-potential players in US firms have voluntarily jumped ship during the 2008-2009 recession, in search of greener pastures elsewhere. Naturally, you are worried that should you decide to implement the across-the-board pay cuts you have envisioned, you may end up losing a lot of American star performers and end up with a bunch of mediocre players who cannot go elsewhere-and you may be stuck with the mediocre folks for a long time, even after the economy recovers.
After spending two days reading all the materials you have gathered, you still do not have a clear picture. Instead, you have a big headache. You scratch your head again. How would you proceed?
Case Discussion Questions :
What are the benefits of across-the-board pay cuts?

Question 10

In HR use of VRIO, why is it more difficult to imitate an HR system than a practice?

Question 11

You have been offered a reasonably lucrative opportunity for an expatriate assignment for the next three years, and your boss will have a meeting with you next week. How would you discuss this opportunity with your boss?

Question 12

Look at the countries on PengAtlas Map 4.3. Suppose your multinational team consists of people from these countries. In your opinion, is it possible to have too much diversity?

Question 13

You work at a large MNE that operates in every one of the top 100 metropolitan areas worldwide. One of the most pressing concerns in your firm at the moment is to control costs. Therefore, you have been asked to develop a forecast for the coming year that identifies the markets in which the firm can expect an increase in the cost of living and, as a result, general salary expenditures. After the report needed for your evaluation is secured, classify the cities that have experienced cost increases into their respective countries. Which countries have more than one city that meets the criteria for your forecast? What are the salary-increase traits associated with each city identified?

Question 14

Regarding the two countries with the largest labor force shown on PengAtlas Map 4.3, what advantage does the large size provide? What is the disadvantage?

Question 15

Name and describe three MNE staffing approaches.

Question 16

How can the best fit versus best practice debate be reconciled?

Question 17

As a Japanese expatriate in charge of US operations of Yamakawa Corporation, you scratch your head confronting a difficult decision: Cut salaries across the board or cut jobs when confronting a horrific economic downturn with major losses? Headquarters in Osaka has advised that earnings at home are bad, and that you cannot expect headquarters to bail out your operations. Too bad, US government bailouts are only good for US-owned firms and are thus irrelevant for your unit, which is 100% owned by the Japanese parent company.
As a person being brought up in a collectivistic culture, you instinctively feel compelled to suggest an across-the-board pay cut for all 1,000 employees in the United States. Personally, as the highest-paid US-based employee, you are willing to take the highest percentage of a pay cut (you are thinking of 30%). If implemented, this plan would call for other executives, who are mostly Americans, to take a 20% to 25% pay cut, mid-level managers and professionals a 15% to 20% pay cut, and all the rank-and-file employees a 10% to 15% pay cut. Indeed, in your previous experience at Yamakawa in Japan, you did this with positive results among all affected Japanese employees. This time, most executive colleagues in Japan are doing the same. However, since you are now managing US operations, headquarters in Osaka (being more globally minded and sensitive) does not want to impose any uniform solutions around the world and asks you to make the call.
As a conscientious executive, you have studied all the HRM books-in both Japanese and English-that you can get your hands on for this tough decision. While you understand that US executives routinely undertake reduction in force (RIFs), which is a euphemism for mass layoffs, you have also noticed that in the recent recession, even "bona fide" US firms, such as AMD, FedEx, HP, and New York Times, have all trimmed the base pay for all employees. If there is a time to change the norm moving toward more acrossthe- board pay cuts in an effort to preserve jobs and avoid RIFs, this time may be it, according to some US executives quoted in the media.
At the same time, you have also read that some experts note that across-the-board pay cuts are anathema to a performance culture enshrined in the United States and taught in virtually all HRM textbooks. "The last thing you want is for your A players- or people in key strategic positions delivering the most value-to leave because you have mismanaged your compensation system," said Mark Huselid, a Rutgers University professor and a leading expert on HRM, in a media interview. You have also read in a recent (September 2009) Harvard Business Review survey that, despite the worst recession, 20% of high-potential players in US firms have voluntarily jumped ship during the 2008-2009 recession, in search of greener pastures elsewhere. Naturally, you are worried that should you decide to implement the across-the-board pay cuts you have envisioned, you may end up losing a lot of American star performers and end up with a bunch of mediocre players who cannot go elsewhere-and you may be stuck with the mediocre folks for a long time, even after the economy recovers.
After spending two days reading all the materials you have gathered, you still do not have a clear picture. Instead, you have a big headache. You scratch your head again. How would you proceed?
Case Discussion Questions :
What are the benefits of reduction in force (mass layoffs)?

Question 18

What are the benefits of inpatriation?

Question 19

ON ETHICS: If you were a HCN, do you think pay should be equal between HCNs and expatriates in equivalent positions? If you were president of your subsidiary in a host country, as a PCN your pay is five times higher than the pay for the highest paid HCN (your vice president). What do you think?

Question 20

What are the four Cs that can benefit HR managers?

Question 21

Currently, your European company is evaluating its standing in the fastgrowing emerging economies known as BRIC (Brazil, Russia, India, and China). Based on your evaluation of the cost of living in each country, the company may reconfigure some of its operations to increase profitability. Your company's manufacturing facilities are located in Beijing, China; Mumbai, India; São Paulo, Brazil; and St. Petersburg, Russia. How much could be saved if the company were to consolidate into one BRIC location that has the lowest cost of living?

Question 22

What can you do to develop a global mindset and help your career?

Question 23

ON CULTURE: What factors often lead to an expatriate experiencing difficulties or even failure on an overseas assignment?