Global Insights Chapter 12

Gained additional operational business skills and a global perspective their industry and markets; ability to manage cultural differences; improved understanding of international operations; becoming more open-minded to problem-solving methods; improved flexibility on HR issues.

What are some of the benefits of overseas assignments for expatriate managers?

Who should evaluate their performance? When and how often should they be evaluated? What aspects of their performance should be evaluated?

What are some of the questions that need to be asked for an evaluation of expatriates

Environmental variables, personal characteristics, and task variables.

What are the context variables that impact evaluations of expatriates?

The impact/influence of local cultural values and context on feedback delivery; conflicts that occur when an implicit and informal culture meets an explicit and formal performance evaluation system; culture can shape how foreign employees react to performance feedback and the various types of evaluation review.

Issues of evaluating foreign-born employees.

Give feedback through a third party, communicate to the whole group, change the form of feedback, simplify the feedback, and avoid slang.

Crafting Performance Feedback tips

The general purpose is evaluation/coaching; considerable amount of feedback from superiors; high face-saving concerns; high employee involvement; criticism less direct; informal, not written; seniority, connections are determinants of positive appraisal.

Saudi Arabia Performance Evaluation

To attract and retain the best people to staff positions worldwide; make it easy to transfer people to various locations; be consistent and fair towards all employees; maintain compensation levels that match competitors, while holding down costs.

Goals of Multinational Compensation Systems

Exchange Model of Compensation

Employees provide effort and output while receiving wages and benefits in return.

Equity Norm

The notion that those who contribute more on the job are deserving of greater compensation.

Alternative Compensation Views

Entitlement and obligation are important factors affecting how employees view the compensation they receive from employers.

US has roughly 25 days off total, which for Asian countries is low, Europe and Middle East is very low.

Paid days off around the world for Employees with 10 years on the job (US vs. World)

Cross-national legal/regulatory differences in compensation; costs for maintaining expatriates on location; expatriate employee comparisons with other similarly situated expatriates of other firms.

Issues in Expatriate Compensation

Direct payments/reimbursements: Tax reductions, allowances for: housing, furnishing, education, temporary living alowance, extension bonus, transportation. Support for adjustment: Personal security, cultural training, language/translation services, child care, emergency leave, spouse employment, and imported food and other goods.

Potential Sources of additional costs associated with expatriation

Ad Hoc Method

The expatriate negotiates with his or her firm for covering the costs inherent in a foreign assignment.

Potential for unequal treatment of expatriates; inability to systematically track expatriate compensation packages; inadequate development of country-specific knowledge on the part of both the firm and the employee.

Drawbacks of the Ad Hoc Method

Localization Method

Involves paying the expatriate essentially the same as local nationals in similar positions. Useful when expatriates want to extend their stay in particular locations or are interested in being permanent expatriates. Rarely used in its entirety.

Balance Sheet (Build-Up) Method

Based on the belief that expatriates should not suffer a financial loss in an international assignment. Attempts to provide expatriates with purchasing power in the foreign location as they would in their home country. Maintains base and merit pays, and considers foreign-service premiums, hardship differentials, housing costs, and danger pay.

Tax Equalization

Attempts to tie expatriates’ tax burdens to their home countries regardless of where they are posted and simplify their reporting requirements. Entails the firm paying the difference (if any) between their expatriates’ host-country tax obligation and their home-country tax obligation.

Cost-of-living allowance (Goods and Services Differential)

Helps offset higher living costs abroad by giving expatriates the same purchasing power enjoyed at home.