Executive Summary
International growth of a company is strictly defined by the expertise of its managers in training and developing human resources abroad that can work with the organizational structure of the parent company. But training employees abroad is considerably a demanding task. This is especially because of the cross-cultural differences that will hinder most of the usual training and incentive programs that are based out of the ethics of parent corporation. It is essential that the parent corporation understand the cultural practices as well as sensitivities of the target country before venturing into business with it. This is where the importance of sending a few of our own managerial staffs into China becomes apparent. Unless we understand the kind of workforce that China has and how they can be well trained with the minimum of resources, we will never be able to build our empire in this country. The first step in this regard is to prepare our employees to live and learn in Beijing for a sufficient period of time. The hardships that our employees may have to go through during this temporary shift shall be taken into account when implementing an expatriate program for them.
Most employees will be reluctant to take on such responsibilities in fear of the forced change in their established lifestyle. And in this regard, the best possible option, as we (human resources department) have to come to believe, is to use the best possible candidates that can evolve well with their environment as well as work without prejudices against the ethnicities of the target country. They should also be capable of identifying the key elements that could be used to train the target workforce and also develop a near perfect performance management system for their future. This report shall be discussing the most viable practices in recruiting, developing, training, and managing our employees that will be deployed into Beijing, China for establishing our subsidiary. To preserve the simplicity of this report, the most difficult parts of the expatriate program, that is the recruitment and selection of the right managerial staffs and also the incentives, rewards and compensation that we need to offer them, will be the primary focus of this report.
Introduction
Recruitment of expatriates can be a very tiring process. Out of the many factors that need to be considered, the most important one, as it seems, is the employee’s loyalty to the company. Shifting to another country involves the making of a considerable amount of compromises from the part of the employee. Even with a slight boost from the incentives and/or compensations that our company is willing to provide, company loyalty can only preserved by the mindset of the expatriate. Besides, if the selected employee is incapable of making the changes in our subsidiary that we expect of him/her, then our whole operation in the target country shall fail. This is where the importance of the right personnel selection becomes apparent.
Our intended expatriation program may last for more than a year or till the completion of our assignment which is the complete establishment of our subsidiary in Beijing. And this decision was arrived upon by discussing how the best possible results can be achieved with limited resources. Our purpose is to develop a workforce from scratch and keep them in par with the work culture of our parent company (Hauser). In case the cultural backgrounds of the target country limits their development, it shall also be the duty of the expatriates to develop a culture that is well suited for our future transactions. To achieve this difficult goal, we need a group of proven managers to work throughout the duration of our assignment without any hindrance. Until we are satisfied with the progress in China we expect these managers to stay and complete their assignments.
Recruitment and Selection
Some of the prerequisites of any managerial staff involve a definite set of skills such as leadership and promptness. But for an employee that need to manage and work with human resources of a different country some of the skills needed are 1.Uncompromised Performance 2.Willingness to take on new tasks and challenges 3.Experience in working abroad 4.Ability and Creativity 5.Adaptability 6.Personality 7.Communication skills, etc (Bártolo-Ribeiro and Andrade). Personality, even though mentioned towards the end in the list, is one of the most important features that an expatriate should possess. Working in a drastically different environment and culture requires a specific set of characteristics such as cultural empathy, willpower, patience, etc. It shall be the duty of ours to test such capabilities in our employees (that are we planning to expatriate) and make conclusions with the least possible error.
The idea of culture is not an easy one. Almost every cultural concept such as family, assertiveness, gender equality, In-group collectivism, time orientation, etc changes from one country to another. The Chinese environment, unlike ours, is extremely tradition bound. Their collectivistic culture, wherein the members are prone to stick together and foster an interdependent relationship, can be quite hard to accommodate for many Australians. And therefore, the adaptability factor of our expatriates is a necessity. If our employees are willing to make a shift with their family, we need to check their adaptability as well. Since this move will not be for a short while, it is imperative that we also preserve the happiness of their family (by checking their willingness and adaptability) in order to sustain the growth of our goals in China.
The concept of skills analysis is very elusive in nature. For the purpose of measuring some of the qualities we have previously mentioned (as required for our expatriates) the report by (Bártolo-Ribeiro and Andrade) have highlighted some categories of selection tests or trainings that we can conduct in this regard. They involve a step by step process through which we can test 1.Knowledge 2.Personality 3.Values 4.Situational factors 5.Institutional factors 6.National and 7.Skills. The first series of tests is conducted to assess the knowledge of an employee regarding cross-cultural differences, management, organizational knowledge, etc. The top scorers of this test can be subjected to the remaining tests. Through personality tests we shall be checking the attitude the employee has in various aspects such as cultural empathy, emotional intelligence, extroversion, ambition, adaptability, etc.
Issues in Implementing the Selection Program
Most often employees with families are reluctant to make a shift in their lifestyle due to the characteristics of the target location. Some of the main deterrents for them are the 1.Availability of good schools for their children 2.Language barrier for either the employee or spouse 3.Job implications of spouse 4.Cultural backgrounds and 5.Other personal reasons. In our case, the selection process is not subtle enough for the employee to commit themselves to the tests without having a clear idea of what the company is expecting from them. It would be considerably difficult to extract a hundred percent commitment (in taking the tests) from those who are not willing to make this shift. And as such, we may lose the best of our employees to such thinking. But this should not be a reason for our company to suffer huge losses. This is where carefully planned incentive and compensation program comes in.
Rewards, incentives, and Compensation
Expatriate compensation is considered a very serious factor in motivating them to fulfill their assignments abroad without any difficulty (Sims and Schraeder). Also, attracting the right kind of employees into this program can be made possible only with attractive rewards and incentives for them (Today). As mentioned above, family implications are the major reason for the reluctance in employees to make a shift from their home country to China. It shall be our (Human Resources) duty to assess the requirements of the employee and provide sufficient alternatives for their issues. For instance, if the spouse is willing to relocate with the employee, we should provide them the facility of a decent accommodation. In a similar way, children, if any, needed to be provided with options for a decent education we shall have to make sure that the employee does not have to suffer for it. During the first year, in case the assignment drags on to another year, we may even have to acquire admissions for the child in a decent school as well. Basic travel (including flight) allowances and daily allowance will be provided generously depending upon the assignment of the employee (such as difficulty); generally one third of all incentives shall be through such benefits (Gomes).
Most companies opt for a negotiable platform for deciding incentives for the right employees. Such methods shall only encourage reluctant employees to make unreasonable demands to derail their chances of getting shifted to China. One of the easiest way to choose the right kind of compensation for the employees is by assessing the cost of living in the host country (Sims and Schraeder). As the Chinese Yuan is lower in value compared to that of Australian dollar, the cost of living in China, as reflected on the expatriate budget, will not be much higher. But still, the employees shall need an incentive package to incite them to come forth to take on this opportunity. Some of these packages include 1.Healthcare 2.Taxes (both foreign and resident) 3.Health care 4.Children’s education, etc.
The services and incentives that the company might have to provide expatriates during their stay in China can be assessed academically. Some of the viable methods via which we can fix the most mutually beneficial incentive program is through 1.Balance Sheet Approach-wherein the expatriates are provided an equivalent purchasing power as that the host country. But this approach may reduce the amount of incentives (of the employees) in relation to their parent country, Australia. 2.The destination-based approach copies the packages of a local employee with similar job designation (also not in the best interest of the employee) 3.Lump-sump approach provides the expatriates with the option to choose from any service and the company shall have to pay for their choice (not in the best interest of the company) 4.Cafeteria Approach is for executive level employees who shall have two or more different packages to choose from. Some of these include exclusive club memberships, insurance, luxury company car, etc. 5.Negotiation approach-wherein the employees and human resources meet together to finalize on an agreeable amount or package as their incentive (Nazir, Shah, and Zaman). It shall be in the interest of the company that the Human Resources Department will choose the most viable approach for this expatriate program.
Issues related to Incentives
Since the cost of living in China is extremely lower than that of Australia (even after considering a western style of living) the expatriates may find themselves inadequately compensated compared to their counterparts based in Australia. This cannot be avoided since, even after adjusting for housing, taxes, healthcare, etc, the package of the expatriates still might be only a little over than their counterparts in Australia. This will generate the frustration in employees that they are not receiving any compensation for having to make such compromises. To avoid such frustrations while still avoiding excessive expenditure on expatriates, we need to provide the expatriates a great choice of living in China instead of direct monetary benefits. It shall be the duty of the company to ensure that they (Expatriates) never feel inadequately compensated. A generous bonus, provided in Australian dollars, shall become a part of their annual package waiting for their return. For each year spent over the required time (assignment duration) in foreign soil, these employees will also receive additional rewards which shall also be waiting for their return as well.
Potential Challenges for Implementing Expatriate Programs
Until the staffs that were sent abroad returns in good time after completing their individual assignments, we cannot say that our expatriate program was a success. The biggest issue underlying this program is that our interest is located in Beijing, China. The large distance (between Australia and China) shall limit the willingness of married employees to shift from our country to China. Most often the spouses (or family) of these employees might not be in a position to make such a shift. The job implications of the spouse, the education of the children, other personal issues such as taking care of sick family members, etc will greatly affect the willingness of the employees in complying to our program. And since the assignment duration cannot be pre-established, the uncertainty shall also deter these employees from taking this job abroad.
Another such limitation is the issue with incentives. Building a subsidiary in another country, no matter the economic conditions of the target country, is a very intricate process. The expansion itself is very expensive let alone the cost of finding infrastructure and the incubation period until we start receiving returns on our investment. The expatriation program shall become highly resourceful if the assignment drags on to more than a year. Having to provide great incentives to the expatriates shall also blow a big dent into the resource allocation of our company.
Benefits of the Program and Conclusion
The program is inevitable for a number of reasons. Our company, as it is now, is based completely on Australian work ethics and corporate culture. As of now, we have no reliable experience in working with a Chinese business or their workforce. It is essential that we have a working knowledge of how to motivate the Chinese workforce and be sensitive to their traditions and culture as well. This is most certainly an intricate task that requires the hand of experienced managers at work. It is usually hard to find a universally applicable HRM strategy for international corporations (Gomes; Kim). That is, we may have to establish a new one that is specifically crafted for China. Controlling Chinese workforce through a single HR management shall become rather tiresome without direct interference from our well established managers. Until we can ascertain that their jobs can be transferred to other junior managers from our country (or from Beijing itself), we need them working there. During the course of their stay, it shall be their duty to find a possible method to develop a viable Human Resource structure and hierarchy that will work in China. They should also assess the cross-cultural differences and the issues that the company may frequently run into due to the diversity in the workforce (Hashim and Hameed). The responsibility of making a viable strategy to counter such complaints and issues shall also rest upon these expatriates. Until our expatriates can establish a reliable corporate structure (similar to ours or a working new one) and workforce, we cannot completely leave the business in China to the local managers.
Works Cited
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Nazir, Tahira, Syed Fida Hussain Shah, and Khalid Zaman. “Review of Literature on Expatriate Compensation and Its Implication for Offshore Workforce.” Iranian Journal of Management Studies (IJMS) 7.2 (2014): 203–221. Print.
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Sims, Robert H., and Mike Schraeder. “Expatriate Compensation An Exploratory Review of Salient Contextual Factors and Common Practices.” Career Development Internation 10.2 (2006): 98–108. Print.
Today, Personnel. “Companies Must Offer Good Incentives - Personnel Today.” Personnel Today. N.p., 1 Dec. 2001. Web. 1 June 2016.
