Evaluation of factors determining the setting of wages for British expatriates - Essay Example

? Evaluation of factors determining the setting of wages for British expatriates and local employees in the British multinational company. Introduction All organizations strive to ensure that they manage their human resources appropriately in order to achieve the set targets, as well as goals of the organization. Human resources can be termed as a critical concern to all managers. It is a crucial resource that exploits all the other resources to produce the desired result in the organization. Thus, the accurate placement of employees is a key element of any organization, which makes the firm to have a competitive edge. The application of the human resource function in multinational companies becomes controversial due to the need to formulate human resource guidelines and structures. The dissimilarity among the nations where branch is located complicates the process of hiring both local and expatriate employees (Baruch 2002, p. 239). This paper will discuss the factors that a human resource director should consider while setting wages for local and expatriate employees working in a multinational corporation. Evaluation of factors to be considered in setting the wages for British expatriate managers and engineers Many Multinational Companies desire to send their current employees to work in a different nation for a number of factors. First, the citizens in the new nation may not have the knowledge and expertise required in the job. In addition, the expatriate, being a present employee of the organization, has vast skills of the company for organizing all the company’s businesses in the new branch with the mother company (Thite 2009, p. 269). Thirdly, it helps offer the supervisors and senior management with the image needed to be a key decision maker in this global economy. As a human resource director, determining the wages to be paid to expatriates is not an easy task as it incorporates many factors to be considered (Baruch (2002, p. 240). As Caligiuri (2007, p. 294) notes, the calculation of the wages of any expatriate need a careful thought of many factors before one arrives at a wage structure that incorporates all factors. As the human resource of this British Multinational, I will distinguish between the internal and external influences of these wage determination strategies. The internal determinants include the rank of employee in the organization, the stage of the family development and the labour category of the employee. Regarding the first factor, I will develop expatriates wages with regard to their ranks in the organization. For instance, I would set different wages for senior managers, middle-level managers and supervisors. Secondly, I would develop a good strategy to categorise wages based on the marital status of the expatriate. I would also consider the nationality of the employee in developing different remuneration structures. The background of the expatriate will also be a significant factor in setting the wages; it would help me come up with the appropriate wage structures. I would highly insist that the young and new expatriates be remunerated like employees of the host country. The highly skilled and experienced expatriates can be remunerated with add-ons, adjustments and incentives, as well as bonuses to their wages. The characteristics of the work assigned can also be the foundation for the wage setting. On this regard, those given complex tasks should earn higher wages than those whose duties are not complex (Friedman 2009, p. 252). The social factors are also remarkable in influencing the wages to be paid to expatriates; these include the society and present discussion structures, for instance, state or industry-broad, local or company. The latter can often tremendously affect the degree of pay diversity and distinct kinds of remuneration and appraisal are satisfactory. Regarding expatriate remuneration, the origin of the company is not likely to have an impact on the wage calculation (Van Der Heijden, 2009 p. 831). Globalization makes many companies crave for total exploitation of their human resources, and this may lead to expansion of the multinational transfers and assignments. Based on this, as a human resource director, I will out into consideration the labour category that the employee belongs to while setting the wages. This will include an evaluation of three classes of labour; mother country workforce, native country workforce and third country workforce (Lee 2010, p.963). The characteristics of the work will also be a key factor in the wage determination process of the organization. I will also formulate a variety of programs on the basis of the length of the project. As an operative sent overseas for a period exceeding one year, there exist three different classes of expatriates; these include short term relocation, long term relocation or constant relocation (Lee 2010, p.963). I will recommend that the constant relocation group be remunerated using global salary standards and be entitled to some benefits. Lee (2010, p.965) observes that this discrepancy is chiefly precise for the calculation of the basic salary, cash remuneration, and other unique stipends, benefits and social security. This is the case because the longer the task overseas is, the further canons and regional surroundings of the new nation company might influence the payment of the labourer. These long term expatriates may eventually be put in the same class as natives. The company’s surroundings can also affect the calculation of wages for the expatriates. The other key factor that will also influence my wage formulation process includes the economic conditions of the host country (Van Der Heijden, 2009 p.831). I will observe any discrepancy between the motherland and the expatriate’s new country. Moreover, I would also consider the rank of organizational or interior cultural variety of the new state, where all the workers take jobs in comparison to their cultural upbringing (Van Der Heijden, 2009 p.832). The dangers encountered by the workers will also be another key factor that I would consider while setting wages for the expatriates. Evaluation of factors needed to consider in setting the wages for local managers, engineers and manufacturing staff. Selmer (2001, p.121) observes that while setting the wages for local employees, there tends to be three interlinked factors that can bring differences in the wages paid to the local engineers, managers, and the manufacturing staff. These factors include the economy, laws and culture. The amount of wages in different countries fluctuates primarily with advancement of any given economy. Majority of the nations regulate wages through an income strategy. Wage panels or congresses that stipulate local wage rates for several jobs are widespread in many countries. The traditions of the country affect the payment methods in a number of ways. For example, in a Japanese culture, where unity is emphasized over competition, it is hard to incorporate personal enticement programs. In my wage setting process, I will consider the impact of all these factors. Organizations tend to be different in terms of the methods they use while paying their employees. This emanates from some factors such as discrepancies in wealth, buying ability, interior business issues and social elements (Thite 2010, p. 269). Among the principal factors that I will weigh up when I am developing wage structure for the local managers, engineers and manufacturing staff will encompass the factors discussed below. One of the core factors includes business issues, which relate to the business done and the organizational strategies used in driving the business. There exist a few companies that are more responsive to wages than others; such companies tend to incur high costs of labour (Thite 2010, p. 270). In addition, some disparities emerge in the productivity process, concerning the capital equipment and the variety of skills of the employees. The main emphasis of the organizational strategies are on offering their staff with safety; leads to a reduction in their earnings and vice versa. Another critical factor to consider is the overall advancement of the economy and its effect on the wage rates that I will be developing. Successful nations will obviously remunerate highly. It is possible for a country to thrive well, but with escalating costs of living, the worker’s buying strength significantly declines in comparison with other nations with a lesser cost of living (Baruch 2002, p. 239). Trade unions and government also have some impact on wages and are significant in some nations than in others. As such, the activities of trade unions will be a key factor to consider while setting wages for the local employees (Baruch 2002, p. 240). Traditions and customs can also be regarded as crucial determinants of wages to paid to local engineers, managers, and manufacturing staff. Some countries hold certain beliefs regarding the minimum wage that should be earned by local employees. Consideration of cultural factors that affect labour would be crucial in setting appropriate wage standards (Van Der Heidjen 2009 p.831). This is because the cultural norms that determine the remuneration of employees have an overall impact on the employee well being. The laws of the country within which the company operates can also be regarded as a crucial factor to consider while setting wages for local employees. The host countries may be having some agencies that determine the wages, which the local employees should receive from multinational corporations. As a human resource director, there is an obligation to adhere to the laws of the country and consider the labour standards that the host country has set. The salaries to be paid to local managers, engineers, and manufacturing staff should not violate the local laws that have been set by labour organizations. Despite the fact that the company is guided by its policies, which emanate from the host country, local factors play a pivotal role in determining the wages of employees (Caligiuri 2007, p.293). The salaries of local employees have to be in line with the local guidelines regarding wages. As such, some company policies regarding wages have to be forfeited for the sake of harmony with the host country. The determination of local wages can depend on the work, the individual, or execution of the work. As such, those many duties will most likely receive higher wages than those with fewer duties. Another crucial factor that would help a human resource director in determining the wage of the local employees includes the supply, as well as demand for labour. In this regard, the higher the labour supply, the lower the wages paid to the employees. This is because high labour supply may reduce wages to the extent that the wages go below the poverty level. On the other hand, low supply of labour means that the wages of the local engineers, mangers, and manufacturing staff will go up. This is because very few of the local employees will have the necessary skills needed to work in the multinational company. Therefore, there will be high demand for the services of such employees, meaning that they will have to be paid high salaries (Selmer 2001, p. 1219). The other key factor that can have an impact on the setting of wages for local employees includes wage spread. When the wage spread ratio is high, there is a possibility that the local employees will be paid lower salaries than when the wage spread ratio is low. Therefore, it is crucial for the human resource director to take into consideration the wage spread ratio (Lee 2010, p. 974). (Selmer (2001, p. 1219) observes that the work experience of the local engineers, managers and manufacturing staff should also be a critical factor to consider while setting the wages for such employees. The more experienced the local employees are, the higher the wages they will demand. On the contrary, local employees with little experience and limited skills will earn low wages. Experienced employees have to be paid well since they have the necessary knowledge and expertise needed to run the company. Conclusion Transnational culture classification, economic pillars and industrial relations structures make the task of selecting, training, and managing the employees quite complex. These discrepancies lead to the disparity in the management systems based on the specific country in question. Such variations affect the relationships between managers and their juniors. The determination of wages for local employees should be significantly informed by the local conditions, which determine the employment of locals. References List Baruch, Y. (2002). Expatriation and Repatriation in MNCs: A Taxonomy, Human Resource Management 41(2), pp. 239-259. Caligiuri, P. et al. (2007). A Strategic Contingency Approach to Expatriate Assignment Management, Human Resource Management Journal 17(4), pp. 393-410. Friedman, P.et al. (2009). Expatriate Adjustment from the inside Out: An Autoethnographic Account, The International Journal of Human Resource Management 20(2), pp. 252-268. Lee, L. et al. (2010). The Effects of Cultural Intelligence on Expatriate Performance:The Moderating Effects of International Experience, The International Journal of Human Resource Management 21(7), pp. 963-981. Selmer, J. (2001). Expatriate Selection: Back to Basics, The International Journal of Human Resource Management 12(8), pp. 1219-1233. Thite, M. et al. (2009). Expatriates of Host-country Origin: coming Home to Test the Waters, The International Journal of Human Resource Management 20(2), pp. 269-285. Van Der Heijden, J. et al. (2009). Expatriate Career Support: Predicting Expatriate Turnover and Performance, The International Journal of Human Resource Management 20(4), pp. 831-845. Read More