Compensation And Benefit Problems At United Aryan- Kenya - Research Paper Example

Compensation and Benefit Problems at United Aryan- Kenya Executive Summary Companies continue to expand globally with benefits schedules for their global workforce increase in value. United Aryan-Kenya is a multinational company operating in East Africa and parts of Asia in countries such as Pakistan, Thailand, and Singapore. The company specializes in the manufacture of clothes for export. United Aryan faces compensation and benefits challenges owing to the fact it runs businesses in countries with diverse cultural backgrounds. Other related challenges are difficulties if offering benefits to employees in multi-cultural environments. These are crucial in controlling costs, retaining employees, and rationalizing the company administration. This discourse delves into analyzing these problems and recommends solutions that the management needs take to sort out the problem. It is crucial for the management because the modern economic environment poses additional problems that would make the situation complex. Table of Contents Executive Summary 2 Introduction 4 Methodology 5 Challenges and solutions 5 Streamlining Exercise 8 Subsidiary Staffing Policy 8 Conclusion 10 References 11 Introduction United Aryan is a multinational corporation defined by scholars as a firm running business in more than one country. Clearly, it means that United Aryan has important assets regarding premises and machines in more than one nation and gets profits from those investments. The rate at which the world economy grows continues to push United Aryan in most parts of the world. The channels for internationalization go beyond acquisition efforts, international merger strategies, and financial transactions to focus on best compensation and benefit schemes. The process of staffing employees at United Aryan-Kenya plays a significant role in determining terms of employment. In most of its branches, the company either recruits its staff form expatriates from other organizations or develop an international centre for professionals, managers, as well as workers from different cultural setups. Addressing compensation and benefit issues in the company will help United Aryan-Kenya to develop its own cluster of globalists in outlook as well as its sophisticated global managers from all the countries the run business. Other multinationals already have these programs running successively. They include among others Nestle, Gillette, and Sony. Recruiting employees to a career they are sure throws them into the international stage guarantees their steady supply who desire and aim at going overseas. Expansion to join international business increases the market for company products therefore; efficient compensation and benefit schemes will enhance attainment and maintenance of a competitive advantage in the competitive world. The management at United Aryan ought to realize that expansion into the global market comes with challenges as much as the company’s domestic market became too small to sustain its growth and expansion plans. Because of this, United Aryan took to the common alternatives once it established its offices, stores, and manufacturing plants in Kenya by recruiting individuals employed as expatriates. Methodology Findings in this report are products of research in the United Aryan Company based in Kenya. The researchers carried out fifteen telephone interviews among employees occupying senior positions in branches in Kenya. These were managers with senior decision-making authority. The branches employees many people from five hundred to ten thousand. The interview covered local citizens as well as those working as expatriates. All the branches specialize in the manufacture of all types of clothes for export. Markets are broad and include countries in Europe, Asia, and others in the American continent. Researchers also prepared questionnaires and handed them to line managers and supervisors. One thousand two hundred copies with positive responses coming from nine hundred and ninety-six pamphlets. The focus of the interview was getting their views on their salaries and other benefits, challenges emanating from the company remuneration system, areas with potential benefits, and practices they consider bets in the company compensation scheme. Challenges and solutions The first of the challenges United Aryan-Kenya is facing is developing a strategy reminiscent with global benefit standards. The strategy should meet different needs of employees as applied in other companies with employees from various cultural setups. Trading in the international market provides United Aryan-Kenya with multiple opportunities for growth. Growth is essential to the prospects of the company (Sherman, 1998). The size of the workforce in the international market can be bigger than the one at in the local market depending on the performance of the company in that market. Senior managers identified lose as their biggest challenge they face during company expansion. Loses came through acquisition of new offices or establishment of the same. The company strives to ensure that employee-benefit programs continue efficiently and smoothly. They also concentrate on making sure that the company remains compliant with government regulations. However, they carry out these positive changes at the expense of executive compensation. International laws require financial transparency especially those affecting commitments for benefits at the centre of company operations in all companies engaged in international business. The other challenge is that employees complain about the company taking long to become truly global. Employees question the approach taken by the company while drafting and executing compensation and benefits policies. Junior employees posit that by asking the company to become truly global, they do not seek for one-size-fits all compensation schemes. They value the essence of flexibility in addition to cultural factors and government regulations in reshaping local benefits models as well as influencing expectations of employees (Swaak, 1995). One expatriate occupying a senior management level in the company identifies that the way in which the Kenya government stipulates the way companies should remunerate expatriates. Taxes charged on income for expatriates are higher. The incentives offered in branches based in other countries such as India are not available in Kenya. They include home incentives, child incentives, health plans covering even grandparents. The benefits cut across all employees whether expatriates or local. Furthermore, government mandates concerning compensation and benefit schemes are also not standard. It makes employees in Kenya to receive poor remuneration across the board. In fact, few employees are optimistic that changes will be radical once the company becomes truly global. Therefore, the report recommends two ways significant in helping the company address compensation and benefit programs quickly. First, the company should consider a precise benefits strategy that meets international standards because the company is a multinational. The philosophy of strategy should offer employees a model for comprehending management decisions touching on employee compensation and benefits. Such a strategy should have the capacity to take care of different cultures of multiethnic community backgrounds (Rodriguez, 1996). The second strategy is for United Aryan-Kenya to develop efficient and comprehensive remuneration schemes for all employees whether on contract, permanent, mobile, as well as expatriates. Expatriates feel that the definition of their salaries and benefits should be simplified. Other companies such as Samsung have taken such measure and are doing well in the same area that appears an Achilles-heel for United Aryan. A proposal to streamline these problems is establishment of hierarchy of needs that enlists the priorities of compensation and benefits for multinational companies such as the United Aryan- Kenya. The framework enables any company venturing into the international market to adapt to through a learning process while setting its schemes for bonuses, pay, as well as other long-term benefits for employees for all cadres. A case in point is if a company wants to initiate a community service program, then first, it should ensure that it remunerates employees well before launching the community program. The company must also have measures to have the structure working (Wederspabn, 1991). The second corrective measure should be adopted from other company branches such as those in India and Thailand. These branches remunerate their employees well and it is advisable for the headquarters to create a structure similar to a family-company environment in all the global business operations. In this case, United Aryan International should adopt a paternalistic system by giving benefits that across all the branches in all countries including free meals, health insurance schemes, retirement plans, and basic salary standards. United Aryan-Kenya is on an extensive branding process. Therefore, it should create international compensation and benefits strategy in line with the branding process as one of the remedies to their problems. The company can hire the services of a human resource company to integrate its compensation and benefits structures to suit international standards (The Stateless Corporation, 1990). I the end, it will a strategic shift to thinking and working as a global company leading to new considerations on multinational opportunities. The management at United Aryan-Kenya ought to consider that an efficient compensation policy is a significant step in tackling the challenges of attracting and maintaining talented and knowledgeable employees. The company agrees that it is facing this as a great challenge. Streamlining Exercise Subsidiary Staffing Policy For United Aryan-Kenya to maintain growth in its business ventures, it will require the services of an efficient international human resource management services. It entails among other features transferring people around the branches scattered across the African and Asia continent. An efficient international human resource management will help the human resource manager at United Aryan to draft and execute plans of actions and activities in offices for their stores, plants, and other important outlets. IBM and Coca-Cola applied this strategy successfully in most of its branches in the international market (Welch, 1994). Responsibilities assigned to the human resources manager at United Aryan are training, selecting, formulating policies, and transferring company employees. Selecting and recruiting of staff appears a big challenge to the manager considering the fact that the company runs its businesses internally. The predicament touches on the host-country for the subsidiary, the headquarters of firm, and any other source or region acting as a supply of labor. To streamline the entire process of implementing, planning, monitoring, and managing compensation schemes remains a constant challenge to United Aryan-Kenya. The company needs to have a hitherto need for integrated compensation systems befitting all employees. The human resource management at United Aryan must to become conscious that expansion into the global market comes with challenges as much as the company’s domestic market became too small to sustain its growth and expansion plans. Research conducted among the nine hundred and ninety-six employees finds that most of them believe that bringing together all compensation and other benefits administration from other branches to a single platform should be the priority for the company. Although the management wishes to develop and implement an ambitious compensation and other benefits scheme, it is necessary for them to know that the whole process has limitations as well. United Aryan-Kenya will continue to adjust its external and internal resources for the betterment of the lives of employees until global systems become a reality. The advantages cut across all employees whether expatriates or local. In addition, government mandates concerning compensation and benefit schemes are also not standard (Wetlaufer, 1996). The human resource manager together with his office must coordinate procedures and policies to manage from the head office through tom other stores and plants in Kenya. The aspects and policies must balance the desires and needs of employees efficiently while balancing the forms of reward. If it fails in managing this scenario, then difficulties will emerge similar to the ones faced by the company today. United Aryan should comprehend that management of the employee-compensation scheme will result in the failure or success of the company. The only challenge for the human resource manager is maintaining a cordial working relationship with other executive managers in the company. The team should foster an international mind-set only possible by having managers thinking globally in addition to drafting and implementing human resource policies that enhance the development success of the company. Conclusion The management has a responsibility of comprehending the benefits derived by employees from the current system. The human resources department or the department charged with duty of remunerating employees ought to carry out a research on both international and local programs for the company. At the same time, the human resource manager should define factors that drive the global benefits schemes. The manager has a responsibility of clearly articulating the schemes to all employees. Then, the manager should set up a management framework. The structure should define responsibilities and roles at the head office and other branches. The model must be comprehensive and easy for employees to interpret. The management should make this a priority because it affects their salaries and other benefits. Consequently, the human resources office should communicate, implement, and monitor the whole process by making follow-ups. Educating employees at all levels is significant to the success of any compensation strategy. The feedback derived from monitoring and follow-ups should be applied in fine-tuning the company strategy. The management should remember that flexibility is at the core of the compensation scheme. Through this, improvements are possible. The management at United Aryan should be comfortable in making changes to the scheme to make it better. These are central in scheming costs, retaining employees, and rationalizing the company management. This discourse delves into analyzing these problems and recommends solutions that the management needs take to sort out the problem. References Rodriguez, C. (1996). International management: A Cultural approach. West Publishing Company. Swaak, R.A. A. (1995).Expatriate Failures: Too many, too much cost, too little planning. Compensation & Benefit Review, 47-55. Sherman, A. (1998). Managing human resources. Cincinnati: South-Western College Publishing. The Stateless Corporation. (1990). Business Week, 98-105. Wederspabn, G.M. (1991). Costing failures in expatriate human resources management. Human Resource Planning, 15:27-35. Welch, D. (1994). Determinants of international human resource management approaches and activities: A Suggested framework. Journal of Management Studies, 31:139-164. Wetlaufer, S. (1996).Foreign subsidiaries: Determining executive Compensation. Harvard Business Review, 11-12. Read More