CU-BBA-SEM-IV-Compensation Management-Second Draft

The repatriate who have performed at a high level in a HCN may bring a dimension of confidence and competence that will enhance his or her value to the company as it competes in a changing world market. Expatriates who are work outside the culture of the company and the country, the repatriated employee may well have insights that can effect needed change. That perspective ought to be valued and given a voice within the company. The repatriated employees would likely to bring motivated by some factors to encourage them for the sharing of their experience. The effective international employees may well have gained insights in how to affect a more coordinated group effort than encouraging individual achievement. Repatriation Process 1. Preparation: before 3-4 months of expatriate return Developing plans for future and info about new position Checklist of items before leaving (closure of bank a/c, bills etc.) 2. Physical Relocation Removal of personal belongings, breaking ties with friends, colleagues before returning Re-entry training for home country’s update, socio-cultural contrast orientation, psychological aspects etc. 3. Transition: Finding accommodations, school for children, opening bank A/c etc. for comfortable living. Relocation consultants used. 4. Readjustment Coping with aspects as company changes, reverse culture shock and career demands Eg. Repatriate returning from country where power distance is large as Thailand may experience stress on returning to small power distance countries like Denmark. Repatriation of Expatriates Repatriation Return to one’s home country from an overseas management assignment 301 CU IDOL SELF LEARNING MATERIAL (SLM)

Reasons for returning Formally agreed-on tour of duty is over Expats want their children educated in the home country Unhappiness with foreign assignment Failure to perform well Major concerns of expatriates Cultural Re-entry Financial Implications Nature of job assignment Multinational responses to repatriation 1. Staff availability: current and future needs If repatriate promoted, International assignments as a positive career move If repatriate demoted or given pink slips so vice versa. 2. Return on investment (ROI) Expatriates are expensive Accomplishing assignment objectives at the expected cost 3. Knowledge Transfer Cross-fertilization of ideas and practices that assist in developing competitive advantage. Build upon international experience of repatriates Designing a Repatriation Program 302 1. Mentor programs (Pairing expat with a member of home office senior mgmt): Maintaining contact with the expatriate throughout the assignment Ensuring that expatriates are kept up- to-date with developments in home country Assisting expatriates in repatriation process 2. Inviting repatriates in developing repatriation program Steps suggested for smooth transition: Arrange an event to welcome & recognize the employee & family Establish support to facilitate family reintegration Offer repatriation counseling or workshops to ease the adjustment Assist the spouse with job counseling, resume writing & interviewing techniques CU IDOL SELF LEARNING MATERIAL (SLM)

Provide educational counseling for the children Provide employees with thorough debriefing to identify new knowledge, insights & skills to provide a forum to showcase new competencies Offer international outplacement to the employee if no positions are possible Arrange an interview with the expatriate & spouse to review their view of the assignment & address any repatriation issues 14.6 SUMMARY  International compensation can be defined as the provision of monetary and non- monetary rewards, including base salary, benefits, and perquisites, long- and short- term incentives, valued by employees in accordance with their relative contributions to MNC performance.  Objectives:  Attracting and Retaining Personnel  Motivating Personnel  Optimizing Cost of Compensation  Consistency in Compensation  The following are the major components of an international compensation package.  Base Salary  Foreign Service Inducement Premium  Allowances  Benefits  Incentives  Taxes  Long Term Benefits or Stock Benefits  Going Rate Approach- This is based on local market rates. It relies on comparisons of surveys of the local nationals, expatriates of same nationality and expatriates of all nationalities’ pay packages.  The Balance Sheet Approach to international compensation is a system designed to equalize the purchasing power of employees at comparable position levels living abroad and in the home country and to provide incentives to offset qualitative differences between assignment locations. 303 CU IDOL SELF LEARNING MATERIAL (SLM)

 Citizen’s Approach – In this approach, an international basket of goods is used for all expatriates, regardless of country of origin.  Lump Sum Approach – This involves giving the expatriate a predetermined salary and letting the individual decide about how to spend it.  The main factors affecting international compensation strategy are; (1) social contract (2) culture (3) trade union (4) ownership and capital markets, and (5) managers’ autonomy.  An expatriate is somebody who has left their country of origin in order to reside in another country. Ex-pats may leave home for work reasons, including migrant labor who seeks more lucrative employment in a different country.  Repatriation is a process of returning back from a international assignment to a home country after completing the assignment or some other issues. Repatriation is the last step in the expatriation cycle and it involves readjustment and re-entry of international managers and their families back to their home country. 14.7 KEYWORDS  Tax equalization: – Firm withhold an amount equal to the home country tax obligation of the expatriate and pay all taxes in the host country.  Tax Protection: - The employee pays up to the amount of taxes he or she would pay on remuneration in the home country. In such a situation, the employee is entitled to any windfall received if total taxes are less in the foreign country then in the home country.  Employee Stock Option Plan (ESOP) - a certain nos. of shares are reserved for purchase and issuance to key employees. Such shares serve as incentive for employees to build long term value for the company.  Restricted Stock Unit (RSU) — this is a plan established by a company, wherein units of stocks are provided with restrictions on when they can be exercised. It is usually issued as partial compensation for employees. The restrictions generally lifts in 3-5 years when the stock vests.  Employee Stock Purchase Plan (ESPP) — this is a plan wherein the company sells shares to its employees usually, at a discount. Importantly, the company deducts the purchase price of these shares every month from the employee’s salary. 304 CU IDOL SELF LEARNING MATERIAL (SLM)

14.8 LEARNING ACTIVITY 1. State the significance of the compensation in Expatriate Management. _________________________________________________________________________ __________________________________________________________________________ 2. Is tax component of the compensation having a positive or negative motivational impact on Expatriate Performance? ________________________________________________________________________ ________________________________________________________________________ 14.9 UNIT END QUESTIONS A. Descriptive Questions 305 Short Questions 1. What is an International Compensation? 2. Explain the Foreign Service Inducement Premium. 3. State and explain the objectives of International Compensation Management. 4. Write a note on Citizen’s Approach. 5. Describe the Expatriation Process. Long Questions 1. Describe the various components of the International Compensation. 2. Compare Going rate approach with Balance Sheet Approach. 3. Explain the objectives of the International Compensation Management. 4. Discuss the factors involved in International Compensation. 5. Enumerate Repatriation Management B. Multiple Choice Questions 1. Relocation is ________________ part of Compensation. a. Incentives b. Allowances c. Benefits d. Base Salary CU IDOL SELF LEARNING MATERIAL (SLM)

2. Which type ofshares serve as incentive for employees to build long term value for the company? a. ESOP b. RSU c. ESPP d. ETOP 3. What is Spouse assistance? a. Provide some temporary assignment for Spouse b. Provide Training for the spouse c. Provides sponsorship for educational certification of the Spouse d.compensates for the loss of income due to spouse losing their job 4. ___________involves giving the expatriate a predetermined salary and letting the individual decide about how to spend it. a. Citizen Approach b. Balance Sheet Approach c. Lump Sum Approach d. Going rate Approach 5. Finding accommodation is considered in _________________ step of Repatriation. a. Transition b. Readjustment c. Physical Relocation d. Preparation 306 CU IDOL SELF LEARNING MATERIAL (SLM)

Answers 1 – b, 2 – a, 3 – d, 4 – c, 5 – a 14.10 REFERENCES Text Book  Wilhelm Schmeisser, Dieter Krimphove, Rebecca Popp, International Human Resource Management and International Labour Law, De Gruyter Oldenbourg,  Peter J. Dowling, Marion Festing and Allen D. Engle, Sr., International Human Resource Management, Cengage Learning EMEA  By Veronica Velo, Cross-Cultural Management, Business Expert Press  Srinivas R. Kandula International Human Resource Management , SAGE Publications Pvt. Ltd  Pravin Durai, Human Resource Management, Pearson India Reference Book  K Aswathappa , Sadhna Dash, International Human Resource Management, McGraw Hill  Gary Dessler, Fundamentals of Human Resource Management, Pearson  Ekta Sharma, Strategic Human Resource Management and Development, Pearson India  Parissa Haghirian, Successful Cross-Cultural Management, Business Expert Press Open Sources  https://www.Shrm.org/  https://www.ncbi.nlm.nih.gov/  https://www.futurelearn.com/  International Journal of Human Resource Studies 307 CU IDOL SELF LEARNING MATERIAL (SLM)