Managing Complex Employment Expectations

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Table of Contents

Abstract
Content of a Traditional Expatriate Package
SWOT Analysis of the Local International Policy
Employers’ and Employees’ Needs
Fairness of the Three Packages
Global Application of the Local International Policy
Reference

Abstract

The traditional expatriate package provides benefits such as housing allowance and ensures that employees’ salaries are not reduced when they take international assignments. However, it cannot be sustained due to its high costs. The local international policy reduces costs by reducing the expats’ salaries and benefits.

However, the application of the policy is limited due to restrictive laws in host countries. Generally, the employers expect to reduce costs, whereas employees need financial stability when they take international assignments. Thus, employers should strike a balance between reducing costs and enhancing employees’ financial stability.

Content of a Traditional Expatriate Package

In the traditional expatriate package, expats are paid salaries that enable them to maintain the purchasing power in their home countries in the host country. This implies that the expats’ remuneration is not altered to their disadvantage. This motivates employees to relocate to foreign countries. The package also provides additional benefits such as housing allowance and travelling costs. These benefits are provided to address the relocation challenges that might have negative impacts on expats’ work.

The main limitation of the contract is that it is expensive. Thus, it cannot be used by the company to handle its emerging needs concerning transfer of knowledge and gaining international experience among employees. Additionally, the contract does not motivate expats to return to their countries, thereby denying new hires a chance to gain international experience.

SWOT Analysis of the Local International Policy

The main strength of the policy is that it enables the company to reduce costs by eliminating the expensive benefits associated with the traditional expatriate contract (Dowling et al., 2008). It also promotes equality by ensuring that locals and foreigners are earning the same salary.

The main weakness of the policy is that it reduces the salaries of expats. This will lead to dissatisfaction and low morale. Moreover, elimination of most of the benefits after the first year will force expats to concentrate on issues such as their children’s education rather than working for the company.

The policy provides an opportunity to localize the expats (Dowling et al., 2008). This is likely to improve the expats’ motivation to work in the host country. The threat to the policy is that employees will be reluctant to take international assignments for fear of salary reduction. Moreover, the policy might not work in countries with low social safety nets such as China.

Employers’ and Employees’ Needs

The employers’ needs regarding international mobility on a local international contract include reduction of costs and providing opportunities to more employees to gain international experience. The needs of employees, on the other hand, include financial stability and avoidance of disruption of family life.

In order to meet the employers’ needs, the contract should limit the number of years spent on international assignments to reduce costs and to provide opportunities to more employees to gain international experience. In order to meet employees’ needs, the package should provide limited financial support to prevent significant reduction in expats’ purchasing power and to enable expats to relocate with their families.

Fairness of the Three Packages

According to the equity theory, an employee perceives fairness as a situation where the ratio of his effort to outcomes is comparable to those of his colleagues in the same position. In this context, the local employees will consider the expatriate contract to be unfair since the expats will be earning more than them.

However, the expats will consider the contract to be fair since they will be earning the same salary as their colleagues in their home countries. The local international contract will be considered to be unfair to the expats since their salaries will reduce without a corresponding reduction in their efforts. Generally, the local contract is fair since both local employees and expats will earn the same salary. However, it is disadvantageous to expats since their salaries will reduce significantly.

Procedural justice should be applied to ensure that the employees’ efforts commensurate with their salaries. Moreover, it should be used to ensure equitable compensation among employees in similar positions. Thus, the company should provide equal salaries to employees in a particular country. However, the expats should have additional benefits to compensate for the expected reduction in their salaries. This will lead to positive reactions to the packages.

Global Application of the Local International Policy

The main factors that the company should consider to improve the application of the local international policy include cost reduction, as well as, the impact of the policy on employees’ pay and performance. The company should provide the expats with opportunities to reduce living costs.

This can be achieved through sharing the cost of basic needs such as housing. Thus, the local international package will be less expensive than the expatriate contract. Expats’ performance will also improve since the additional support from the company is likely to boost their motivation.

Reference

Dowling, P., Festing, M., & Engle, A. (2008). International Human Resource Management. London, England: Thompson Learning.

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