Wage and Salary

Assignment 11 – Overall Instruction

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Assignment #11: International Compensation (30 points)

Due: by 11:59 pm, Sunday, July 21st, 2019

* No assignments will be accepted late without written documentation of an unavoidable or unforeseeable event. Why this assignment?

This assignment is intended to achieve the Module 14 learning objectives “demonstrate an understanding of the things to consider (i.e., national culture and national institution) in paying foreign employees working in their own countries,” and “find U.S. Department of State Office of Allowance website to examine the amount of pay that needs to be adjusted for expatriate assignments for U.S. government workers.” This assignment also supports Course Objectives 1 and 2. Instructions

Let’s assume that you are an HR manager of a company in the U.S.. Your company is thinking about expanding its business globally. With this in mind, complete the following two tasks. Task 1 (Total of 10 points)

As the first step of expanding its business globally, your company has decided to do market research on several candidate countries for market expansion. They are China, Mexico, and Egypt. To do the initial market research, the company has decided to dispatch its three sales employees as expats for one year. The salesperson to be dispatched, the city and country that they will be living in for the year, and their current salary are as in Table 1 below.

Table 1. The three expat candidates

Name City and country Current salary

John Smith Monterrey, Mexico $72,573

Jane Brown Shanghai, China $83,003

Donald Kane Cairo, Egypt $98,321

As we have learned in the Video: International Compensation in Module 14, some adjustments in pay level is needed, in general, to compensate for the cost of living and less pleasant work environment involved in expat assignments. So, go to the U.S. Department of State Office of Allowances website (https://aoprals.state.gov/web920/location.asp?menu_id=95) to determine the adequate pay level for the expat assignments of these three employees. How to access the data on the webpage is explained in the video.

For example, if Employee X’s current salary is $100,000, and he is to be dispatched to Kabul, Afghanistan, he should be paid 70% more than what he is currently being paid for this expat assignment. The number 70% came from 0% (Adjustment needed considering the cost of living) + 35% (adjustment needed for hardship) + 35% (adjustment needed for danger). So, based on the information in this website, the adequate pay level for the case of Employee X on an expat assignment to Kabul, Afghanistan would be $170,000 [=$100,000 * (1+0.70)]. Search for the data on Kabul, Afghanistan in this website, and see if you can come up with 70% as the total amount that needs to be adjusted for this expat assignment.

Assignment 11 – Overall Instruction

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As I have mentioned in the video, the information on this website is intended to be used for adjusting the pay level of U.S. government employees on foreign assignments based on the cost of living in Washington D.C. So, using the data on this website may not be appropriate for most companies. Keep this in mind. But for simplicity and the purpose of just knowing some processes related to adjusting the pay of expats, we will use the data on this website. And in making the adjustments, consider only the three factors in the above example: cost of living, hardship, and danger. Do NOT consider other factors in this website such as education allowance, living quarters allowance, etc. Let’s keep it simple. And let’s also assume that no adjustment is needed for the cost of living difference between where your company operates in the U.S. (which is not specified anyway) and Washington D.C. All you need to answer is the adjusted pay amount for these three employees and how you came up with the adjusted amount (as in the example above). Do not overcomplicate yourself in answering the question. Task 2 (Total of 20 points)

If the market research shows that the above three countries are indeed an attractive market for expansion, your company will need to hire local nationals to operate its business in these countries. As we have learned in the Video: International Compensation in Module 14, the national culture can be a factor that influences the decision of how to pay employees who are hired locally. So, research the national culture of these three countries. State how the national culture of these three countries differ from that of the U.S. Then, state two implications per country in how the difference in the national culture to that of the U.S. may influence the company’s decision of how to pay its local employees. Also, explain the ‘why’ part of your implication.

There can be various ways to research the national culture of a given country. But for this assignment, use the ‘Compare Countries’ tool on the Hofstede Insights webpage (https://www.hofstede- insights.com/product/compare-countries/). This website allows you to compare the national culture of multiple countries based on Hofstede’s cultural dimensions (collectivism-individualism, power distance, etc.). How to navigate this website and compare the national culture of different countries are explained in the Video: Examining the Differences in National Culture through Hofstede Insights Webpage in Module 14.

A sample answer for this task can be:

“The national culture of Country X is much higher in uncertainty avoidance and lower in individualism than that of the United States. So, the company may want to pay its local employees in Country X more based on seniority (Implication 1). This is because employees who do not like uncertainty can prefer a pay system that is more predictable. Under the seniority pay system, the fluctuation in pay is relatively more predictable since your pay increases as your tenure increases. The company may also want to pay the local employees based more on group performance than on individual performance (Implication 2). Employees in high collectivistic (or in low individualistic) society can be less comfortable with the performance being evaluated as an individual and the pay linked to this result.”

Again, do not overcomplicate yourself in doing this task. What is wrote in the quotation mark is all you need to write (but three of these since there are three countries for you to write). I’m not asking for a sophisticated pay plan. But since I have already provided you with examples of ‘pay based on group performance’ and ‘pay based on seniority,’ try to think about at least one other pay practice implication that is related to national culture. The implications can overlap between countries since some countries can be similar regarding national culture. But do not write the same implications for all three countries.

Assignment 11 – Overall Instruction

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Important Notes

1. Use the answer sheet (word file) provided to answer the questions. The answer sheet may help you to better understand the things that are asked in this assignment.

2. In writing your answers, NEVER copy-and-paste any part of the textbook or any other sources (especially the writings in the Hofstede Insights webpage). Write the answers in your own words. If more than seven consecutive words are identical to someone else’s writing (including the textbook and any other sources), it will be considered as plagiarism, and you will receive 0 points for this assignment. You will also be referred to Students Affairs.

3. I also change the numbers on this assignment every semester. So, do not copy-and-paste the answers from the assignments that were given out in this course in the past. In the case of your answers being the same as the answers in the past, it will be regarded as plagiarism and behavior that violates the ‘4. Ethics’ category of the professional etiquette outlined on page 5 of our syllabus. In this case, you will receive a failing grade “F” in this course and be referred to Students Affairs.

4. See Appendix for the grading rubric.

Assignment 11 – Grading Rubric

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Appendix. Grading Rubric

Question Grading Standard Points

Task 1 (10 points)

1) The student has calculated all the pay levels correctly.

2) The student has correctly explained how he or she had come up with the adjusted pay level for all three cases.

Both of the above two conditions are met.

10

Only one of the two conditions is met. 5

None of the conditions are met. 0

Task 2 (20 points)

1) The student has correctly explained the cultural difference between the three countries and the United States.

2) The student has provided two implications per country.

3) The implications are logical considering the cultural difference that the student has identified.

4) The student has utilized the contents from the ‘Hofstede Insights’ webpage

5) The student did not write the same implications for all three countries.

4) and 5) are all met, AND ALL of the other three conditions are met.

20

4) and 5) are all met, BUT ONLY TWO of the other three conditions are met.

15

4) and 5) are all met, BUT ONLY ONE of the other three conditions are met.

10

4) and 5) are all met, BUT NONE of the other three conditions are met.

5

4) and 5) are NOT all met. 0