Project 5: Managing a Global Business

Employment Issues—Hiring and Firing

Notice: Contains Confidential Information

Colossal Corporation maintains a subsidiary in Serafini, a small country in Eastern Europe.

This subsidiary is incorporated in the state of Delaware as New Brand Design, Inc. (NBD),

a company that designs, brands, and manufactures innovative electronic products and

markets and distributes them for resale across the globe. NBD has been admitted to

conduct business in Serafini.

NBD’s executive board is composed of six expatriates from the United States, one

expatriate from Italy, and three local Serafini nationals. These 10 board members manage

over 100 employees who are all nationals of Serafini.

Two of the local Serafini executives, Elena and Viktor, recently learned that their salaries

are much lower than the other eight members of the executive board, and their benefits

packages not nearly as comprehensive. They are upset and have lodged formal complaints

with the human resources director at NBD, Max Ciccone.

Max has been dealing with the troubles at NBD for a few months and has been consulting

with operations in the United States to try to find a solution. US operations decided to try

to fix the problem by sending out two more expatriates from the United States on five-

year contracts to replace Elena and Viktor.

The new US expatriates that NBD plans to send to Serafini are Michael and Beth. Michael

is a 66-year-old who has a lot of executive experience and is the former CFO of another

of Colossal’s international subsidiaries. Beth is a 42-year-old with 15 years of experience

Course Resource

in management. NBD has applied for visas and work permits for Michael and Beth, as

required under Serafini law.

Elena and Viktor are very upset, but they are continuing to do their work as usual. Max has

explained to them that their salaries are reflective of their more limited experience and

qualifications relative to the other members of the executive team. Despite this

explanation, Elena and Viktor continue to complain and threaten lawsuits, saying they

have equal experience and qualifications to at least three other US board members (which

happens to be true).

Serafini is not a democracy and it has no equal-pay laws. Moreover, everyone in Serafini is

required to retire at 65. The stated reason for this law is that the country must force older

workers to retire so younger workers can find jobs. For this reason, the labor office of

Serafini is refusing to grant Michael a work permit.

Although there is no local law prohibiting women from taking management positions in

Serafini, the labor office of Serafini is known for fabricating reasons to deny women’s

requests for work permits. It now is refusing to grant a work permit for Beth. The labor

office claims her paperwork was incomplete, but Max has confirmed it was complete

when it was initially sent. He recalls that he even re-sent her paperwork to ensure

processing. To date, the labor office has not responded to Max’s many requests to confirm

receipt of Beth’s paperwork.

Because of the hold-up with the permits, no action has yet been taken to terminate Elena

or Viktor, and Max is consulting with US operations about what he can do legally and

ethically to resolve these issues.

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