Topic: Review of the company requirement and legal responsibilities for global reporting with a focus on strategic and legal responsibilities.

Module 7 Unit 2 Culture and ethics Page 1

Master of Science in Business and Reward Management

Module 7 V 1 01.01.15

In Partnership with

The University of Derby Corporate

Managing International or Global Remuneration Practice

UNIT 2 - THE INFLUENCE OF CULTURE AND ETHICAL CONSIDERATION

Module 7 Unit 2 Culture and ethics Page 2

Copyright CIPP

April 2015

All rights reserved. No part of this document may be reproduced, stored in a retrieval system, or transmitted, in any form or by other means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder.

This booklet may not be sold, lent, hired out or otherwise dealt with in the course of trade or supply in any form of binding or cover other than that in which it is published without the prior permission of the publisher.

This booklet contains public sector information licensed under the Open Government Licence v3.0.

Whilst every effort has been made to ensure the information included complies with current legislation neither CIPP nor the tutors can be held responsible for any errors or omissions.

Module 7 Unit 2 Culture and ethics Page 3

TABLE OF CONTENTS

LEARNING OUTCOMES 5

THE CHALLENGE OF CULTURE 6

What is culture 6

Cultural influence 8

Language and communication 11

Language influence on payroll process 13

Language as an indicator of culture 14

Communication support of language 15

Religion 18

Values and attitudes 18

Social structure 24

Research for business and culture 24

Hofstede’s theory on Intercultural dimensions 25

Respecting Differences and Working Together 27

Harness the Power of Diversity 27

GLOBAL LEADERSHIP EFFECTIVENESS 28

What is a cross-cultural leader? 29

COMMUNICATION AND DECISION MAKING 31

Better communication techniques 33

Business Card Etiquette 35

Business lunch etiquette 35

Cross cultural business blunders 36

Team Building and Cultural Consideration. 37

CULTURAL SHOCK 38

Situations of Culture Shock 40

Shock through change of management/ownership 40

Module 7 Unit 2 Culture and ethics Page 4

Shock through relocation 41

Reverse placement shock 42

CULTURAL IMPACT ON WORKING PATTERNS 43

Attendance at Work 43

Leave / holidays / vacation 43

Impact on pay expectations 44

ETHICAL BEHAVIOUR 45

Ethical implications of multinational business 48

Corruption 50

Ethics and the organisational stance 51

International ethical regulations 53

IMPLICATIONS OF SECONDMENTS, INCLUDING SHORT AND LONG-TERM

ASSIGNMENTS. 54

Company international assignment policy 57

Scope of Work – Global Services 59

Services provided in Policy 59

APPENDIX EXAMPLE OF INTERNATIONAL ASSIGNMENT POLICY 61

Module 7 Unit 2 Culture and ethics Page 5

Learning outcomes

On completion of the module learners will be able to:

 Appraise the cultural impacts of developing and implementing

global remuneration systems

 Critically review a strategic approach to integrated reporting and

processes, reflecting on the implications for performance

management and financial control

 Design and create an implementation plan for a remuneration

process for overseas employees, critically evaluating the

strategic and operational opportunities and risks

Upon completion of this unit it is expected that you will have adopted the skills to

be able to:

 The implication of culture shock for leadership effectiveness

 Ethical implications of multinational business 

 International business risk including the complexity of gift

perception via bribery and corruption

 Implications of secondments including short and long-term

assignments.

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The challenge of culture

International working has occurred for centuries, but technology has opened the

floodgates. Speed of travel has brought the opposite ends of the world physically

as close as a day for anyone who can afford the air ticket. As McInness says

‘The media and communication environment in which we all exist and

participate is close to real time; things happen, everybody knows

about it, with a 20 second lag (and falling)…Our businesses will fall

or rise depending on how well they adapt.’ (McInness 2012, p36)

International work has effectively overcome time and distance. The other issue

for working with other countries is local cultures. Wibbeke says,

“The simple truth is culture is important because culture controls our

life - with or without our permission.” (Wibbeke 2009 p71)

What is culture

Culture is often talked about but when you try to break down as to what it actually

means it becomes difficult to give any specific definition.

What is recognised is that culture impacts on our behaviour, our ability to be able

to assess the reality of the situation we are in, how we will perceive our

understanding of truth and to help define the way we are likely to react.

The complexity of the word is reflected in the five different points offered by

Dictionary.com for the definition of ‘culture’:

Noun

 The quality in a person, or society, that arises from a concern for

what is regarded as excellent in arts, letters, manners, scholarly

pursuits, etc.

 That which is excellent in the arts, manners, etc.

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 A particular form, or stage, of civilization, as that have a certain

nation or period, e.g. the Greek culture.

 Development or improvement of the mind by education or

training.

 The behaviours and beliefs characteristic of a particular social,

ethnic, or age group, e.g. the youth culture or the drug culture

(Dictionary.com 2013)

It can be dangerous to make assumptions based on the home country’s cultural

attitude and approach to behaviour. Care should be taken when assuming how

individuals from any country will react to requests simply based on the

expectations of behaviour from the head office’s country.

It is also important not to make decisions on how another country’s population is

likely to respond based on perceptions that could easily have been built from the

decision maker’s own country’s cultural stance. It is not difficult to see how a

biased and anecdotal view could be built on misconceptions that really relate to

cultural assessment rather than fact. If nothing else there is a chance a country

may have changed due to various circumstances. For example, look how the

breakdown of the USSR has led to separation and evolvement of each separate

constituent country.

Views and perceptions based on previous experience, possibly even generations

ago can create a real challenge where change has occurred. It is dangerous to

make sweeping generalisations. There are exceptions within every country just

as there are differences within a family: Not all Japanese men are short, not all

country folk are bumpkins. Yet it cannot be dismissed that there are differences;

it is how we use that perception of other people that is important.

Knowing a country and its culture is essential for the advancement of business

trade, but it is just as important to understand it in order to ensure best control

and development of working relationships with employees.

But how can we visualise culture?

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Culture has wide-ranging level and nature of influence. There are visible

differences that can easily be seen, just like the branches and leaves of a tree.

Then there are less visible differences that cannot be easily viewed, just like tree

roots.

Examples of visible differences can include:

 Language

 Eating habits

 Clothing

 Forms of behaviour

Examples of less visible differences can include:

 Beliefs

 Perceptions

 Values

 Expectations

 Attitudes

 Assumptions

Cultural influence

It is recognised that there are distinct differences. Morrison (2002) indicates that

cultural awareness has two distinct natures; homogeneous (such as Japan) and

heterogeneous (i.e. the differing states of Eastern Europe).

Japan can be seen to be self-based, built partly through its language being

unique to the country, as is its religion (Shinto). It has a strong sense of national

identity and group loyalty and this is filtered through the culture to its people.

Module 7 Unit 2 Culture and ethics Page 9

This is compared to all those differing states of Eastern Europe which when split

began reverting to separate identity and heritage. Despite being suppressed into

one group for many years they wanted to return to different languages, religions

and attitudes, but found restructure had led to new border lines and some

evolvement or greater fragmentation, for example Yugoslavia.

Morrison (2002) suggests elements of national culture are reflected through:

 Common language or dialect

 Shared religious and moral values

 National symbols and rituals (flags, festivals, particular places

and monuments)

 Shared history

 Patterns of family life and values

 Roles of males and females

 Attitudes to education

 Relationship between the individual and group, including work

organisation and state

 Ways of resolving conflict

 Geographical homeland

Reflect on Module 2, Section 4 considering factors that influence culture

and the discussion on the implications behind each of these factors.

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It is hoped you recalled the web diagram with culture at the core and the

following areas of influence – Language, Communication, religion, values and

attitudes and social structure.

Bannon & Mattock (2003) suggests that a country’s culture will be influenced by

three key factors:

 Topography – how well the country is defined by physical

borders, its landscape and weather

 Religion – Muslim, Christian or any other

 History – length, violence, autonomy

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Trompenaars (2006) suggests that culture distinguishes itself by the way it

resolves solutions because of their attitude in light of:

 Relationships with people

 Time

 The environment

All of these areas of cultural influence have an impact on both inside the location

and in relationship with other areas. An organisation needs to balance its own

cultural style with the expectations and perceptions of each global environment if

it is going to achieve harmony and productive activity. It also has to anticipate

and handle its presence in relation to the culture of the environment and third

party activity.

Language and communication

The issue of language and the impact on communication is important because it

encompasses more than just the spoken word. Even when we believe we are

speaking the same language, it will soon become apparent that the meaning and

context of the spoken word can be different depending on the influence of

location and culture.

Culture is often at the root of communication challenges. Exploring historical

experiences and the ways in which various cultural groups have related to each

other is key to opening channels for cross cultural communication. Becoming

more aware of cultural differences, as well as exploring cultural similarities, can

help individuals communicate with others more effectively.

It is important when finding oneself in a confusing situation to consider whether

culture is shaping personal reactions. It is really important to try to see the world

from the other's point of view.

Translation between languages is made complex because the differences

between languages is more than direct word-to-word matches. The challenges

include:

Module 7 Unit 2 Culture and ethics Page 12

 Whether the word exists

 Whether the same word means the same thing

 Whether the word can have more than one meaning

The alphabet and indicators

Some languages have different alphabets; some of which have letters that are

specific to that particular language. There are several books specifically

researching into the development of alphabets, but the challenge for any

organisation is ensuring they not only have the correct spelling but the correct

word to say what they want to communicate.

Many languages area based on the Latin alphabet, but that does not mean they

use all 26 letters. Hawaiian has 18 letters, but will only use some letters for

foreign words. Compare this to the polish language, which has 32 or Sindhi,

which has 51.

Then many countries use indicators with letters to adjust the meaning or

pronunciation of either the letter or the word in total. The action is called

‘accented’ and there are names for each. For example the accent in German is

an umlaut of double dots as a ë or ä. Alternatively the accents in French have

different names including:

 aigu ´ (acute accent) only on an e

 grave ` (grave accent) on an A, E, or U

 circonflexe ^ (circumflex) on an A, E, I, O, or U

 tréma ¨ (dieresis or umlaut) can be on an E, I, or U

In Spanish one accent is called a tilde, for example in mañana.

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This can often be the most challenging part of learning another language when it

is not part of the norm for the learner’s own language.

Chinese is a totally different process. Officially there is no alphabet, because

each word itself has a picture or could be said to be a letter. Modern Chinese has

moved to a system of using syllables to sound out the spelling. To help be able

to use computers there is a system for typing the syllables as words which when

entered are then analysed to produce the pictorial shape associated to the total

word itself. This process is called Hanyu Pinyin.

Language influence on payroll process

Understanding that language between cultures is more than the words meaning

helps console those individuals who find it difficult to learn a new language; to be

truly fluent the individual has to appreciate more than the word meaning but

context as well.

Different countries have differing language but there are some common

terminology used in payroll throughout Europe

UK Terminology

France Belgium Portugal Netherlands Sweden

Payslip Bulletin de

Salarie

Recibo de Remuneracoes

Salaris Compenten

Preliminar Avrakning

Net Pay Net a Payer

Net Liquido a Receber

Uit te Betaken

Nettolon

Gross Pay Salarie

Brut Salarie

Brut Totol dos Abonus

Loonheffing Brutolon

It is also important to understand there may be a legislation requirement to

provide multiple languages in the same country. In the UK there is an

expectation to provide forms in Welsh as well as English, in Canada to have

French as well as Canadian English.

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Because of all the sophisticated nuances’ for ensuring effective and motivational

communication, some organisations site the importance of using local staff as

essential.

Language as an indicator of culture

Reflect on Module 2 Section 4 review of Hall and theory on language as it

reflects culture.

Either there is attention on the detail of the words used or there is more attention

to the manner or context in which it is said.

HIGH CONTEXT VS. LOW CONTEXT COMMUNICATION

Hall (2005) suggests that cultures are reflected in language by the way the

individuals react to the spoken word. He used the expressions "high context" and

"low context" as labels denoting inherent cultural differences between societies.

High-context and low-context communication refers to how much speakers rely

on things other than words to convey meaning.

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Hall (2005) states that in communication, individual’s face many more sensory

clues than they are able to fully process. In each culture, members have been

supplied with specific "filters" that allow them to focus only on what society has

deemed important. In general, cultures that favour low context communication

will pay more attention to the literal meanings of words than to the context

surrounding them.

INDIVIDUALISTIC VS. COLLECTIVISTIC CULTURES

There are two contrasting cultural orientations: one values individualism and the

other values collectivism.

In a worldwide study of 116,000 employees of IBM, Hofstede (2001) found that

the most fiercely independent people were from the US, Australia, Great Britain,

Canada and the Netherlands, in that order. In contrast, the most interdependent

people were from Venezuela, Colombia, Pakistan, Peru and Taiwan.

Having two different types of focus can make the interaction between the

opposing parties a challenge. High context groups such as China and Korea are

focused on the person speaking and the relationship between them – status in

that area is key to the relevancy of the message being given. In low context

groups (for example Germany, Canada and US) it is the specifics of the words

being used that are essential. They have a much greater focus on the

terminology and legality of words being said – the message is important and to a

lesser point who is doing the speaking.

Communication support of language

Communication is more than the verbal language. Other than the word that is

actually spoken there is consideration needed for:

 Use of body language

 The behaviour for how we treat each other and its subtext

 Presents - gifts

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When reviewing Module 2 Section 4 the implications of body movement for as

previewed by different cultures was discussed, for example the hand gesture of

finger to thumb touching.

 In USA and UK this sign is considered OK

 In Japan it means Money.

 In Russia it means Zero

 In Brazil it is an Insult

Another gesture that can create confusion relates to the act of saying thank you.

Grosse & Reker (2010) suggests that in the US, Germany and South Africa to

indicate a signal of appreciation – that of ‘thank you’ – an acceptable visual act is

to press the hands together figures facing upwards – in the shape of a child

saying a prayer. It is a style that has been adopted particularly by Hollywood

entertainers and literary figures and has been suggested is an extension from

spiritual acts and implies modest appreciation.

Yet in Zimbabwe, Grosse & Reker (2010) advise only men are allowed to make

this kind of shape, and even then it should be with the fingers facing outwards as

if pointing to the person being spoken to not up to the sky. Women show their

thanks by cupping their hands together in a shape that looks like holding a

butterfly or small insect

Module 7 Unit 2 Culture and ethics Page 17

Kenya the gesture is made by clasping the hands together as if trying to shake

ones own hand, and in many other countries, thank you is shown by placing

ones right hand on the heart (like the US salute when their national anthem is

played).

So it can be quite dangerous to use the body to ‘speak’ ones feelings unless you

are very sure who you are talking to – and which version of sign language they

are going to read from your act.

The signals we give in how we behave in someone’s presence provide

information about both our feelings and our valuations about them. Just like

language the meaning behind some body messages are changing, making the

relationships quite complicated. The cultural expectations for acceptable

behaviour is evolving as time passes. Perceptions and expectations change

because culture is a living and evolving phenomenon.

Take the example that in the UK in the past men would have stood in the

presence of a lady joining a group or raised their hat in recognition of someone

as they walked past them in public. Some individuals still follow those customs

but later generations are not necessarily doing so.

Reflection of Module 4, section 2 identifies the giving of gifts is another form of

communication. However the treatment and expectation for such provision vary

as to what is acceptable and what is not. Tipping and thank you presents may

be acceptable in certain countries and for certain professions, whilst in other

situations it would be an insult.

Care has to be taken even in the act of presentation. In some countries it is the

tradition to give a gift when first meeting whilst in others it is on leaving. In parts

of Asia when handing over a gift two hands should be used, whereas in Saudi

Arabia and many other Muslim countries the left hand is unclean so only the right

hand should be used to pass the gift over.

If giving flowers, it is important to remember there can be associated symbolism;

the chrysanthemums is a symbol of death in France, in others a rose would be

too personal as it is a lovers gift regardless of colour. In certain countries it is

rude if there is an odd number of flowers and an even number in others.

Module 7 Unit 2 Culture and ethics Page 18

It is also important to consider how the present is wrapped. Black and white

paper represents death and funerals for Asia and Africa would appreciate bold

bright colours.

In Asia it would be expected to actually refuse the gift for anywhere up to three

times, it shows humility, but imagine if the present was not reoffered.

In Japan the gift is restricted to periods in the year with July is seen as a time for

gift giving – Ochugen as a token or homage to ancestors or possibly celebration

of the summer. December it is Oseibo and is the point for saying thank you for

service and loyalty. Such gifts are seen as key to the working relationship.

Religion

Reflection of Module 2, section 4 should have indicated how religion has been a

major influencer in the way culture and legal development has occurred for

countries. In some places the religion influence has retained its influence to a

much greater extent than others and this has implications on the way people

behave and expect to be treated. It can influence attitude towards others, and in

some situation, create severe restrictions in co-operative interaction. Not all

countries adhere to a strict religious link but where it does exist it can be difficult

to always fully understand the passion or strictness of their cultural rules.

Religion also can have a direct impact on working activity, which an employer

must understand in order to maintain good working relations, such as religious

festival stopping work or restricting eating or drinking. Consideration has to be

given over treatment of staff – for example avoiding meetings on inappropriate

days. It all depends on the intensity of the religions regulations.

Values and attitudes

As will have been identified, this is an extensive area for considering the impact

on both emotional expectations and perceptions of what is acceptable and

unacceptable standards of behaviour. It is reflected both in the way the individual

expects to behave themselves – what is allowable and what is not – as well as

defining what is good or bad behaviour from others.

Module 7 Unit 2 Culture and ethics Page 19

It can be seen in the way individuals treat each other and the value they place on

things like life value, honesty and attention to timeliness.

Attitudes relate to the style and approach for reacting to a situation or people.

The response made will have three facets:

 The content which is the value or beliefs that cause the reaction

 The structure which is the aspect of feeling – the emotive

element

 The function which is the style of behaviour which is based on

values

The big difference between values and attitudes is that an individual can choose

to override their inclined reaction by taking into account values and beliefs that

are not their own. This is the deliberate use of emotional intelligence to adapt

their normal attitude trends. So someone working in a multi-cultural situation

adapts to reflect not just their own values but the other countries as well.

There are different behavioural patterns that are classic indicators of different

values leading to diverse attitudes in approach including:

 Time – their attitude towards punctuality, and respect of time

keeping, their focus on the value of time and the concern about

now rather than the future

 Age – value for maturity, treatment and regard to youth and what

merits protection

 Gender – attitude to treatment through gender, value of their life

and the way they should be treated or protected

 Education – respect for learning, focus on standards and

requirement for professional respect

Module 7 Unit 2 Culture and ethics Page 20

There have been differing levels of research into these aspects.

Time

Some countries have a much stricter value to punctuality. For example, in

Germany it is important to be punctual. Latin America in contrast, would expect a

meeting to start anywhere up to 45 minutes after the designated start time.

Some countries are perceived to be of a slower pace; including Southern Ireland.

Anthropologists suggest that the attitude to time is basically the cultural reaction

to the members’ reaction to value of life and the meaning behind existence.

Kluckholn and Strodtbeck (1961) suggest a ‘Values Orientation’ theory that

promoted principle of three attitudes:

 Present-orientated – timeless, traditionless and ignoring the

future

 Past-orientated – focused on maintaining and reinstating

traditions

 Future-orientated – envisaging a better future

They suggest it is future orientated cultures that are more likely to experience

economic and social development.

The handling of activities within time can either be sequential; one task at a time,

or synchronically; multi-tasking. It is a common comment in Europe to suggest

that women will multi ask whilst men cannot; but there is a serious issue for this

within cultural implications.

European and American cultures are inclined to sequential; planned, tabled or

organised. Being late has implications on other events. Sequential cultures

value punctuality and dealing with the matter in hand.

Argentinian and South Korean cultures tend towards synchronic ways. They

value reacting to the variable tasks in hand and particularly the interaction with

the person present with them; so if someone visits unexpectedly they will get

Module 7 Unit 2 Culture and ethics Page 21

attention. They are much more relaxed, valuing interaction and multi activity

which can divert attention. Deadlines tend to be more flexible and less likely to

be adhered to. To a sequential culture this could be read as meaning having no

respect; but actually they are more interested in relationship building than

punctuality.

These classifications are also found to reflect in the attitude on food preparation.

Sequential looks a methodical preparation with just enough per person; whilst

synchronic provides lots of variety per meal with a tendency to have extra

prepared for the unexpected guest.

As always there are exceptions to these trends. However, a relaxed value of

punctuality would be a major challenge to the typical person in payroll who is

used to deadlines and adherence to tight schedules.

Age

Reflection will recall the comparison of US accepting the young high-flier,

investing money in youthful energetic skills, compared to China where true

respect is given to senior individuals.

Simply putting in legislation to protect employment rights to a person regardless

of age does not in itself alter the level of cultural respect given to a person based

on their maturity. That kind of value looks at other aspects of treatment; such as

being deferent in communication, of giving added value to comments and ideas

from older employees and the expectation of treatment in all aspects including

standing in the presence of an older person, placing their choice and comfort in

front of other interests.

Gender

It is well known that different cultures have different values and levels of

recognition towards gender. In some cultures the male is not just associated

with strength but as being innately the person fit for decision-making. Women

are meant for carer roles. In others, the woman is the person who is seen as a

key leader and the head of the social structure.

Often the value awarded to the individual will be based on religious attitudes.

Different beliefs have evolved whilst some have adhered to attitudes that have

Module 7 Unit 2 Culture and ethics Page 22

seen little change over years. An example is in Christian faiths, the reference to

equality is that of equal rights, whilst in Muslim legislative definition talks about

equal dignity, which has a subtle difference.

Reflection of attitude can be symbolised in the way the women are treated in

terms of education; the courses and resources that are made available to them.

The type of work that an individual can do will reflect the value placed on a

gender. It took years in even those countries that appear to be very liberated to

tolerate the idea of a woman doctor or engineer.

Equally it is only in the last decade that a male midwife would be accepted

although a male doctor was traditional.

In some countries women are still not openly allowed to hold managerial roles

because the role is seen to be aggressive, their role should be in nurturing such

as that of a teacher, advisor and even political areas.

We all appreciate that fashion is a way of reflecting what is acceptable or seen

as desirable in making a gender attractive in the eyes of others. In some cases

the requirements are physical change, which to those not involved in the culture

find difficult to understand or accept.

It was only in the 21 st century that feet binding (the deliberate squeezing of girls

feet into tiny shapes) were truly dealt with, although the ban and strict monitoring

still takes place in remote districts in China to ensure the practise is not

reintroduced.

Certain cultures still look to body piercing and tattoos.

Module 7 Unit 2 Culture and ethics Page 23

Another indication of gender evaluation is clothing; what is acceptable for

appearing in the presence of others. We are all aware of the differences

between cultural expectations on how much flesh should be shown and the

challenges this can have if we do not have the same cultural values or concerns.

It is important to understand this is not about fashion but about faith and values.

Equal pay and equal value for pay are legislative steps taken to try and force,

through compliance, to meet claimed cultural equality. It might be asked that if

the culture truly accepts equality, what is it that makes it necessary to require a

law to enforce it to be put into action?

Cultural expectation has indirect impacts on acceptance of all sexual issues.

Countries which indicate gender equality standards have also been shown to be

more likely to hold greater tolerance to same gender sexual preference; although

not in every case and not always to the same level of acceptance.

Being aware of this is important when working cross-country particularly when

taking responsibility for the safety of employees. Appointment and treatment of

employees regardless of personal sexual preference may be acceptable in parts

but not all locations of a global organisation; whatever the ethical feelings it is

important to ensure the safety of staff in their location.

Education

The value of education would normally be expected to be of priority for every

country, but this is different depending on the accepted culture and roles of

people in society. This ranges from self-financed to state aided. Depending on

Other extreme practices include neck ringing

(elongating the neck by adding up to 20 rings

of metal) by some places in Asia (Kayan

Lahwi) and some tribes in Africa.

Module 7 Unit 2 Culture and ethics Page 24

cultural slant there may be expectation of potential learning restricted by level of

personal family affluence, gender of the individual or focus of learning by

theoretical experience, apprenticeship program or pure life learning.

Social structure

This aspect of culture is often the one that creates the most problems when

handling working relations. The challenge of mixing cultures is that differences in

respect and appreciation of others make working relations difficult to build until

tolerance in attitude can be established.

Specific areas for consideration include attitude towards age, gender, people of

other religions, individuals with physical or mental differences, and what nature of

class division they use to create a status benefit on things like money or blood

line.

Part of culture is the way it creates expectations and acceptances of behaviour,

as well as perceptions of how others are likely to behave. There are extensive

theories and debates over the issue – the problem being they are created by

parties who themselves are products of their own cultural education.

Research for business and culture

A challenge for business is that often research on this topic has been performed

by people based in the west, from so called developed countries. Business

research naturally became biased as the tests were based on employment

groups within America or Europe. The assumptions for performance and

behaviour used for those followed the cultural norms as the standards.

As evolvement into wider working groups have occurred, so research and theory

has extended into a wider range of working environments allowing greater

availability of global and international context of business activity to be

considered.

Module 7 Unit 2 Culture and ethics Page 25

As researchers themselves became aware of the influence of culture they had to

find ways of ensuring bias was limited. Care is needed to ensure that ‘attitude’

and ‘norms’ are culturally assessed if business theory is to have meaning that is

relevant to the true working situation.

Hofstede’s theory on Intercultural dimensions

The creation of Hofstede’s intercultural theory followed years of research using

organisations to respond to questionnaires and tests. Hofstede (1980), identified

specific dimensions and sites that offer comparable stances between countries.

Research on Hofstede's five dimensions on national culture – a starting

point would be Module 2, section 4 but try comparing countries to appreciate impact

of assessment.

Hofstede's theory

Objective focus

Power placement

individualism V group

Emotional responce to

change

Time focus

Module 7 Unit 2 Culture and ethics Page 26

Building Trust Across Cultural Boundaries, Asheman, Bing & Laroche (2000)

suggest that research shows a strong correlation between components of trust

such as communication effectiveness, conflict management and rapport, as well

as productivity. Cultural differences in multicultural teams can create

misunderstandings between team members before they have had a chance to

establish any credibility with each other. Building trust is a critical step in

creation and development of such teams. As a manager of a multicultural team,

it is necessary to recognize that building trust between different people is a

complex process, since each culture has its own way of building trust and its own

Module 7 Unit 2 Culture and ethics Page 27

interpretation of what trust is. Cultural differences mean different things in

different cultures.

For instance, in the USA, trust is "demonstrated performance over time". Trust

can be gained from colleagues by "coming through" and delivering on time any

promised commitments. In many other parts of the world, including many Arab,

Asian and Latin American countries, building relationships is a pre-requisite for

professional interactions. Building trust in these countries often involve lengthy

discussions on non-professional topics and shared meals in restaurants. Work-

related discussions start only once a counterpart has become comfortable with

the individual as a person.

Respecting Differences and Working Together

Anthropologists discovered that, when faced by interaction that is not understood

it is normal for people tend to interpret the others involved as being "abnormal",

"weird" or "wrong".

Awareness of cultural differences and recognizing where cultural differences are

at work is the first step toward understanding each other and establishing a

positive working environment. It is important to try and use these differences to

challenge personal assumptions about the "right" way of doing things and in fact

can be a chance to learn new ways to solve problems.

Harness the Power of Diversity

Diversity is a specialised term describing the range of difference that can exist in

any relationship. Any organisation that has international interest will have a

workplace that will include people from various backgrounds and cultures and/or

diverse businesses.

A business can find a strategic competitive gain in an organisational and cultural

context by seeking to leverage, rather than diminish, opposite forces. “An

important but widely overlooked principle of business success is that integrating

opposites, as opposed to identifying them as inconsistencies and driving them

out, unleashes power. This is true on both a personal level (the balanced

Module 7 Unit 2 Culture and ethics Page 28

manager is more effective than his or her peer at one end of the control

spectrum) and on organisational level as well.” Clarke & Chen (2007) pg. 32

Accepting the importance of diversity is a reason to accept cultural difference as

being a useful thing not automatically a negative situation.

Certainly for payroll it can be essential to have diversity in knowledge when faced

with handling the payment process. Separate locations normally have different

requirements for legislative and culturally expected treatment when processing

reward for work. Using the local knowledge could be the answer to handling that

responsibility.

Global leadership effectiveness

With the continual development of globalization and internationalization, few

businesses can now escape the need to work across cultures. Today’s leaders

need to be adept at leading and managing people of different cultures; they need

to listen, be able to talk to and understand what people are actually saying,

wherever the individual comes from and no matter how diverse the culture

involved.

It must be remembered that people from different cultures may not just use

different language – they may view their leaders in different ways and the leader

needs to understand the workforce equally as much as be able to make

themselves understood.

Building a management team in a new country may have many more challenges

than first imagined. The respect offered to those within a business, which has

grown organically, may have been earned over years. For new managers being

deployed into countries that are new to them it is essential to consider guidance

and support to ensure they understand both cultural differences for building and

running businesses in these territories.

Identifying best talent for such challenges is not just about the individuals who

have created the best profit in the past or managed the most efficient

Module 7 Unit 2 Culture and ethics Page 29

businesses. The managers, who are diplomatic in their dealings, understand

political and social situations as well as having the ability to look beyond the

obvious are going to be serious contenders for the role.

What is a cross-cultural leader?

Bass (1997) suggests that leadership is a universal phenomenon. Spreitzer, McCall jr & Mahoney (1997) describes an international executive as

someone “who is in a job with some international scope, whether in an expatriate

assignment or in a job dealing with international issues more generally”.

(Spreitzer et al 1997, p19)

They have a duty as part of their role to handle the international impact and

implication. As part of this there is a need for cultural awareness.

(Osland et al. 2006) In research considered further about the impact of global

leadership and suggested such activity was “a process of influencing the

thoughts, attitudes and behaviours of a global community to work together

synergistically toward a common vision and common goals”. (Osland et al. 2006,

p21).

Their theory identified six core dimensions for the global leader skill:

Module 7 Unit 2 Culture and ethics Page 30

A manager must assess skill sets, training and productivity within the team.

However just as in a home nation situation, attitude of the individual goes a long

way in assessing their appropriateness to the role.

Rentsch, Mot & Abbe describe this as a specific trait that must be attributed to

multicultural leadership and they call it multicultural perspective taking. This is

the ability “take the perspective of another within the cultural context, to apply

cultural lenses and to adapt quickly when encountering individuals or groups

from unfamiliar cultures.” Rentsch, Mot & Abbe 2009, p18)

A similar theory is offered by Gelfand, Erez & Aycan. They explain it as being

cross-cultural organizational behavior (OB) suggesting that it as having “cross-

cultural similarities and differences in processes and behaviors at work, and the

dynamics of cross-cultural interfaces in multicultural domestic and international

contexts.” (Gelfandet al, 2007, p52)

Johnson, Lenartowicz & Apud discuss this type of activity under the description

of cross-cultural competence (CC). Here the theory suggests international

competence needs “an individual’s effectiveness in drawing upon a set of

knowledge, skills and personal attributes in order to work successfully with

people from different national cultural backgrounds at home or abroad”. (Johnson

Cross cultural

Leadership skills

Cross- cultural

relationships

Triaits and values

Cognitive orientation

Global business expertise

Global organizing expertise

Global visioning

Module 7 Unit 2 Culture and ethics Page 31

etc. al, 2006, p51). Their focus is the use of knowledge that has already been

used rather than how the leader is acquiring that skill and knowledge. Success is

measured by use rather than existence of knowledge.

A business must give thought to how effective a manager may be when asked to

run a business outside of their home nation. Supervisory management is a skill

that can be taught and developed and then put into practice. Those same skills

are transferrable across countries when managing teams and ensuring everyone

in the team is aware of their role.

Communication and decision making

A leader will come across cultural issues in many forms.

The manager must think about the ethics, history, customs and practices within a

country to determine how best to maximise the talent available and how to

ensure communication is effective.

Whichever definition of leadership is used the main recognition is that the role

involves being able to influence people to meet a goal – and that if the role has

international aspects the skills have to include the capability of meeting the

impact of cultural difference. Motivation and expectation of the individual will be

effected by the influence of their own specific cultural exposure. If the leader is

to be understood and respected they have to be successful in reaching out to

other cultures in a way that will lead them to be understood.

Across each country a manager must ensure that they take time to understand

the organisational control that has been developed in order to be effective in their

day-to-day communication

Decision-making is often left to the managers but it can be seen as a sign of

disrespect if direct contact is made with a subordinate of a manager rather than

through the manager. Taking time out to understand the hierarchy of the

business structure, as well as the nuances behind the decisions taken to put

people into posts, is an important step for a leader to take.

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Ensuring continuity and respect is given to local customs is very important. For

example reward and recognition can be achieved in very different settings. A

visiting manager may see a local practice to award certificates for advancement,

as demonstration of values being upheld, as irrelevant. Actually it could be of

vital importance to the local team who culturally perceive it as recognition of

development of the individual and motivation for the success of the workforce.

To ensure messaging and instruction is received well, it is important to test and

question the understanding of the receiver. It is not enough to take silence as to

mean understanding. An example could be a situation processing a team

communication where the message is met by silence: they may have remained

quiet, but does this mean they have understood the message? It could be that

through respect for hierarchy only a manager will do a response and his

subordinates are expected to remain quiet. They may not feel able, out of

respect, to ask or challenge the message supplied.

This is something that will have to be worked through with the local management

when determining how the instructions are validated. It may be through matching

of detailed work instructions and positive reinforcement of objectives with peer

checking and detailed segregation of duties for audit and monitoring that

reassurance can be achieved. In other situations the norm may permit the

individual to ask outside of line protocol.

The Practical Challenges of Communication

Today's businesses are complex entities. However, one fundamental principle of

success remains constant – the need for communication.

The role of the intercultural manager is by no means an easy one. As a result of

culture, all aspects of communication contact needs to be considered in light of

various protocols and expectations. Culture takes the art of management to

another dimension and a different challenge that must be met in order for the

human elements of organisations to succeed.

Module 7 Unit 2 Culture and ethics Page 33

When doing business abroad it is important to understand the local culture.

Culture includes areas such as a country's norms, values, behaviours, food,

architecture, fashion and art.

As workforces become increasingly multicultural and businesses continue to

expand overseas, the homogenous workforce has become a thing of the past.

The cultural diversity of businesses necessitates that internal communication

now takes note of the intercultural element if it is to be truly effective.

Better communication techniques

As already discussed, communication manifests in various forms, both verbal

and non-verbal. One area of increasing concern for businesses is how to nurture

and maintain effective intercultural communication between employees.

Management today have to ensure that they are understanding and being

understood across cultural boundaries.

Reflection of Module 2, section 4 will have identified some specific suggestions

for care over communication.

 Clarity on communication;

 Care about timetabling and planning;

 Anticipating possible difference in working expectations;

 No assumptions.

Intercultural management need to consider those aspects and the following:

 Respect and Courtesy – whatever the status

 Tolerance – try not to react without careful review and reflection

Module 7 Unit 2 Culture and ethics Page 34

 Cultural Taboos – pre-empt where ever possible to avoid conflict

 Know the Law – ignorance is not bliss

 Encourage Interaction – make effort to provide interactive links

 Simplify Language – take care over words and expressions

 Make Sure People Understand – do not assume the message is

clear

 Write Instructions to support verbal messages

 Be Flexible in presentation

Of course, it hardly needs pointing out that the requirement is that where cross-

cultural differences are proving an obstacle to communication within the

workplace, it is important to try and analyse where things are going wrong. There

is a need to make the effort of standing back and considering who are involved,

what is the situation and context of the problem as well as what type of

communication is involved (written, verbal, electronic, personal, timing). It is only

by properly assessing and considering all factors, including cultural influence, will

the root of the problem be understood and a solution be found.

It is important to understand where potential obstacles lie in communication in

order to effectively adapt and achieve good practice. Graphics and illustrations

sometimes offer a useful way to present information to help ensure

understanding of language. That is why it is often useful to use pictures to

support text for explaining health and safety issues – simple illustrations can

communicate across cultures.

Consider supporting the presentations of tables of statistics in the form of charts

and diagrams.

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Business Card Etiquette

One area of culture that is important for the international businessperson is

etiquette. Understanding business etiquette can help the individual feel

comfortable when dealing with foreign friends, colleagues, customers or clients.

Knowing what to do and say in the right places will help build trust and open lines

of communication. One aspect of etiquette that is of great importance

internationally is the exchanging of business cards. Unlike in North America or

Europe where the business card has little meaning, other than a convenient form

of capturing essential personal details, in other parts of the world the business

card has very different meanings.

Even the act of presentation is important. In Europe it is an acceptable practise

to pass the business card quite casually either at the beginning or end of a

meeting. It acts as a formal link for reminder of contact information. In Japan the

requirement is to make a formal presentation, using both hands and bowing

whilst formally offering the token as a gesture of information.

Business lunch etiquette

For the international globetrotter it is always beneficial to have an appreciation

and understanding of a local culture and any etiquette or protocol. This includes

understanding the issues to acceptable behaviour whilst eating.

Business lunches are very common in many countries and cultures. Food itself is

one of the most visible manifestations of a culture and is something people are

proud of and like to share with guests to their country. However, just as the food

changes from culture to culture so does the intention and etiquette surrounding

the meal called ‘lunch’. In some cultures, the business lunch is a time for chit-

chat and building relationships, in others simply a fuel stop at which people

continue to talk about business, known as the "working lunch".

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Cross cultural business blunders

The following are examples of how cultural ignorance can and does lead to

negative (and much of the time humorous) consequences. The following cultural

blunders illustrate how crucial cultural awareness is in international business

need.

 Managers at one American company were startled when they

discovered that the brand name of the cooking oil they were

marketing in a Latin American country translated into Spanish as

"Jackass Oil."

 American Motors tried to market its new car, the Matador, based

on the image of courage and strength. However, in Puerto Rico

the name means "killer" and was not popular on the hazardous

roads in the country.

 A US telephone company tried to market its products and

services to Latinos by showing a commercial in which a Latino

wife tells her husband to call a friend, telling her they would be

late for dinner. The commercial fell flat because Latino women

do not order their husbands around and their use of time would

not require a call about lateness.

 Cologne for men pictured a pastoral scene with a man and his

dog. It failed in Islamic countries as dogs are considered unclean.

Proctor & Gamble used a television commercial in Japan that

was popular in Europe. The advert showed a woman bathing,

her husband entering the bathroom and touching her. The

Module 7 Unit 2 Culture and ethics Page 37

Japanese considered this ad an invasion of privacy,

inappropriate behaviour and in very poor taste.

 An American businessperson refused the offer of a cup of coffee

from a Saudi businessman. Such a rejection is considered very

rude and the business negotiations became stalled.

A Japanese manager in an American company was told to give

critical feedback to a subordinate during a performance

evaluation. Japanese use high context language and are

uncomfortable giving direct feedback. It took the manager five

tries before he could be direct enough to discuss the poor

performance so that the American understood.

 One company printed the "OK" finger sign on each page of its

catalogue. In many parts of Latin America that is considered an

obscene gesture. Six months of work were lost because they had

to reprint all the catalogues.

Team Building and Cultural Consideration.

When building a team within a new country, it is important to factor in the local

customs and practices, supporting families and providing a flexible approach

where deemed necessary to allow for child-care or elderly relative care.

Providing robust training can be seen as a real positive for any employer looking

to employ the best local talent.

When building new centres/operations overseas, consideration needs to be

given to the right candidates to support them locally. Do they have an inclusive

approach? Are they open to learning about new cultures? Do they want to travel

and work in a new country and have they had such experience in the past?

Module 7 Unit 2 Culture and ethics Page 38

Cultural Shock

The exposure to a new culture can lead to various emotional reactions, which

can range from full acceptance to total resistance and resentment. The ability to

reach a state of acceptance is really the reaching of a state of understanding and

can take variable time for achievement depending on different factors. Without

realising it there is a need to move through a phase of assessment and

acceptance.

Accessed from Journal Management Systems. Barker (1990) offered the above diagram to show the phases of reaction whilst

acclimatising to a new living or working environment where culture is different.

The four stages of culture shock include:

 Honeymoon phase – a period when a person is feeling excited,

even elated to be experiencing new culture. During this time

there is still close memory of the original culture placement that

can act as a level of comfort.

 Culture shock phase – Also known as the distressed period:

Here the person is showing rejection for the new things in the

culture. They may feel confused or even inadequate about what

is happening – things do not make sense.

Module 7 Unit 2 Culture and ethics Page 39

 Adjustment phase – this is the period where re-integration may

begin There can be a state of anger and frustration as there is a

realisation of dislike of some things but comparison and learning

is beginning to develop. There may be a level of rejection of the

new but there is also acceptance and understanding of some.

Whilst the differences are accepted there is still missing of past

home.

 Mastery (or recovery) phase – here there is confidence and

independence as the new is understood and handled. The

individual feels able to trust and make choices with more

enjoyment and security.

In some cases the movement is rapid, for others it takes time and it is in those

situation that the impact of the learning process is more apparent. The

requirement to move through the ‘negative’ phases are recognised when

suffering difficult emotional reaction. If the individual is able to adjust rapidly

those ‘negative’ periods are short lived and so have less impact.

There are several areas of cultural impact that can contribute to a feeling of

shock. Typical changes include:

 Language (verbal and body)

 Environment – including cleanliness, time and temperature

adjustment

 Clothing

 Food

 Facilities – medical access, entertainment sources, travel

conditions and feeling of security

 New working skills

Module 7 Unit 2 Culture and ethics Page 40

 Loss of history – home, understanding and family.

The most often found symptoms of culture shock are:

 Indications of their feeling isolated

 Being in a state of anxiety and worry

 Showing a reduction in job performance

 Having a high level of nervous energy

 Indications of a state of helplessness

Of course, these can be indications of other problems but if they appear in

someone who is working in an environment that is different than their normal

working place cultural shock could be a contributing factor.

When an individual is not coping with culture shock symptoms it can lead to a

very negative and serious situation and help is needed. Waiting for the person to

just ‘come to terms’ with the cultural situation is not likely to happen without some

support and the damage experienced in reaction to the shock state may be

difficult to recover from unless deal with effectively.

Situations of Culture Shock

It should be remembered that cultural shock could occur in different situations

within the work place. Care is needed to understand the situation of individuals

placed into new working environments.

Shock through change of management/ownership

When an organisation is taken over by a new management structure that is

focused on a different cultural approach, it can lead to shock for the employees

Module 7 Unit 2 Culture and ethics Page 41

faced with new expectations. An overseas company may bring new behavioural

expectations and management styles, which are conflicting in approach to

previous approaches. The individuals facing this change will go through the

same cycle of cultural learning as if they had moved themselves to a new

location. The individuals may be required to adjust to new communication

approaches, different decision-making styles and goal focus.

Their personal ability to adapt to the new requirements will have both a short and

long term impact on their emotional and productive state. The organisation

taking over this need to appreciate this is a transitional state and reaction to the

situation needs careful control.

There is a danger that valuable resources in skilled labour could be lost if the

transition is not managed with support and time to adjust. However, it is also

important that there is a defined time for adjustment or any existing conflict could

remain for an unreasonable period and productivity and effective performance

could be lower than required quality.

Shock through relocation

The most commonly recognised situation of culture shock is where an individual

moves from living and working in a known environment, relocating to reside and

work in a new location where the culture is different than that previously

experienced. The placement of a person into a role overseas is an example

where the decision may have been voluntary, or there may have been a level of

pressure due to career commitment to undertake a role in a new environment for

a period of time.

The shorter the placement the less likely the emotional reaction will have

enduring effect. Initial placement is one that normally generates feelings of

excitement. However, placement of any length can lead to discomfort.

It is quite normal for organisations to include counselling and pre-post

preparation to assist in the adjustment – particularly where the difference

Module 7 Unit 2 Culture and ethics Page 42

between home and placement is significant. It will depend on the level of

experience that individual already has had in being flexible about the placement.

The situation is made more complicated by the impact on their family – whether

partners and children are going with them, as they will also potentially need

assistance in handling the change, or where they are going alone in which case it

may be a challenge due to experiencing separation anxiety.

It will depend on the reason for placement, the level of dependency the

organisation has on that individual and on the cultural stance the company takes

to a commitment of supporting their employees as to the amount of resource and

effort the business will take in helping the individual adjust to the new cultural

situation.

Reverse placement shock

An aspect of overseas work placement, which is not always given enough

attention, is the impact on the individual when they return home from working

overseas.

When they come back to the ‘home’ culture it would be anticipated they should

find it easy to re-assimilate customs. It is however true that in some situations the

return is not as simple as anticipated. There may have been such

acclimatisation to the host situation that it is found difficult to settle on returning

home.

Adjusting to time difference may take a short while, but returning to different

weather conditions, adjusting to safety standards may take longer. If the

absence has been for a lengthy period there may even have been significant

changes and so the ‘old’ culture may now have evolved and need relearning.

The employer many have included in their agreement guidelines of expected role

and financial terms but the other aspects may not have been considered. If the

person is returning and not continuing employment with the organisation they

could well be facing this cultural adjustment on their own.

Module 7 Unit 2 Culture and ethics Page 43

Cultural impact on working patterns

Global organisations have to address cultural expectations when creating

working conditions and pay practises.

For example, it is important when planning a global payday strategy to

understand that Monday to Friday is not the normal working week for every

country. Care needs to be taken not to schedule payments on a non-working

day, for example on a Friday in the United Arab Emirates when banks are shut,

otherwise payments will be late.

It is also important to ensure that, whichever system handles absence from work,

the process holds the information about the non-working days for each country

you are processing a payroll. This will ensure any paid/non-paid absence is

reflected accurately against an employee’s entitlement.

Attendance at Work

In several countries in the EEA an employee’s attendance at work affects their

entitlement to Government funded benefits/incentives, so it is important that the

payroll service provider or in-house payroll team are advised of such absences in

a timely manner. A good example of this is in Belgium where employees receive

a daily allowance from employers towards luncheon vouchers to buy food. The

money to pay for these vouchers is collected via the payroll, with both the

employer and employee contributing, but they are not paid if the employee does

not attend work for any reason so absence reporting is critical to accurate payroll

processing.

Leave / holidays / vacation

In some countries the balance of leave/holiday/vacation due is required by law to

be shown on the employee’s payslip. To be able to do this accurately it is

Module 7 Unit 2 Culture and ethics Page 44

necessary to record each day of leave. Depending on the specific needs of the

country, it might be necessary to accounted for the type of leave taken at the

correct time, for example there may be a difference between company provided

and state or public holiday entitlement.

How leave is accrued and when it can take be taken is also subject to variation

throughout the world. In some countries accrual is only allowed when completing

a full month of work, whilst in others it just needs over 50% attendance. Other

situations may look for weekly accrual rights. In some countries leave cannot be

taken until accrued whilst in others, like United Kingdom it can.

In some countries, particularly in Europe, when a Public Holiday falls on a non-

working day (e.g. the weekend) the employee can chose when they want to take

the day within a stipulated timescale otherwise these are lost. Whilst leave not

taken and carried forward from a previous leave year may need to be taken by a

stipulated date otherwise they too are lost. All these factors may need to be

considered when recording annual leave accurately on a payslip.

Impact on pay expectations

A country where the culture leans to collectivism structure tend to expect

remuneration to be based on equality norm – here the pay benefit is shared on a

standard basis rather than personalised incentive. Individuals would be paid on

a pay scale awarded as a share to the job rather than paying the individual for

their personal skills and contribution to the organisation. It means the status of

‘fairness’ and ‘sharing’ can be maintained – keeping the harmony of inter-

relationships.

The collectivism type of culture is also more comfortable with the idea of

teamwork – and as such accepts the principle of being paid a share of the team

activity.

Cultures that lean to individualistic style are comfortable with reward structures

based on personal achievement. It's the performance related and merit allocated

Module 7 Unit 2 Culture and ethics Page 45

based structure that supports the idea of each person needing to maximise

personal skills and contribution – to be rewarded on individual effort.

Ethical Behaviour

Ethics can be defined as the moral behaviour for conducting activity and is

measured in relation to values guided by cultural expectation. It is commonly

held as an individual situation, but organisations are also expected to be

managed with an ethical stance.

Hill suggests “many ethical issues in international business are rooted in the fact

that political systems, economic development and culture vary significantly nation

to nation.” (Hill, 2008, p19. He argues that what is normal practice in one place

many be unethical in another and consideration of action is essential. “Because

they work for an institution that transcends national borders and cultures,

managers in a multinational firm need to be particularly sensitive to these

differences” (Hill 2008, P20)

He suggests the most common ethical issues that will have an impact within the

business setting, including:

 Employment practices,

 Human rights,

 Environmental regulations,

 Corruption and

 The moral obligation of multinational corporations

Review Module 2 section 4 and reflect the sections covering Ethical

issues.

Module 7 Unit 2 Culture and ethics Page 46

Reflection should have indicated that assessment of ethics is based on

standards learnt through experience within the cultural environment where the

activity is being enacted. In some countries the measurement of what is

acceptable is based on religious guidance whilst in others the standards have

been created through a mixture of social and historical evolvement.

In order to support some of the ethical expectations, legal requirements have

been set in place by local political decision. These vary by country and cover

environmental and social issues, including employment considerations. The

overlap between legal and ethical requirement can become blurred as in some

situations the pressure for behaviour is purely to meet perceived practise rather

than legally enforceable situations.

It is however very clearly a case of each environment having its own process and

it is important any organisation takes care to understand what the existing needs

for that locality are.

For example, many countries do not have rules about the state of dress a person

must have in public and the requirement for certain standards may be purely

monitored by public reaction. In other countries there are legal regulations which

Module 7 Unit 2 Culture and ethics Page 47

may specify the condition – or the rules may be designed so that the breach is

one of ‘public disorder’. The assessment of what that breach means is in

reaction to what is considered as ethically acceptable standards allowing

flexibility depending on cultural development.

Key measurements include legal compliance, cultural perception of misconduct

and political challenge to power. Whether breaches to legal duty or just the

ignoring of voluntary but expected codes of practise, the individual will be taken

to be representative of the corporate image.

Whichever process, the result is an expectation of behaviour where the norm is

to support local cultural standards. It is the commitment and effort made to

comply with those values which are held as the ethical approach of the individual

or the organisation.

There are a number of identified focus areas for an organisation where

consideration about ethical approach will be assessed, and the following diagram

is offered to reflect this:

Ethical response

considerations

Employee treatment

Legal compliance

3rd party respect

Environment - green

behaviour

Social regional

behaviour

Module 7 Unit 2 Culture and ethics Page 48

Ethical implications of multinational business

The need for a multinational to recognise ethical behaviour is as important in the

host as in the home market – it is just the value of what is ethical that can be

different. The challenge is then whether the conditions of ethical assessment are

suitable for the organisation to maintain or if it needs to balance this with their

normal home requirements. Take the use of child labour – what is acceptable in

one environment is certainly not in others – so which will be the standard that the

organisation wants to meet?

The ethical standards of the home might be deemed ‘higher’ than that of the

‘host’. For example when manufacturing and using raw materials from the host

country, asking whether those materials are being sourced in a sustainable

manner may not be an ethical consideration for the host country but could be a

concern for the home. One example is the concern over retail companies using

child labour to make clothing – the issue becomes that of the balance of cheap

production and who is being used to make items.

Corruption and bribery are the most common legal factors for ethical

consideration doing business on a multinational scale. The emphasis and

understanding of what is bribery is a challenge in different localities.

International regulations are starting to establish global standards, but it is a

challenge to meet the aspirations of the international standards when countries

have differing policies and ethical commitment on the ground floor that are

steeped in the history and culture of that country.

Ethical dilemmas are also brought to attention when considering the religious

beliefs of a country and the founders of a business and their beliefs. For

example, a business that has deep roots in the Christian bible belt of North

America may be opposed to the Darwinian beliefs held in the United Kingdom.

That same business may want to do business in a Muslim country and have to

consider its views on halal and how it will accommodate those variations.

Organisation impact on hosts’ culture.

Module 7 Unit 2 Culture and ethics Page 49

There is a concern that the existence of an organisation that has its cultural

experience based on another country will itself influence the host’s style through:

 Exposing residents to new working practises and ideas of

behaviour

 Creating envy from other locals wanting to be treated like this

companies employees

 The act of challenging country cultural practise e.g. treatment of

children or women as employees

 Payment reward behaviour i.e. pay through ability rather than

service.

It is difficult to assess how influential the sub text learning can be when an

organisation moves into a new cultural environment, because there are so many

factors that count, such as:

 The level of dependency on the incoming organisation

 The nature of change that is being promoted

 How strict and unviable the existing cultural values are

The more the local environment needs the presence, the greater the chance they

will respond to meet any requirements to keep the party there unless the existing

cultural or religious standards are robust enough to counteract it. So the

community could welcome and tolerate some influence unless it really clashed

with cultural standards that simply are not flexible.

The fact that an organisation coming into a country can influence the host culture

places a burden on its ethical responsibility and has led to many organisations

deciding to create a policy for strategic behaviour in relation to how far it will

Module 7 Unit 2 Culture and ethics Page 50

integrate itself within that host country’s structure. It is seen to have the same

need as a strategic attitude towards environmental and economic behaviour.

Estevez suggests “There must be a balance for multinational companies to

ensure human rights, culture, financial infrastructure, the environment, the

product is of quality and ethical practices is the foundation rather than just being

considered in the decision making process” (Estevez 2010, p23)

Corruption

Rigoglioso suggests “In some countries, corruption is so common that it is as

expected as a handshake when ordinary people or businesses deal with

government officials” (Rigoglioso 2010, p52)

Research by Dal Bó and Rossi (2007) found that corruption damages nations

whilst making firms inefficient. They found that in countries where government

corruption was higher, organisations needed significantly more employees to get

the same job done as in countries where there was not the same level. By

comparing the findings to non-corrupt societies the employee numbers were as

much as 7% larger than corrupt nations.

They argued the impact of such corruption had a direct cost to the organisations,

which then had a negative impact on the nations’ economies. As the cost of

production or service was inflated, those costs were passed on to customers at

the same time preventing these employees from doing really productive work.

The higher overheads impacted on profitability and success of such

organisations, which placed them at a disadvantage in international markets.

Another other type of corruption was harassment through unnecessary ‘official’

requests; typically there would be a requirement to produce information or to

meet for extra system processes to be dealt with. This leads to either

unnecessary activity or cost to purchase relief from such requests.

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It was evident that this used company resources that could have been spent on

productive value; the outlaying of labour and resources increasing operational

cost.

The third factor was that the increased presence of corruption would lead to

increased employee numbers to deal with investigating and controlling of the

problem in the organisation; the act of risk avoidance coming with a cost, but

regrettably also inflating overheads. Help is available to at least indicate which

countries are inclined to have more corrupt environments.

Reflection on Module 2, section 4 on ethical area should have meant considering

the impact of Transparency International– a non-government lobby group, which

offer theory on the perception of country corruption. The United Kingdom ranks

16 th with Ireland and the USA ranked 18

th . The worst countries are Somalia at

the bottom, with Afghanistan, Haiti, Iraq and Myanmar just in front. Those at the

bottom have been cited in the research as the countries with the most indicators

of bribery being a consistent business activity.

Ethics and the organisational stance

On reflection, it will be recalled the notion that it is now acceptable to consider

organisations in terms of ethical standards. The behaviour of staff belonging to

the organisation is taken as a symbol of the attitude of the business in its

controlling interest. Of course, bad news will travel fastest so the implications of

a country protesting about employees behaviour is taken to be the company’s

preferred stance and it is difficult to establish defence against such findings.

Review Ebert’s and Griffin’s theory on the range of potential organisation

stance of stoical responsibility. Continue research to reflect on issues identified

under Module 2 section 4 concerning corporate social responsibility.

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Hopefully the following three key possible stances, as offered by Dowling,

Festing and Engle (2008), have been recalled:

 Ethical relativist – there is no universal wrong, it depends on the

local culture, e.g. ‘when in Rome do as romans do’

 Ethical absolutist – behaviour should relate to the culture at

home; behave as you were taught to behave

 Ethical universalist – there are fundamental rights and wrongs

that cross boundaries

It is hoped you identified the range of impact as from obstructionist through to

proactive stance. Employer’s key four areas of possible business influence

include:

 Treatment of employees, e.g. pay, training, benefit and support

 Treatment of the environment in the way the organisation works,

e.g. goods used, transportation and control of waste

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 Provision of charitable donations, e.g. money donation for

charities, free goods or services for worthy bodies and education

bursaries

Module 4, Section 2 discussed the implication of corporate social responsibility

(CSR). It explained that CSR is seen to create a sense of wellbeing for the

organisation and the staff – balancing overheads for providing the support with

the impact of respect by the community and enhanced welfare of the workforce

through having been involved in ‘good’ or ‘social’ works.

CSR is felt to be a key factor for companies to consider the welfare of the

workforce and charitable acts that support the local community.

An example raised is, employers who allow staff In India to have the ability to

take community service days in addition to annual leave. Allowing such service in

the community, for example helping a school or church, is given a lot of respect

by the public to the organisation for supporting the employee’s activity.

It has been suggested that recognising the strength of CSR is a win-win for the

business image, with companies that are operating it often being perceived as an

employer of choice by the community.

International ethical regulations

Modules 2 and 4 have discussed several international organisations that have

been proactively moving forward global policies promoting ethical behaviour.

They have discussed

 Organisation of Economic Cooperation and Development

(OECD) including the Anti-Bribery Convention

 The International Law Commission

 The International Labour Organisation (ILO)

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Review the discussion in modules 2 and 4. Do further research using

their web sites. www.ilo.org www.legal.un.org www.oecd.org

Clearly the on-going expansion of organisations in the global environment would

indicate there is likely to be more rather than less of these types of agreements.

ILO (2004) are an example of countries working together are trying to ensure

organisations are encouraged to meet group standards of behaviours – for the

benefit of the countries and best practise of business.

Ethical standards are not going to disappear and it is an insensitive organisation

that believes it is above the control of the control of the environment and local

requirement of where it functions.

Implications of secondments, including short and long-term assignments.

As a company operating internationally, the company will find it necessary from

time to time to assign key individuals from one international location to another.

Such assignments will help the company develop a global perspective and

provide expertise in the locations where it is needed, whilst at the same time

allowing employees to broaden their work experience and develop their careers.

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The transferring of one person to another country has specific issues that are

more complicated that the relocation of an individual within the same situation.

There are additional concerns such as ensuring the legal right to work in that

country and of meeting their needs in a new cultural situation.

The transfer of a person from one country usually is more expensive than a local

‘hire’. In addition, the organisation will have to ensure the local staff adjust to the

arrival of a new colleague with the added concern of coming from another place

– they could suffer culture shock at needing to work with someone who may

have different life perceptions, as well as handling the possible resentment at not

having achieved a promotion for themselves.

Review Module 2 Section 4 and then Module 4 Section 2 for

‘Secondment of Employees’.

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It is hoped the following points were recalled:

Firstly that the cost of hiring someone for a secondment role is going to be more

expensive because there are

 Additional payments to employees as a result of extra

allowances through relocation, accommodation and living

expenses

 Additional administration overheads for recruitment and payment

of employees because of sorting out their employment in the

country and moving them there.

Reflection should have identified issues related to employment overseas include:

 ‘Host’ country Government payments, company registration and

employment registration

 Statutory deduction issues, tax and social security from ‘host’

and ‘home’ country

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 Added administration services e.g. arranging overseas

payments, providing more advice and support for the employee

due to complexity

 Added reporting requirements for ‘host’ and ‘home’ statutory

bodies

 Currency transfer and exchange rate

 Cost of repatriation to employees on return

Company international assignment policy

Reflection on secondment activity will have identified the challenge that some

decisions to second and appoint a person for international employment transfer

is not always undertaken having consulted with the HR team. This clearly can

lead to problems because the managers may not appreciate the complexity of

the decision to transfer labour to another country. Some companies elect to

prepare a policy that exists as a guide for management with the intention of:

 Providing some focused support to try and help raise pre-

awareness of issues that can be a concern for assigning

overseas

 Provide a policy of approach so that staff a treated in an

equitable way regardless of where the appointment is occurring

Of course each organisation will elect to design a policy that reflect areas of

specific interest for them. It needs to cover different aspects of the treatment of

an individual but it is recommended the content should include:

 What is to occur before a person commences work in the new

role

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 How they are to be paid and supported whilst working in the role

 What is to happen when they finish in the role

The policy may have the focus of ensuring staff are treated equitably. Part of

that will be agreeing what is the intention of pay. The vagaries of having different

taxation and social service liability can lead to individuals receiving different

levels of net pay depending on which country they are working in. There is also

the challenge that some cost of living situations are more expensive and

individuals will anticipated a need for earnings levels to reflect this in order to

have an equitable standard of living country to country. It may be the policy of

the organisations that an individual should not suffer or gain as a result of being

employed in a specific location.

An overseas secondment policy would need to reflect that attitude and establish

clearly the anticipated payment approach. Clearly it should not mean they are

deciding to avoid legal responsibility but there should be clarity on what is

expected to occur in the terms of pay award. One example is to offer a payment

structure that will focus on net award – that the employee is promised to receive

an equitable amount at take home pay with the up to gross adjustment made to

ensure all taxation burdens are met. However, pay adjusted will depend on the

extent of what that this will involve – but keeping the net pay value of same level

country to country. This is sometimes referred to as ‘equitable net pay’ or ‘home

based payment’, but organisations may have their own name for the same

treatment.

Areas that could be included in a policy are:

 The nature and value of pay – in the extent of salary and

expenses,

 Indication of supporting services that are to be offered whilst

overseas – such as training, culture orientation, support for living;

including health and residence provision, expense for home

visits,

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 what is meant for

 Support of dependents, legal, financial and emotional advice

 Support services to be offered before and at end of

placement – relocation, training, legal and travel costs

Scope of Work – Global Services

The following indicate common global service provisions that are normally

described and become a commitment of treatment for that individual by the

organisation.

Services in Contract

1. Candidate Assessment 12. Repatriation Services

2. Assignment Management Coordination

13. Temporary Living

3. Cost Estimate 14. Cross-Cultural Training

4. Home Country Departure Service 15. Language Lessons

5. Relocation Expense Management 16. Visa & Immigration

6. Tenancy Management Services 17. On-going Financial Management Services

7. Property Management Services 18. Repatriation Employee Expense Mgmt.

8. Pre-Decision 19. On-going Compensation Administration

9. Home Finding 20. On-going Policy Administration

10. Orientation & Settling in Services 21. Household Goods Move Management

11. Host Country Departure Services

Services provided in Policy

1. Assignment Management Coordination 7. Host Country Departure Services

2. Cost Estimate 8. Repatriation Services

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3. Relocation Expense Management 8. Temporary Living

4. Pre-Decision 9. Cross-Cultural Training

5. Home Finding 10. Visa & Immigration

5. Orientation & Settling in Services 11. Household Goods Move Management

An example of an International Assignment policy is included in the appendix to

offer a suggestion of how an organisation may cover the critical issues of an

international assignment policy.

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Appendix Example of International assignment policy

The International Assignment Policy (the “Policy”) sets out, in broad terms,

guidelines for employees of the company who are assigned to work outside their

home country. It supports the intent of the company to facilitate international

assignments where they meet business needs.

The overall philosophy adopted by the company is to provide sufficient

assistance to employees to enable them to commence working effectively in the

assignment location as soon as possible. The company also wishes to ensure

that individuals do not suffer from a monetary perspective as a result of the

assignment. Living expenses for an international assignment are rarely the

same as those in the home country.

The company therefore undertakes to provide certain allowances and benefits,

as specified in the Policy, to neutralise the adverse effect of such differences.

The company trusts that employees will recognise the company’s intention to

treat them fairly and equitably, within necessary cost parameters.

This Policy is not considered by the company as a means of rewarding

employees who are on assignment. Reward is dealt with separately as part of

the normal terms and conditions of an individual’s home employment contract.

Whilst this policy document provides broad guidelines for treatment of

international assignees it cannot hope to cover every single circumstance an

assignee may be faced with. Therefore, the company will also provide

employees with a personal assignment letter, which confirms individual

entitlement to benefits and support, as well as serving as the formal variation to

the contract of employment. Where there is a difference between this Policy and

the assignment letter, the assignment letter will take precedence.

Methodology

The Company has decided that the objectives of the company and the employee

would be best served by adopting the “Home Balance Sheet Approach”.

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The objective of the home balance sheet approach is to ensure that employees

are neither worse off nor better off as a result of the international assignment by

delivering the same net pay as in their home location and making adjustments to

that figure to ensure that employees have the same spending power as they

would have done at home. Under this approach the individual remains on their

home country employment contract and is assigned to and paid by the host

country entity.

This is achieved as follows:

Step 1 - Establish the salary for the assignment

The salary and benefits will be based on the company’s home country

compensation structure and will normally be the amounts that the employee was

receiving immediately before the start of the assignment. This salary will be

reviewed in accordance with the annual salary review cycle of the company in

the home country.

Step 2 – Deduct a housing contribution and, where appropriate, an education

contribution from salary and add in the additional tax deficit.

The housing and education contributions are deductions from salary that

approximates the home country housing and education costs that the employee

would have had, had he or she remained at home. In return for this salary

reduction the company undertakes to pay all reasonable housing and education

costs in the host location.

Step 3– Add a cost of living allowance to the net salary

A cost of living allowance (see section 3.5 below) is added to the net salary and

is designed to make up any difference between the cost of goods and services in

the home and host locations. It covers typical family expenditure with the

exception of housing, income taxes and personal investments and savings.

Step 4 – Payment of other costs relating to the assignment

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In addition, the company will provide further support, as it deems necessary

during the assignment and in connection with the relocation and repatriation of

the employee and his or her family.

Miscellaneous Notes

Although this Policy intends to be as comprehensive and accurate as possible, it

will change over time to reflect and/or address the company’s evolving business

environment and competitive practice.

It is recommended that employees meet with the HR Adviser early in the

discussion stage of any potential assignment to discuss the Policy and how the

assignment will be managed on a practical basis. The HR Adviser will also

advise on and mobilise any external resources that will be required e.g. Service

Relocation, The company’s relocation providers.

Please note that final approval of all assignment terms rests with the CEO,

Divisional Managing Director and Head of HR. Individuals and line managers

should not make any agreement relating to assignment terms or exceptions to

policy without the prior approval of the CEO, Divisional Managing Director and

Head of HR.

Types of transfer

This summary relates to a situation where an employee is transferred from a

home country to a host country, at the company’s request, for an assignment

intended to last at least 2 years, and with a clear intention to return to the home

country at the end of the assignment. It is intended that the maximum

assignment period should not exceed 3 years. If any stay exceeds this period it

is the company’s intention that it will become a permanent transfer on the third

anniversary (see below). The assignee will be made a host company perm at

the discretion of the Executive Manager subject to individual circumstances.

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There will be instances when other types of transfer will be appropriate and they

are not covered by this summary. Other types of transfer are governed by their

own policies and these can be found on the HR Intranet. Examples of other

types of transfer are:

 Short term assignment – intended to be between 3 months and

one year.

 Long-term assignment – intended to last for at least 18 months.

 Employee initiated – Where an employee requests a transfer

they will be expected to take up a local contract with the

company in the new location and will be subject to local terms

and conditions of employment.

 Permanent transfers – Where the intention is for an individual to

transfer to another location for an indefinite period, the individual

will be expected to take up a local contract with the company in

the new location and will be subject to local terms and conditions

of employment.

Pre-departure

This section summarises areas to be considered prior to the start of the

assignment.

Pre-decision Visit

In some instances, dependant on length of assignment, a pre-decision visit may

be offered, to a maximum of 2 days.

Such a trip will be approved for the assignee and his or her partner and will

include the reimbursement of expenses for meals, transportation and

accommodation, in line with the ‘The Company’s Expense Policy’.

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Orientation / Home Search Services

An orientation and/or home search services visit will normally be provided, but

may be combined with a business trip prior to commencement of the assignment.

Such a trip will be approved for the assignee and his or her partner and will

include the reimbursement of expenses for meals, transportation and

accommodation, in line with the ‘The company Expense Policy’.

Work Permit / Visa Assistance

The company will assist assignees and their families in obtaining any appropriate

immigration clearance, work permits or visas and will fund the associated costs.

As immigration clearance can take several months to process it is critical that the

assignee works with the company and Service Relocation Services to supply any

documents required as quickly as possible. This may include passports, birth

certificates, marriage certificates, educational certificates, photographs and

medical records. The assignee should also make the company aware as soon

as possible of any potential areas of complication e.g. unmarried partners,

partners and/or children of different nationality.

Medical Examinations / Immunisations

Immunisations and health certificates may be required as part of the immigration

process or by other law in the country of assignment. It is the responsibility of

assignees to ensure that the necessary procedures are completed for

themselves and accompanying family members in good time and that any

required documentation is obtained prior to the assignment. The Company will

meet any costs.

Cultural Orientation Training

An important aspect in the success of an international assignment is the ability of

the assignee and family to adapt to the local culture. Where appropriate the

Module 7 Unit 2 Culture and ethics Page 66

company will provide cultural orientation training either prior to the start of the

assignment or shortly after arrival in the host country.

The Company will source and arrange such training for the assignee and family,

through Service Relocation Services, this will be a 2-day programme.

During Assignment – Allowances and benefits

This section summarises the financial assistance to be provided by The

Company during the assignment.

Transportation to Assignment

The Company will reimburse the cost of economy travel for assignee and

accompanying family to the country of assignment at the start of the assignment.

Removal of Household Goods

The Company will provide packing and removal of reasonable personal and

household effects to the assignment location at the start of the assignment.

Reimbursed costs will depend on family size and assignment location.

Removal services will be arranged through our relocation provider, Service

Relocation Services. The following table provides guidance on what The

Company believes to be reasonable volumes.

 Single assignee 20-foot container (by sea or land)

 Assignee and partner 40-foot container (by sea or land)

 Single assignee 250 lbs. (by air)

 Assignee and partner 500 lbs. for assignee (by air)

 200 lbs. (by air) for each accompanying family member

(Maximum 1000 lbs. per family)

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The Company will pay for full value replacement insurance and any required

customs or import duties relating to the move.

For the avoidance of doubt the company will not pay for removal, insurance,

customs or import duties relating to any of the following items:

ATVs

Billiards table

Boat trailer – any length

Boats, sailboats, canoes, skiffs, rowing boats, dinghies

Car (s)

Child’s swing-set (free standing) / other large outdoor play equipment

Chemicals, paints and other inflammables

Contraband per host location

Curtains

Firewood

Frozen foods

Jacuzzi / Hot tub

Large Appliances - Washer / Dryer, refrigerator, etc.

Lawn mower / Riding mower

Lumber

Mini mobile homes / campers

Moped

Motorcycle

Perishable items

Pet house

Pets

Pianos & organs

Plants

Pop-up trailer

Satellite Dish

Tool Utility Sheds

Tractors

TVs

Waterbed

Weapons

Valuable items or collections (e.g. antiques, stamps, coins, precious stones, jewellery, wine)

Temporary Accommodation

Where time scales restrict this process the company will provide suitable

temporary accommodation for up to the first 30 days of the assignment, if

required.

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Incidental Moving Allowance (Disturbance Allowance)

The purpose of this allowance is to assist the assignee with incidental expenses

that may occur as a result of relocation. It will be paid as a one-off lump sum

through normal payroll in the month the assignment commences. It is designed

to cover, but not be limited to the following:

 Purchase of luggage

 Purchase or conversion of electrical goods in the host country

 House cleaning

 Additional clothing

 Tips to removal personnel, taxi drivers etc.

 Alteration of curtains, carpets

 Fees for installation or de-registration of utility supplies

 Driving licences

 Other incidental expenditure related to the move

The amount of the allowance is to be between 50% and 100% of the gross

monthly salary. Where an incidental moving allowance is paid, it is expected that

an assignee will make no further expense claims for miscellaneous expenditure

relating to the move.

Cost of Living Allowance

The cost of living allowance is designed to make up any difference between the

cost of goods and services in the home and host locations, thus minimise any

adverse effect on the assignee’s standard of living and spendable income. It

covers typical family expenditure with the exception of housing, income taxes

and personal investments and savings.

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The allowance is calculated using an index provided by an Independent Data

Provider and is related to salary level, marital status and the number of

accompanying dependents. It is paid monthly through normal payroll, as an

addition to salary. It commences on the date the assignee and family move into

permanent accommodation in the host country and continues while the

assignment lasts.

In determining the allowance the following are included and the cost in home and

host countries compared:

 Food

 Tobacco and alcohol

 Household supplies

 Personal care

 Utilities

 Clothing

 Recreation

 Domestic help (e.g. cleaners, gardeners)

 Transportation

In host countries where the cost of living is significantly lower than in the home

country a zero rating would be applied.

The allowance is reviewed on a periodic basis (quarterly or annually) and may be

increased or decreased in accordance with changes in the relative indices

between home and host countries.

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Host Country Accommodation

The company will provide suitable accommodation in the assignment location for

the assignee and accompanying family. This will be paid either directly by The

Company, or by means of a monthly accommodation allowance to the assignee,

depending on the location.

Company support will include payment of deposits and any other securities,

ground rent and service charges included in the rental terms. It will not include

the payment of utilities or the costs connected with domestic servants, such as

gardeners or cleaners. To the extent that such costs differ between the host and

the home country, that difference will be factored into the cost of living allowance

Maximum levels of accommodation allowances to be funded by the company will

be determined with the assistance of an Independent Data Provider in the host

country. They will reflect circumstances such as family size and local conditions.

The assignee will be responsible for keeping the accommodation in good order

whilst in occupation.

Educational Assistance for Children

Reasonable expenses for private tuition will be considered on an individual basis

for children who accompany the employee on assignment. This will be paid

either directly by the company, or by means of a monthly education allowance to

the assignee, depending on the location.

The company expects that, where the assignee was incurring fees for private

education in the home country immediately before the start of the assignment,

the assignee will make a contribution towards the cost of education in the host

country, based on the costs they were incurring immediately before the start of

the assignment. Such a contribution will be deducted from the assignee’s salary

on a monthly basis for the duration of the assignment.

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Host Country Transportation

The company may decide to provide either a car for private use or a

transportation allowance to an individual whilst on assignment. This will be

completed in line with the Company car and cash allowance policy and will

ensure that the employee receives the same level of benefit currently received in

the home location. This will be decided on a case-by-case basis, drawing on a

number of factors including location, business and personal needs, security,

home and host country practice and cost.

Home Leave

During the assignment the company will reimburse the costs of economy travel

expenses for one home leave visit per year to the home country. An assignee’s

annual leave entitlement must be used for the home visit.

Emergency Home Leave

In the event of a family emergency the company will provide a round trip

economy airfare to the home location for the assignee and accompanying

spouse/partner and children. A family emergency means the death or critical

illness of an immediate family member. For purposes of emergency leave only,

immediate family is defined as mother, father, sister, brother, child, grandchild or

grandparent of the assignee or partner.

Emergency leave will also cover circumstances where a member of the family on

assignment requires medical care, which can only be provided in the home

country.

Insurances

The company will arrange private international medical insurance coverage for

assignee and accompanying family.

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Where possible all other home country insurances, such as life assurance will

remain unchanged. If, due to personal circumstances these cannot continue

during the assignment, the company will make every effort to provide suitable

alternative arrangements with the local HR representatives.

Tax equalization

To assist you in meeting potential tax liabilities in either your home or host

location due to your assignment, the company will provide you with an allowance

off up to 3000 GBP net of taxes, the allowance will be determined by local HR.

The Company does not provide tax equalization support; assignees are

responsible for their own potential tax liabilities.

During assignment – destination services

One section in the employee’s agreement would normally summarise the non-

financial assistance to be provided by the company during the assignment.

Examples are offered below.

Settling in Service

The company will arrange through Service Relocation Services assistance for

the assignee and accompanying family to acclimatise in the host location. A

fixed number of hours (to a maximum 4 days) will be agreed through Service

Relocation Services and can be used by the family before, during and shortly

after the move.

This assistance is designed to cover areas such as:

 Discussing suitable places to live in the host location

 Obtaining driver’s licences

 Opening local bank accounts

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 Completing relevant registrations e.g. social security numbers

 Ascertaining where to shop and obtain particular goods

 Familiarisation with doctors, dentists, emergency services

 Local clubs which may be of interest

 Sourcing private transport – rental or purchase

 Familiarisation with the assignment location

Tax Preparation Assistance

To ensure that all home and host country legal filing requirements are met the

company will provide expenses for tax return preparation assistance up to a

maximum spend dependent on the individual employee circumstances. It is the

employee’s responsibility to source a Tax advisor.

During assignment- miscellaneous

The model examples below indicate what should be encompassed in a special

section for summary of other assignment related matters that may arise. It is the

catch all section and can be tailored to issues of anticipated employment or leave

activity.

Hours of Work & Public Holidays

Generally an assignee’s working hours and public holidays are based on the

local laws and customs of the host location. If an assignee wishes to observe

home country public holidays he or she will be expected to use personal holiday

entitlement to do so.

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Holiday Entitlement

Whilst on assignment annual holiday entitlement remains as per an individual’s

home country employment contract.

Losses on Sale of Vehicles or Real Property

The company will not reimburse employees for personal losses on the sale of

private vehicles or property in the home or host country.

Home Rental Management Costs

The company will not reimburse any fees relating to rental of a residence in their

home country whilst on assignment.

Family Status Change

Changes should be reported to the company as soon as possible, who will

advise the assignee of consequences as far as this Policy is concerned.

End of assignment – guide in agreement

A model review of an agreement should include a section that summarises the

position with regard to repatriation upon completion of the assignment. Examples

of areas of statement are provided below.

Post Assignment Role

Six months prior to the end of the assignment the employee should approach

their host country manager and begin discussions with regards to their

repatriation and future role. The company will make all reasonable endeavours to

ensure that the assignee returns to the same role or one at the same level but for

obvious reasons cannot guarantee this.

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Employee Resignation

If the employee voluntarily resigns whilst on international assignment, the

company reserves the right not to pay moving or transportation expenses for the

assignee or any accompanying family back to the home location.

Abbreviated Assignments

The company may decide, for whatever reason, to end an assignment before the

scheduled repatriation date. Repatriation of the assignee and his/her family and

belongings is guaranteed and the expatriate package ceases to apply.

Repatriation, Retirement or Termination of Employment by The Company

When the assignment finishes, if the employee retires (by company agreement),

or if the company terminates the employment, the company will pay the following

repatriation costs:

 Reimbursement of the cost of economy travel for assignee and

accompanying family to the home country.

 Packing and removal of reasonable personal and household

effects to the home location. Reimbursed costs will depend on

family size and assignment location.

Other End of Assignment Activities

It is assignees’ responsibility to ensure that all formalities are completed before

departure for themselves and any accompanying family members. This may

include advising the tax or immigration authorities of departure.

The company will not pay for any un-used food items.

Module 7 Unit 2 Culture and ethics Page 76

Definition of ‘FOR TERMS OF CONDITIONS’

Home Country – The city and country specified in the assignment letter, to which

an employee would normally return at the end of the assignment. This will

usually be the country where the employee has been employed before the

commencement of the assignment. Designation of the home country is

important as it will determine the application of the policy and calculation of

certain allowances e.g. cost of living, home leave budget.

Host Country – The city and country specified in the assignment letter to which

an employee is assigned.

Partner – Spouse or unmarried partner who is an established member of the

employee’s household in the home country. For unmarried partners the

relationship should be long-term and have subsisted for a minimum of 6 months.

Family Members / Dependents – This will include spouse or partner, as defined

above. It will also include dependent children under the age of 19, of the spouse

or partner, who live with the employee as part of his or her normal family unit

immediately prior to the assignment.