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These are home country employees; this is where the employees are from the home country of the organization. The Host country employees; these are employees belonging to the country to which the organization has located to and lastly third country employees. These are employees that are neither host employees nor home country employees but belong to a totally different place but are working in the organization. IHRAM deals with employees from many different nationalities and the influences of the external environment. It s very complicated and deals with factors such as cultural distance and institutional factors that heavily affect It.
The case study “Boss, I think we have a problem” Mr… Watkins has made many mistakes in his approach to the situation. Firstly when he decided to expand his overseas, he did not identify the factors that would affect this move. These factors would include culture sensitivity, interpersonal skills and flexibility. These were not included and specified as required skills. Not everyone is equipped to manage such a huge change. People with deferent personalities need to be identified and evaluated, and based on that evaluation Mr… Watkins should make his decision.
He had no to determine the people he has chosen would be able to handle the change as well as the challenges they will have to face in the new environment. Mr… Watkins also needed to look at the cost factor. He has not taken into consideration a realistic cost for the huge project of international operations and the cost of having an expatriate manager and the cost of his South-African Managers that were running European operations with the least amount of knowledge and experience. The company does not have an international compensation system in place. Watkins alienated two of his South African sales managers by sending them to Europe to temporarily run the European operations, but neglecting to work out a compensation package that would cover their relatively high living expenses in Germany and Belgium”. He had made the common mistake of throwing the wrong people into the deep end and got disappointing results. The other mistake he made was that he did not take into consideration the different foreign expenses. The living differs in different countries, with Europe being one of the more expensive places to live in compare to South Africa.
Mr… Watkins made a huge mistake not evaluating this or educating his staff before sending them off into foreign territory. With the foreign expenses comes the consideration of foreign taxes. “Mr… Watkins was rudely surprised to be informed by the Belgian Government that his sales manager owed thousands of Rand’s in local taxes. He should have done his homework in this regard. He did not plan the move or think about the repercussions he may endure. His move was hasty and he did not have proper countermeasures in place to combat all the challenges he had to face with this move. Another mistake Mr…
Watkins made was that he did not consider the move for the employees. There was no formal relocation assistance programmer in place. He took his home country sales managers and placed them in a strange and new environment without the proper orientation. “The managers had hired about 10 local people to staff each of the distribution centers’ but failed to have full time local European sales managers, so the level of sales was disappointing. Again this demonstrates the lack of knowledge and research required in order to make the proper decisions. Mr… Watkins did not consider the relocation impacts on the employees.
He did not consider culture shock or the importance of family support. When relocating occurs, there are many things that need to be considered, how the person will manage in a new environment. How will he/she react to different types of people? How will they like the food or the weather or make friends, etc. Relocating someone to a new environment does not only mean that person has to have business as’. N. Y but also be able to manage on a personal level. Mr… Watkins did not take into their emotional capabilities and if they needed any family support in the new environment.
There were no cultural orientation programmer in place for the expatriate managers and their family members. Mr… Watkins needed to consider the two different worlds he was trying to connect and 2 what he needed to have in place to make sure that they merged well together. “Mr… Watkins decided to fire about half of the distribution centre employees” This is another mistake he had made. The fact that he had no assignment letters in place or documenting the scope of the Job, the employees will find difficulty in achieving what is expected.
There is no clear communication about what is expected of them so in his regard firing employees would be seen as unfair. Mr… Watkins had failed to do his homework before expanding his company in foreign territory and this led to many problems. He could have avoided these if he had proper systems in place and had done the proper research. 3 Question 2 How would you have gone about hiring a European Sales Manager? Why? Firstly research, research and more research! Find out all there is to know about the country, the requirements, the personnel, the market place, etc.
A proper investigation of the market would need to be completed in order to determine the appropriate level of compensation and benefits. This would also be beneficial to the home country employees during their orientation. Expropriate compensation for those managers should be considered and the tax equalization rules and regulations need to be viewed in order to avoid any build up of tax costs. Other countermeasures should be in place to deal with the differing costs of living. The home country employees need to be well educated in this area to avoid any unwanted expenses.
One of the most important factors to consider is the location of the company. The many should be located in areas that are labor as well as tax friendly. “Although Site, Mr… Watkins so far received only five applicants”. Mr… Watkins inexperience in determining who would be the best candidates for the Job hindered his good decision making. A larger pool of potential applicants would have been received if he had decided to use an outside agency. His inexperience and not having the proper evaluating systems in place caused major problems in the selection process. He may have not been able to recognize the potential candidates. Four came from antedates who Mr… Watkins refers to as “lost souls”, people who seem to have spent most of their time traveling restlessly from country to country sipping espresso on sidewalk cafes”. Mr… Watkins stereotypes of European Managers may have clouded his Judgment with the existing pool of applicants. He needs to be more open minded and no “Judge a book by its cover”. The fact that he approached the situation in this manner has demonstrated his inexperience and lack of proper Judgment. He needed to have a proper system in place to evaluate the candidates, for example a test with efferent scenarios.
One that will be able to determine the reaction of the person if placed in a particular situation. This would not only provide Mr… Watkins with insight to the candidates personality but also create an environment where he would also learn about the different situations he could face. It will allow him to think of countermeasures should he be faced with such situations, 4 These are some of the issues Mr… Watkins needed to consider before making any decisions in hiring a European Manager. 5 Question 3 What would you do now if you were Mr… Watkins? Mr… Watkins has made a major mistake in firing about half of the distribution centre employees.
Firstly he did not have a letter of assignment for any of these employees. He did not have proper document specifications on the Jobs. He did not communicate efficiently to the employees what is expected of them. He also did not hear any bad performances. He had no proper system in place for any performance appraisals or dismissal. He basically did not like the end result and decided to get rid of employees with no real explanation. If I were Mr… Watkins I would look to seek legal council on the best way forward. I would try to educate myself of the labor rules and regulations as well as the proper procedures to follow.
I would put into place a proper code to follow in the future. The fact that he did not considered the employees and the lack of communication of the expectations, clearly show that he is in the wrong. If I were him, I would need to reinstate the employees along with a proper apology. The best thing for Mr… Watkins to do is learn from his mistakes. He would need to start over, find an appropriate sales manager with the knowledge of the local culture and business practices. He will need to have a proper recruitment and selection system in place. He would also need to consider the expenses, the location and the labor laws.
In order for his business to be a success he would need to do extensive research. The proper orientation programmer will be required for his new recruits as well as his host and home country employees. He would need to have the proper paperwork in place. Make sure all employees have assignment letters and have the proper knowledge of what they are expected to do. Mr… Watkins would need to be more hands on in his approach with his employees to make them understand their ole in the company and he would also need to remove the stereotypical thoughts in his mind.
He needs to also increase his knowledge on what personality types would be needed in order to be successful in the Job. He needs to gain experience in the selection process and be able to identify the key characteristics 6 needed in his staff. Most importantly is the labor law. Mr… Watkins needs to have a proper understanding of this, internationally as well as locally. 7 1 . Salient, H. (2010). What is International Human Resource Management, viewed 26 August 2014, from http://outbox. Com/harm/what-is-international-human- argumentativeness/ 8