Mm591 International Pay System
International Pay Systems
MM591
September 20, 2010
International Pay Systems
Riordan manufacturing has proven to be leader in the manufacturing industry with the production of plastic injecting molding. They have plants in Georgia, Michigan and China, and have even been carefully viewing their options for opening a plant in Japan. Riordan understands that with the possibility of expansion in global markets that there is a need for great legal and regulatory practices and policies that must be adhered to. The Human Resource department must be able to work closely with the foreign country in order to understand the customs and preferences of the locals while complying and enforcing privacy, copyright, and intellectual property laws. …show more content…
They must also take into account the cultural differences of the workers and customers and work to bridge the gaps with management and other transplanted American workers. By taking account of the legal issues that are involved in international business venture and being able to incorporate the customs and prefers of the country will help Riordan Manufacturing meet their goals in expanding their market and sales in a global economy (University of Phoenix, 2010).
The Case of Robert Lord Local taxation and living costs must be considered, along with the gross salary of the senior managers.
Senior mangers typically earn a higher gross salary than that of a lower ranked employee in many countries including Japan. Once the local taxation and cost of living are taken into account, it is estimated that the United States employee is compensated well than that of his Japanese counterpart. If Robert Lord was sent to Japan on the domestic terms, his buying power is reduced greatly although the gross salary would be higher. The spendable incomes need to be adjusted to meet the differences in the cost of living. In doing this the expatriate is assured of the same appending power in the host country as here in the United States. Several allowances and or incentives could also be added to the host country …show more content…
portion. The United States is one of the few countries to impose tax on income earned on foreign soil, although many of the companies will bear this additional tax burden. This is called tax equalization agreement in which the employee is reimbursed by the employer for the extra amount incurred by the expatriate. Most often a company will withhold a set tax from each payroll payment to the employee, based on a projected tax incurred by that nations salary, and at the end of the tax year, after the exact amount of tax is calculated, the employee or employer must reimburse the other for over/under payment. US companies find themselves at a disadvantage with these tax-equalization pay systems, and many companies are trying to fill their senior management positions with local hires (eca international, 2010).
The Role of the Social Contract in Japanese Systems One of the defining reasons for a government’s tendency to enact protective measures to counterbalance the effects of markets are the insufficient welfare systems and Japan’s existing social contract, which does not tolerate uncertainty and social suffering. At the very basic level a social contract is a covenant to the Japanese culture. It is not codified by which the society and the state are constituted. It addresses the areas such as how many services the government has to provide in return for its right in reducing citizen’s incomes. This could be done through high taxes and or high prices. The differences are reflected significantly in the basic societal assumptions and preferences as well as the political and economic struggles. Countries will differ in how they craft this social contract over the course of history. A social contract will evolve over time and become inclusive of that country’s leading interests as well as their norms and values, and it is extremely difficult to change either incrementally or radically (Olson, 1982). Changes in a covenant require that there be changes in the fundamental values within Japanese society. Since the recession has continued to loom large globally the Japanese people seem to be more concerned with the existing values which would include stability, security and certainly. Japan is certainly not the only country where existing social contract has created barriers to the changes that are needed to transition successful to a post-industrial society. As an example, many in United States are unhappy with a system that in spite of the countries significant wealthy, more than 40 million people are working without health insurance (Olson, 1982).
The Role of the Social Contract on Compensation Systems Internationally Human Capital is the most valuable resource that a company has and companies must treat their employees with dignity, respect, and not to lowball them on compensation just to make a greater profit for themselves. The 20th century corporate models in the past and still exist today are based on the financial capital as being the dominate source of competitive advantage. Corporations were viewed as solely instruments for maximizing the wealth of its financial investments. Corporations today need to adopt new strategies within their employment practices which will build and sustain the trust and commitment of its human and financial investors and to be able to return fair value to both stakeholders. Those who participate in managing the company need to be held accountable for creating and investing for a future that is sustainable. This would imply that all groups should have a voice in regards to the accountability of the company’s board members and other governance bodies (Kochan & Shulman, 2007).
The Equity in Compensation between Expatriate and Nationals within the Same Country Critical issues regarding compensation focus exclusively on the home country nation expatriates.
These issues revolve around negotiations which if there are too many premiums and inventive you will create an international stamped and unrest in the domestic pay system. On the other hand too few incentives given and you will influence people not to risk foreign assignment (Engle, 2007). Issues brought to light by trial and error, or the components and adjustments to domestic pay which comprise the company’s balance sheets. This so called stumbling to a “balance sheet” approach has comprised much of the case-oriented research relation to the pay of expatriates. Information on the cost of transportation options, suitable housing, education of the expatriate’s children, and other incentives needs to be facilitated by consulting firms, in which a pattern can be developed to have a standardized balance sheet approach (Briscoe, 1995). In doing this the company is able to adjust to the intention environment, but by relying on their own domestic
terms.
The Effect of Trade Unions and Employee Involvement in Compensation Systems for Cross Border Organizations They forces that are affecting today’s trends in the international and domestic markets must be carefully analyzed so to be better equip for the needs of tomorrow. Understanding how employee compensations will be determined and what the consequences will have by using different approaches is important. The ways by which employees are compensated affect their financial and emotional well being. Directly impacting the company’s effectiveness and the talents of the nation’s human resources is compensation. Finally, the way in which employees are compensated gives credence to society’s sense of social justice. A trend that is affecting tomorrow’s compensation is shifting away from responding to negotiated or benchmarking patterns to a completive positioning stand. One of the most important relations is that between management, employees and trade union representatives. The central role of the nation unions combined with single nation orientation will sometimes slow or even stop the development of an international union bargain capability (Engel, 2007).
Compare and Contrast Pay Systems across Countries No matter in which country you reside pay is a status symbol within the organizations and also society. Societies that are less complex in nature the status of an individual may be the product of many standards in which judgment is past; for example, the individuals family, friend, education, occupation, religious or political affiliations. In a more mobile society such as the United States, many of these same standards are harder to measure and are not near as important. Income as a symbol of stature does not present this problem (Atchison, Blecher & Thomsen, 2004). Organizations create statues within the structuring of the jobs and the compensation that is associated with that position. By placing coworkers in a status structure of the organzation according to how much they are compensated is quite commonplace. Since pay is a universal measure of status, it is easy to understand that differentials in pay can be significant. Across cultural boundaries this is the one constant in relation to pay systems. This symbolic significance adds another dimension the importance of compensation to individuals (Atchison, Belcher, & Thomsen, 2004). These same values are seen not only within organizations but in society as well. Organization is influenced by what the norm is across industry standards regarding pay. Outside forces vary in their influence with the type of people who are hired, their loyalty or attachment to the company and the similarity of the organization jobs to those found elsewhere. Outside influences can be minimized if the company is able to create unique jobs, which only entry level positions are hired for beyond the company’s walls. “Customary relationships that are just as conservative soon arise inside the organization and groups within will begin to struggle for status and pay which will bring the same type of powerful forces as the same as outside forces (Atchison, Blecher, & Thomsen, 2004).
The Effect of Trade Unions and Employee Involvement on Japanese National Compensation Systems Bargaining in Japan is conducted exclusively at the company level and no mechanisms for the extension of agreement beyond the signatories, bargaining coverage exactly matches union density (eurofound, 2005). Given the difficult economic condition found in Japan the wage negotiation has been difficult for trade unions over the past few years and they have found themselves being forced to choose between maintenance of employment levels and rises in pay. Since 199 employers have been seeking to prioritize lump-sum bonuses and incentives over “base-ups”, which includes pay revision that reflect an upward trend in the price index or the company’s business performance and that of regular pay increases. The estimated trade union organization rate fell from 20.2% in 2002 to 19.6% in 2003 in Japan, which had continued to see a downward trend for 28 consecutive years (eurofound, 2005).
Conclusion
Riordan Manufacturing must help to ease the substantial uncertainly that Robert Lord or any expatriate will face regarding their role within the company when they first arrive. Any information they gain regarding the expectations of their job, the cultural environment, such as expected behavior for that country should be given prior to the move to facilitate a much smoother transition.
References
Atchison, T, Belcher, D & Thomsen, D ERI Economic Research Institute Copyright © 2000 – 2004. Retrieved September 18, 2010 from http://www.eridlc.com/index.cfm?fuseaction=textbook.chpt01
Briscoe, D. R. (1995) International human resource management. Englewood Cliffs, N.J.: Prentice Hall Publishing.
Engle, Allen D (2007) Eastern Kentucky University. Retrieved September 18, 2010 from http://people.eku.edu/englea/GSC.html
European Working Conditions Surveys (2005) Retrieved September 20, 2010 from http://www.eurofound.europa.eu/ewco/surveys/
Kochan, T and Shulman, B (2007) A New Social Contract Restoring Dignity and Balance to the Economy. Retrieved September 18, 2010 from http://www.sharedprosperity.org/bp184.html
Olson, Mancur, 1982, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale UP. Retrieved September 18, 2010 from ProQuest Database
MM591
September 20, 2010
International Pay Systems
Riordan manufacturing has proven to be leader in the manufacturing industry with the production of plastic injecting molding. They have plants in Georgia, Michigan and China, and have even been carefully viewing their options for opening a plant in Japan. Riordan understands that with the possibility of expansion in global markets that there is a need for great legal and regulatory practices and policies that must be adhered to. The Human Resource department must be able to work closely with the foreign country in order to understand the customs and preferences of the locals while complying and enforcing privacy, copyright, and intellectual property laws. …show more content…
They must also take into account the cultural differences of the workers and customers and work to bridge the gaps with management and other transplanted American workers. By taking account of the legal issues that are involved in international business venture and being able to incorporate the customs and prefers of the country will help Riordan Manufacturing meet their goals in expanding their market and sales in a global economy (University of Phoenix, 2010).
The Case of Robert Lord Local taxation and living costs must be considered, along with the gross salary of the senior managers.
Senior mangers typically earn a higher gross salary than that of a lower ranked employee in many countries including Japan. Once the local taxation and cost of living are taken into account, it is estimated that the United States employee is compensated well than that of his Japanese counterpart. If Robert Lord was sent to Japan on the domestic terms, his buying power is reduced greatly although the gross salary would be higher. The spendable incomes need to be adjusted to meet the differences in the cost of living. In doing this the expatriate is assured of the same appending power in the host country as here in the United States. Several allowances and or incentives could also be added to the host country …show more content…
portion. The United States is one of the few countries to impose tax on income earned on foreign soil, although many of the companies will bear this additional tax burden. This is called tax equalization agreement in which the employee is reimbursed by the employer for the extra amount incurred by the expatriate. Most often a company will withhold a set tax from each payroll payment to the employee, based on a projected tax incurred by that nations salary, and at the end of the tax year, after the exact amount of tax is calculated, the employee or employer must reimburse the other for over/under payment. US companies find themselves at a disadvantage with these tax-equalization pay systems, and many companies are trying to fill their senior management positions with local hires (eca international, 2010).
The Role of the Social Contract in Japanese Systems One of the defining reasons for a government’s tendency to enact protective measures to counterbalance the effects of markets are the insufficient welfare systems and Japan’s existing social contract, which does not tolerate uncertainty and social suffering. At the very basic level a social contract is a covenant to the Japanese culture. It is not codified by which the society and the state are constituted. It addresses the areas such as how many services the government has to provide in return for its right in reducing citizen’s incomes. This could be done through high taxes and or high prices. The differences are reflected significantly in the basic societal assumptions and preferences as well as the political and economic struggles. Countries will differ in how they craft this social contract over the course of history. A social contract will evolve over time and become inclusive of that country’s leading interests as well as their norms and values, and it is extremely difficult to change either incrementally or radically (Olson, 1982). Changes in a covenant require that there be changes in the fundamental values within Japanese society. Since the recession has continued to loom large globally the Japanese people seem to be more concerned with the existing values which would include stability, security and certainly. Japan is certainly not the only country where existing social contract has created barriers to the changes that are needed to transition successful to a post-industrial society. As an example, many in United States are unhappy with a system that in spite of the countries significant wealthy, more than 40 million people are working without health insurance (Olson, 1982).
The Role of the Social Contract on Compensation Systems Internationally Human Capital is the most valuable resource that a company has and companies must treat their employees with dignity, respect, and not to lowball them on compensation just to make a greater profit for themselves. The 20th century corporate models in the past and still exist today are based on the financial capital as being the dominate source of competitive advantage. Corporations were viewed as solely instruments for maximizing the wealth of its financial investments. Corporations today need to adopt new strategies within their employment practices which will build and sustain the trust and commitment of its human and financial investors and to be able to return fair value to both stakeholders. Those who participate in managing the company need to be held accountable for creating and investing for a future that is sustainable. This would imply that all groups should have a voice in regards to the accountability of the company’s board members and other governance bodies (Kochan & Shulman, 2007).
The Equity in Compensation between Expatriate and Nationals within the Same Country Critical issues regarding compensation focus exclusively on the home country nation expatriates.
These issues revolve around negotiations which if there are too many premiums and inventive you will create an international stamped and unrest in the domestic pay system. On the other hand too few incentives given and you will influence people not to risk foreign assignment (Engle, 2007). Issues brought to light by trial and error, or the components and adjustments to domestic pay which comprise the company’s balance sheets. This so called stumbling to a “balance sheet” approach has comprised much of the case-oriented research relation to the pay of expatriates. Information on the cost of transportation options, suitable housing, education of the expatriate’s children, and other incentives needs to be facilitated by consulting firms, in which a pattern can be developed to have a standardized balance sheet approach (Briscoe, 1995). In doing this the company is able to adjust to the intention environment, but by relying on their own domestic
terms.
The Effect of Trade Unions and Employee Involvement in Compensation Systems for Cross Border Organizations They forces that are affecting today’s trends in the international and domestic markets must be carefully analyzed so to be better equip for the needs of tomorrow. Understanding how employee compensations will be determined and what the consequences will have by using different approaches is important. The ways by which employees are compensated affect their financial and emotional well being. Directly impacting the company’s effectiveness and the talents of the nation’s human resources is compensation. Finally, the way in which employees are compensated gives credence to society’s sense of social justice. A trend that is affecting tomorrow’s compensation is shifting away from responding to negotiated or benchmarking patterns to a completive positioning stand. One of the most important relations is that between management, employees and trade union representatives. The central role of the nation unions combined with single nation orientation will sometimes slow or even stop the development of an international union bargain capability (Engel, 2007).
Compare and Contrast Pay Systems across Countries No matter in which country you reside pay is a status symbol within the organizations and also society. Societies that are less complex in nature the status of an individual may be the product of many standards in which judgment is past; for example, the individuals family, friend, education, occupation, religious or political affiliations. In a more mobile society such as the United States, many of these same standards are harder to measure and are not near as important. Income as a symbol of stature does not present this problem (Atchison, Blecher & Thomsen, 2004). Organizations create statues within the structuring of the jobs and the compensation that is associated with that position. By placing coworkers in a status structure of the organzation according to how much they are compensated is quite commonplace. Since pay is a universal measure of status, it is easy to understand that differentials in pay can be significant. Across cultural boundaries this is the one constant in relation to pay systems. This symbolic significance adds another dimension the importance of compensation to individuals (Atchison, Belcher, & Thomsen, 2004). These same values are seen not only within organizations but in society as well. Organization is influenced by what the norm is across industry standards regarding pay. Outside forces vary in their influence with the type of people who are hired, their loyalty or attachment to the company and the similarity of the organization jobs to those found elsewhere. Outside influences can be minimized if the company is able to create unique jobs, which only entry level positions are hired for beyond the company’s walls. “Customary relationships that are just as conservative soon arise inside the organization and groups within will begin to struggle for status and pay which will bring the same type of powerful forces as the same as outside forces (Atchison, Blecher, & Thomsen, 2004).
The Effect of Trade Unions and Employee Involvement on Japanese National Compensation Systems Bargaining in Japan is conducted exclusively at the company level and no mechanisms for the extension of agreement beyond the signatories, bargaining coverage exactly matches union density (eurofound, 2005). Given the difficult economic condition found in Japan the wage negotiation has been difficult for trade unions over the past few years and they have found themselves being forced to choose between maintenance of employment levels and rises in pay. Since 199 employers have been seeking to prioritize lump-sum bonuses and incentives over “base-ups”, which includes pay revision that reflect an upward trend in the price index or the company’s business performance and that of regular pay increases. The estimated trade union organization rate fell from 20.2% in 2002 to 19.6% in 2003 in Japan, which had continued to see a downward trend for 28 consecutive years (eurofound, 2005).
Conclusion
Riordan Manufacturing must help to ease the substantial uncertainly that Robert Lord or any expatriate will face regarding their role within the company when they first arrive. Any information they gain regarding the expectations of their job, the cultural environment, such as expected behavior for that country should be given prior to the move to facilitate a much smoother transition.
References
Atchison, T, Belcher, D & Thomsen, D ERI Economic Research Institute Copyright © 2000 – 2004. Retrieved September 18, 2010 from http://www.eridlc.com/index.cfm?fuseaction=textbook.chpt01
Briscoe, D. R. (1995) International human resource management. Englewood Cliffs, N.J.: Prentice Hall Publishing.
Engle, Allen D (2007) Eastern Kentucky University. Retrieved September 18, 2010 from http://people.eku.edu/englea/GSC.html
European Working Conditions Surveys (2005) Retrieved September 20, 2010 from http://www.eurofound.europa.eu/ewco/surveys/
Kochan, T and Shulman, B (2007) A New Social Contract Restoring Dignity and Balance to the Economy. Retrieved September 18, 2010 from http://www.sharedprosperity.org/bp184.html
Olson, Mancur, 1982, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities. New Haven: Yale UP. Retrieved September 18, 2010 from ProQuest Database