Question

ASSIGNMENT

IMHR DILEMMA: WHOM DO YOU SATISFY? EXPATRIATE OR NATIONALS

Hi-Tech Electronics Limited was established in 2006 in Kuala Lumpur, Malaysia. It produces and markets all types of electronics goods in most of the Asian and Pacific countries. It has been one among the top five companies as for the level of technology and one among the top three companies regarding marketing of the products in Malaysia. The company’s policy and practices concerning human resource management are top in the country. The company’s salary administration policies and practices were taken as guidelines not only by the other companies but also by various wage boards and pay commissions in the country. But this company has been struggling a lot because of a minor problem relating to administration of salary and benefits. The problem is stated hereunder.

The company employed nearly 400 national young graduate and post graduate engineers and 20 expatriate engineers. This employee forms the cream of the company’s present human resource. The expatriate employees occupied higher position in all the departments including Human Resource Department. The company’s salary policy and benefit policy were formulated mainly on the basis of the expatriate employee’s desire. The base salary of the company is the same for both the expatriate and national employees. But expatriate receive additional allowances like international market allowance, educational allowance, settling-in allowance, car allowance, housing allowance and entertainment allowance. Thus, expatriate receives nearly 250% more salary than the nationals doing the same job.

The national employees demanded the management to pay equally with that of expatriates immediately. According to them, the pocket frustrates them severely.

QUESTIONS:

3. What are the 4 factors affecting standardization of compensation packages for expatriate and nationals’ employees? provide mind map for more proper illustration.

4. Identify 4 challenges the company will face if they did not fulfil the national’s employees demand.

Answer 1

3. Following are the four factors which affect standardization of compensation packages for expatriate and nationals' employees:

1. The role and responsibilities assigned to the national employees and expatriates.
2. Qualification and experience
3. Skills possessed by the two.
4. Standard of living difference between the host and home country.

Expatriates are mostly more skilled and experienced than the locals. Also, they need to be paid for international replacing themselves and their families. However, a 250% difference in compensation package is not appropriate. There has to be a balance and the difference between wages must be reduced.

4. The four challenges the company will face if they did not fulfil the national’s employees demand are:

1. Employee turnover of the locals would increase, resulting in increase in recruitment and retention costs.
2. The nationals' employees would resist and not co-operate with the management.
3. Conflicts would increase among the two types of employees.
4. There may be lawsuits against the firm which would cost the company money as well as tarnish it's image.