Cross Cultural Training And Compensation Systems In MNCs

Introduce the topic by providing an overview of the chosen MNC and briefly outline the ways in which they have expanded the business globally. 

Cross cultural training should be provided by MNC’s including general knowledge about the country and essential tips on behaviour and sensitive issues.

a) Prepare a short report to create ‘cultural awareness’ for future expatriates on any country of your choice.

b) Evaluate the measures adopted by your chosen MNC to prepare & train expatriates for their new overseas assignments in any two countries of your choice.

(Support your answer with relevant International HRM theories and models)

The reward and compensation systems in MNC’s should effectively balance the needs and desires of host country nationals (HCNs), parent country nationals (PCNs) and third country nationals (TCNs).

MNC’s adopt different types of pay systems like Going rate approach, Balance sheet approach and Local Plus approach to fit into local laws and global policies.

a) Identify and discuss the complexities involved in the designing of a reward package for an expatriate employee.

b) Identify and evaluate the reward and compensation practices offered by your chosen MNC in any two countries of your choice.
(Support your answer with relevant International HRM theories and models)

Part 1

Jet airways incorporated on 1^st April 1992 in Mumbai as a limited liability company and it started operations as an air taxi operator on 5^th may 1993 with a fleet of four leased Boeing 737-300 aircrafts and operates over 300 flights daily. The airline granted a schedule airline status on 14 January 1995. It is an Indian airline company which is located in Mumbai and Jet airways is the second largest airline in India after Indigo. The head office is located in Mumbai and the Jet airways launched its first international flight in March 2004 from Chennai and Colombo. Jet airways provides wide range of services such as lounge services to first and premiere class passengers, provides special support and facilities to guest with limited mobility, reduced guest grievances and provides extra seats while travelling and provides assistance  to airlines operations in different countries. Naresh goyal was the founder and owner of the company (Forbes & Lederman, 2007). Another side this report is explained the methods of cross cultural training for expatriates, models of cultural awareness, rewards and compensation approaches for expatiates for doing new overseas assignment and described the issues of reward and compensation (Koo Moon, Kwon Choi & Shik Jung, 2012).  

a) The selected country is India and India provides different kind of cross cultural training for cultural awareness to expatriates.

Cross cultural training: It is the process of providing training to employees related to the cultural differences between nations and increasing knowledge and skills which is required for new culture (Chipps, Simpson & Brysiewicz, 2008). The main object of cross cultural training is to provide assistance to employees to feel comfortable in host country for doing work and living standards.

 India uses different kind of methods for providing cross cultural training and creating cultural awareness for expatriates. The methods of cross cultural training which are adopted by India to create cultural awareness. They are discussed as below.

1. Didactic training: It provides accurate information related with living and working conditions with cultural aspects of the host country. This training mostly is provided in informal way which can be given in traditional lectures.
2. Experimental training:  It uses various kinds of methods including practical exercises, workshops, simulations and genuine concepts to create cross cultural training for expatriates. This training based on learning concept as well as practical exercises.
3. Attribution training: It tries to provide thinking as well as acting skills to expatriates related to host country; therefore it explains natural behavior of host country to expatriates.
4. Language training: It provides training to expatriates for national and business language of the host country, in such way it plays vital role to send visible indication of politeness and it helps in understanding the culture of host country.
5. Interaction training: This method is based on interactions between expatriates of the local culture and new expatriates; therefore it can create culture awareness for expatriates.    
6. Cultural awareness training: It provides training related to culture concept, cultural differences and values of the countries to expatriates.

Culture plays significant role in doing business internationally, therefore to understand the culture in host country in deeply, India takes help of hofstede cultural dimension theory developed by Hofstede and Handy cultural model. This model explains the effect of culture on the values of people and how these values related with behavior. It improves individual performance and communication skills of expatriates (Gupta, Banerjee & Gaur, 2012).

b) Jet airways which is operated in India wants to prepare and trains expatriates for their new overseas assignment in Canada and United Kingdom therefore the company adopts the following six steps for expatriates training and development (Lee & Li, 2008). They are discussed as below.

• Pre-program assessment and exploration: Jet airways evaluate expatriates and background of his family members and personal tendencies therefore it will help in understanding of new country culture.
• Expatriates and their family training program: It provides information about the society, cultures, values and business agenda of the host country thus it will reduce risk of culture misunderstanding and improve cross culture experience.  
• Host manager team cultural briefings: It focuses on the host countries top management and team with whom international expatriates will work and discover differences regarding communication and management style.
• In country coaching and knowledge management process: In this stage expatriates arrives in host country ( Canada and united kingdom) then many new and unknown consequences occur with expatriates therefore India needs to provide coaching and training for these consequences and situations.

Hofstede developed Hofstede five dimensions model based on cross cultural differences which also provide support to expatriates in training and cultural awareness (Tang & Koveos, 2008). The hofstede five forces model are as below.  

                       

                                (Source: Hofstede, 2017)

Jet airways follow three practices to prepare and trains expatriates for their new overseas assignment in Canada and United Kingdom because there are many culture differences in Canada, India and United Kingdom. They follow different rules, regulation and governance for cultural awareness. Three practices which is followed by Jet airways in India for expatriates they are discussed as below.

• The company focuses on creation of knowledge and development of leadership if the company is making international assignment in Canada and United Kingdom.
• Company manages expatriates judiciously because it is not mandatory that a person who have got success at India (home country), he also will get success in abroad so company checks expatriates technical skills as well as ability to live comfortably in different cultures.
• At the end of expatriates assignment Jet airways provides career guidance and international experience to people for doing work. Jet airway is a constant endeavor to meet customer expectations and to provide excellence services to customers.

a) Cultural awareness for expatriates on India

Cross cultural training plays vital role to facilitate the development and refine the communication skills and competencies of expatriates for doing work in Canada and United Kingdom. Jet airways provides training to expatriates for development of cultural awareness in United Kingdom and Canada for doing new overseas assignment (Rehg, Gundlach & Grigorian, 2012)

Handy model also helps in create cultural awareness and trains to expatriates for new overseas assignment in Canada and United Kingdom. Handy model developed by Charles handy. Handy defines four culture of organization are as follows.

a.) Reward packages and compensation plays significant role to expatriates for doing work in host country (Canada and United Kingdom) and employees get motivated by reward and compensation system. Companies give reward and compensation to competence expatriates but now a day’s some issues are involved in designing of reward packages for expatriates’ employees (Froese, 2012). They are discussed as below.

• How to satisfy wants and aspirations of expatriates for security, constancy and career development to expatriate.
• How to achieve domestic as well as globally competitiveness and how to reward expatriates for their inputs and outputs.
• How to achieve consistency in reward and compensation system and how to provide flexibility in ever changing circumstances to expatriates.
• Companies analysis that how to give high rewards to competence expatriates employees and how to motivate and inspire to expatriates for doing work in host country as well as own country.
• How to provide continue motivation to those expatriates employees who maintain the high integrity and contain costs.
• How to run association with additional benefits schemes and ensure that they increase motivation and loyalty.
• How to take action for fragmenting pay market and maintain the market and how to make effective pay arrangements for expatriates’ employees.
• How to concentrate on rewarding for output and how to enhance quality standards.
• How to introduce complicated performance management processes and how to ensure that expatriates employees have enough required skills for performing task.
• The most important complexity involves in designing reward package for expatriate employees that how to analyze performance and efficiency of expatriates employees for performing task (Froese & Peltokorpi, 2011).

So companies should take care all these consequences while designing reward package for expatriates’ employees.

Companies use rewards and compensation system for many purposes like to attract top talented expatriates, to retain and reward expatriates employees, to build up confidence and to motivate expatriates for doing work with more competency and effectively in host country.  

b.A good compensation and reward system provides satisfaction to expatriates but it should also cost-effective for the company, Therefore Jet airways uses few methods to determine the rewards and compensation for expatriates for new overseas assignment in two countries Canada and united kingdom (Hüttinger, Schiele, & Veldman, 2012). The approaches are discussed as below.

1) Home based approach: It is also recognize as a balance sheet approach and well known approach in reward and compensation. This approach provides equal and balance an expatriates in his and her home country. Home based approach is related with key assumptions and it is prepared to protect expatriates from cost differences between their home country and host country. It provides compensation packages with equal cost differences between the worldwide project and the same project in the home country. British telecommunication uses this approach to compensate expatriates for starts new overseas assignment in Australia and India (Lee, Bothe & Steele, 2012).

2) Host based approach: In host based approach home country (India) Transfers payroll to the host country Canada and United Kingdom and receives additional benefits, bonus and incentives based on host country compensation and reward practices and regulations. This approach is cost effective compare to the classical home based approach with local policy mechanism. This approach is very complex for repatriating assignees because it integrates employees into the local country salary structure therefore it makes very difficult to shift the expatriates in another country and come back to their own country (McNulty, 2016).  

3) Going rate approach: In this approach, the basic salary for worldwide transfer is connected to the income formation in the host country. It is based on the home markets and depends on surveys comparison among home nationals, expatriates of same country and expatriates of other countries. For example An Indian bank which is working in London with using local British salaries and the salaries of other Indian competitor’s banks in London and the standard salary offered by all foreign banks which are working in London according to the salaries which have been offered to the employees.

b) Jet airways expatriate training on overseas assignments in Canada and United Kingdom

4) Local plus approach: Local plus approach is defined as an approach where companies pay their foreign workers according to the local formation.

Key components of compensation: It refers to the additional benefits, incentives and bonus excluding salary they are discussed as below (Cheung & Lee, 2012).

• Base salary: The base salary is a fixed amount of money which is paid by an employer to employees. It includes the repair premium, livelihood allowances and housing and utility allowances for expatriates.  
• Foreign Service inducement: Parent country usually receives a salary payment as incentives to accept foreign projects. Such expenditures depend upon the assignments, length of the assignment and actual hardship.
• Allowances: Many allowances are paid to expatriates but it depends upon the projects. They include the livelihood allowances, housing allowances and travel allowances.
• Education allowances for children: These allowances are paid to expatriates children. Education allowances include tuitions fees, language class tuition and uniforms.
• Moving and relocation allowances: Moving and relocation allowances are paid to expatriates.
• Tax equalization payments: Company adjusts employees’ basic income so expatriates do not need to pay more and less than tax if they are staying in home country.
• Spouse assistance: Companies provide support in spouse assistance also.

Conclusion

This report based on the cross cultural training of expatriates, reward and compensation system of expatriates. Cross culture training and reward and compensation system for expatriates plays significant role for different countries. On the second side report is explained the business of jet airways in India as well as in foreign. Jet airways is the largest and most popular airline in Mumbai and it carries around seven million passengers in a year. The jet airways provides various kind of services to passengers such as tourism services, lounge services and reduce grievances of passengers (Duggan, Law, &Murphy, 2011).

Some recommendations are given to Jet airways they are as follows.

• The jet airways has done lot of work in the field of tourism promotion in recent decades but still it needs to do more work towards promotion of tourism in India  and abroad.
• It is recommended that investment should be made to develop air seats metros. HRP plays vital role in the development of tourism sector and customer satisfaction so government should be formed HRP board.
• There should be a partnership between government and industry to promote tourism education in India. The jet airways should developed suitable organization culture to make HRP more successful and effectively (Bould & Bearfield, 2008).

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