Managing Employee Relocation: International Human Resource Management Issues

Challenges Faced by Employers When Relocating Employees

Question:

Identify and discuss the Human Resource Management Issues that a HR Manager in Melbourne would have to consider when relocating a Manager from Australia to Manage a subsidiary branch of an Australian Multinational Organisation that is Located in London in the United Kingdom.

The issue of employee relocation is a major concern for international human resources management. There  is in fact a major challenge when this relocating has to do with moving the employee from one environment to a different one. Some of the issues that employers are faced with when relocating employees include the moving expenses, relocation agreements, support for their families, communication, legal and economic issues. It thus becomes important that the human resources department ensure relocation is one that will attract the affected employee and ensure they are retained at all costs (Baker & Anderson, 2010).

The human resources department needs to make sure that they provide the most competitive relocation package for these employees through fair policies and practices. It is also important to appreciate that employee relocation can help in retaining current employees in need of promotion while luring in new hires, this provides employee with new career opportunities while advancing development in the overall goal of the organisation. The following essay analyses some of the human resource management issues that a manager in Melbourne needs to consider as he or she relocates a manager from Australia to manage a branch located in London, United Kingdom (Baskerville, 2003).  In doing so the paper will also analyze some of the employment relations and human resource issues on the employee working in the foreign country.

In most case businesses that operate within Australian border have the advantage of dealing with a relatively limited cultural, economic and legal requirements for relocation since Australia is a capitalist competitive country. For a company that operates in multinational perspective then they are bound to face some human resources issues due to lack of homogeneity. One of the main examples is the minimum mandated holidays that the employee will not enjoy will living  in the united kingdom. There are also other general issues like the need for security and terrorism awareness training for employees in international assignments where crime and other issues like kidnapping might be common for foreign employees (Prewitt, Weil, & McClure, 2011). The HR manager in Melbourne Australia function in the multinational company will be complicated highly by the need to adapt the HR policy and procedure to the united kingdom’s subsidiary company. some of the other issues that will have to be considered by the HR manager during relocation will be as follows:

For any company, it is usually a huge challenge for the HR department to have a relocation program that will cover each and every single need for the person being relocated. This is because each employee is different. The manager should be efficient enough to track relocation needs from designated transferees. Each relocation needs to be treated differently. This can be done by reviewing all the relocation issues collectively in the event that the season dies down to determine whether or not the policies should be altered. One of the example is when one has an large amount of transfer requests for extended living in the native country (Prewitt, Weil, & McClure, 2011). The changes in relocation policies may also not mean that they will lead to an increase in the budget.

Creating Competitive Relocation Packages to Retain Employees

It is a common trend for people to keep on talking and sharing vital information in the office, this will also come in to play whenever the Human Resources (HR) manager is planning to relocate an employee. Employees are always talking with one another meaning that the manager may be faced with a multitude of request for relocations at the same time with regard to the benefits of moving from Australia to the united kingdom. However, if employees discover that the relocations policies are similar in one way or the other, it may discourage acceptance (Kenton & Yarnall, 2009).  Also during relocation, the company will also have to consider economic burden that comes with relocation. The difference in the United Kingdom and Australian economies will also mean that there are differences in HR practices. For example, in a free enterprise system, the efficiency requirements usually favors HR policies which looks in to efficiency of workers, productivity and staff regulation in relation to market forces (Prewitt, Weil, & McClure, 2011).  As the organisation moves along the scale, the HR practices will continue to shift towards the prevention of unemployment even at the expense of ensuring efficiency during relocation.

In most cases, it is important for the HR manager to offer the employee reimbursement for expenses incurred during relocation. Such expenses may include house hunting, transportation costs and temporary living expenses. For some organisations, they may decide to forego reimbursement and consider paying the employee upfront to enable them cover their expenses. As a way of motivating the employee, allow them to keep whatever remains from the lump sum compensation for their acceptance to relocated (Stone, Russell, & Patterson, 2003). This means that the HR department will not follow up on the expenses or keep a detailed record on how the employee spent the lump sum compensation.

The differences in the cost of labor for the two countries will also be a major issue during relocation. This is because a high cost of labor as experienced in the United Kingdom will mean a major focus be put on efficiency and other HR practices like pay-for-performance; this will ensure an improvement of employee performance. The differences in the cost of labor for many countries is very important issue during relocation. For example, the hourly compensation for production workers in the manufacturing industry is $25.56 in Europe and $2.65 in Mexico. This  may encourage or discourage the employee from accepting relocation.  Other factors to consider in the cost of labor include the number of working hours in the united kingdom and that of Australia, holidays, performance appraisals and individual development (Kenton & Yarnall, 2009).

Just like any other operations in the organisation, the company will spent a lot of money during relocation of the employee. In some cases this relocation may never meet the company objective  in the case that the employee leaves the company shortly after they have been relocated. It thus becomes important for the company to have the payback clause when writing relocation agreements, this should also include the costs of relocation and other forms of compensation that the employee is given (Deng, Menguc, & Benson, 2015).  In the payback clauses the relocated employees should agree to pay back all or part of the expenses for the relocation in the even that he leaves the company within a suggested period which is usually a year and half. Such clauses are common for industries with the highest turnover.

Cultural, Economic and Legal Challenges Faced by Multinational Companies

There are some cultural differences that will play between working in Australia and working in the united kingdom for the relocated manager.  This is because the employee will encounter differences in HR practices among employees in the foreign subsidiary. The cultural norms of the people in the united kingdom and the relevance of these norms will affect the Australian employees typical view of his relationship with employees in the united kingdom, this will also affect the way he will execute his assignment (Prewitt, Weil, & McClure, 2011). For example, employees in the united kingdom usually expect lifetime employment with regard to performance for example. In addition, appraisals is mostly focused in the individual and not the working group, meaning that the manager will have to consider such developments.

According to Geert Hofstede, there are a lot of international cultural differences during relocation.  In this line, employees firstly differ in power distance which is the extent to which the less powerful member in the organisation will expect and accept that power will be unequally distributed. Individualism vs. collectivism where the relationship between individuals in an organisation is usually less close and  more loose. In the United Kingdom for example, each employee is expected to look after themselves and their immediate relations (Baskerville, 2003). This is something that will affect the way the employee will blend in with his new colleagues.  Masculinity vs. feminity will also look at the extent to which the society values assertiveness and caring. These intercultural differences in Australia and the united Kingdom will also have implications for the manager during relocation. It is important that as the manager is being relocated, he should be given an orientation of HR practices in the united kingdom including selection testing and the payment plans to fit the local norms.

The best case scenario would be to draw a manager from the UK citizens (Baskerville, 2003). Also when selecting and employee for relocation, it is important to maintain a high degree of empathy with reference to attitude and cultural demands of the host country.  This is because a HR staff that is able to share the cultural background of an employee is more likely to become sensitive to the expectations and needs of the new workplace and manage the company successful.

Lastly, while looking at the industrial relation as an issue, the main focus is put in the union, the employee and the employer from Australia and in the united kingdom (Kenton & Yarnall, 2009). There are other factors also like the employee act and how it has been applied in the united kingdom and in Australia. Managers should use mathematics like the cost and benefit analysis to look at the overall costs of relocation and the cost of locally sourcing for an employee. An overall relocation program will also not function if it does not include such costs like the transfer costs, replacement, training, family movement costs and hardship costs for the employee. Other legal issues like immigration, work permit and labor costs should also be looked in to (Adler & Elmhorst, 2010). The differences in the working periods, compensation in terms of money and time allocation for employees should also be looked in to. It is also important that an employee is given site visits and orientation to the new host country before relocation, this will allow him or her time to understand the professional and cultural differences that they will encounter after relocation.

Conclusions

In conclusion, any manager willing to relocated from one country to another will want to be offered a very attractive package during relocation. This is especially very important if the person is going to undertake an high level or executive position as there is usually a high cost associated with such a package. It is however important for the human resources manager to find out whether there will be any financial gain in relocating or locally hiring an employee in the host country. There is usually a lot of pressure for the human resources manager to cut down on costs and put in place policies whereby employees will still be relocated to places they are required to move.

References

Adler, R., & Elmhorst, J. (2010). Communication at work: principles and practices for business and the professions (10th ed.). New York, NY.: McGraw Hill.

Baker, H. K., & Anderson, R. (2010). Corporate Governance: A Synthesis of Theory, Research, and Practice (Robert W. Kolb Series) (1st ed.). NY: Wiley.

Baskerville, R. (2003). Hofstede never studied culture. Accounting, Organizations and Society, 28(1), 3-7.

Beardwell, J., & Claydon, T. (2010). Human Resource Management: A contemporary approach (6 ed., Vol. 42). Harlow: Financial Times Prentice Hall.

Deng, J., Menguc, B., & Benson, J. (2015). The impact of human resource management on export performance of Hospitality enterprises. Thunderbird International Business Review, 14(6), 409–429.

Kenton, B., & Yarnall, J. (2009). HR: The Business Partner . Routledge; 2 edition.

Prewitt, J., Weil, R., & McClure, A. (2011). Developing Leadership in Global and Multi-cultural Organizations. International Journal of Business and Social Science, 2(13), 1-20.

Stone, G., Russell, R., & Patterson, K. (2003). Transformational versus servant leadership: a difference in leader focus. Leadership & Organizational?Development Journal, 25(4), 349-361 .