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.
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.
Cultural Awareness for Future Expatriates
Honda is a Japanese company which primarily deals in automobiles, motorcycles, aircrafts and the power equipment. Honda came into existence in Japan in the year 1948 under the name of Honda Motor Company (Forbes, 2017) having its headquarters in Tokyo (Encyclopaedia Britannica, 2017). It has remained the world largest motorcycle manufacturer along with the world largest manufacturer of internal combustion engine.
Honda has put in a lot of efforts to expand their market globally. Its overseas expansion initiated in the year 1952 inculcating its exporting to Taiwan. They made expansion in the continent like America, Europe, Africa and Middle East and Asia with the motive of “marketing globally and acting locally” (Honda, 2017). The other strategies that have made Honda to stand at this position are following labour intensive method; embrace paradox, attention on the flexibility of the factory, innovation, etc.
This assignment discusses the strategies related to the cultural awareness and the measures taken by Honda to impart the training to the expatriates in India and USA. It also throws light on difficulties that the company face while designing an expatriate’s reward package and also the reward and compensation practices offered by Honda in Canada and USA. Last but not the least it includes the final conclusion followed by the recommendations.
Culture as the term means the customs or the social behaviour of the society. It is the nature of the particular group of people characterised by the language, music, social habits, etc. Cultural awareness is associated with the knowledge to deal with the cultural values, beliefs and the perceptions. Lack of cultural awareness can result in cultural shocks for these expatriates and can ultimately reduce their productivity. Cultural shock is the feel or experience that an individual suffers due to the different cultures (Shioshvili, 2012). It results in uncomfortable experiences along with personnel disorientation. Therefore, the training in terms of creating cultural awareness is really a significant aspect of every organisation.
Hofstede’s culture dimension theory is a basic structure for cross-culture communication. It’s Dimension in national cultures inculcate power distance, uncertainty avoidance, individualism against collectivism, masculine v/s feminine and short term v/s long term and restraint (Hofstede, 2011). National culture is the culture that grows with the generations using mechanism. On the other hand the corporate culture includes the organisational structure and rules, climate of organisation, etc. which as per Brown has been categorised as outer layer, middle layer and inner layer and is regarding the dissimilarities within or parts of the same organisation. The national culture has shared meanings whereas organisational culture has shared behaviours. The corporate culture and strategic decision making gets affected by the national culture.
To overcome these cultural differences and shocks, trainings are imparted to the expatriates as this can be an aid to them in terms of overcoming the cultural barriers. Therefore, training for future expatriate becomes an essence in the present situation. For a country like India which has so much Diversity in terms of culture and religions the importance of training for the expatriates increases. There is a huge difference in the cultures of the Western and Indian cultures (Asia link Business, 2016). Cultural awareness training imparted should include-
- Traditional values– Training regarding the varying main religions and also the main festival that should form the part of this training.
- Relationships– The respect for hierarchy is again should be considered as an important aspect in terms of imparting training. Relationships build-up and maintaining it for long term by respecting and valuing the Indian culture and values.
- Body language– As per Indian culture Namaste is a traditional way to introduce oneself. Although shaking of hands is also appropriate.
- Communication– The national language is Hindi but for the official purposes both Hindi and English are considered. (u Ottawa, n.d.). Politeness can further enhance the impact of the communication.
- Social and Negotiation– Expatriate must be aware to deal with people and the currency exchanges that is considered for negotiations should also be given. Indian currency is Rupees and emphasis on the tradition of hospitality.
Expatriates Training offered by Honda
So, for any future expatriate to India must take in knowledge the above concerns and the training should be imparted in relation to them.
As it has been discussed, expatriates have to face a lot of issues and challenges that somehow reduces their abilities to perform better, therefore trainings are offered to them so that can overcome the hurdles and are able to generate better outcomes. Expatriates training is the main component for guarantee their success of the international business (Crocker & Lee, 2006). Honda is also offering better trainings to the expatriates to prepare them to take the foreign assignments, away from their country. Two of the countries where the expatriate training provided by Honda are discussed below-
Honda Training offered at India, after the selection of an expatriate for global project the pre-departure training in the first visit including the expatriates along with the family belongings. This pre-departure training gives them information regarding the diverse culture, tradition and lifestyles so that they can adapt themselves to the different atmosphere. The association of brand name with the expatriate in relation to the overseas assignments make Honda rather more disciplined. Once the foreign project is all over, the post task experience of the expatriate is used to guide the future expatriates going to the same foreign country. The training of the languages, cross culture drills and other aspects are really an effective measure to train and prepare the expatriates.
Coming to USA, the expatriate training offered by Honda includes the pre-departure training which includes the elements like cultural awareness programme, preliminary training and language training. Once the expatriates have done the pre- departure training, and have completed the assignment that is located in the foreign country then the expatriate returns to their own country of work. Later on, the practical assistance is provided to the repatriates and also the practical knowledge that the expatriate has gained can further be used for future expatriates also.
The efforts of Honda are extremely helpful to the expatriates in terms of their assistance that are being provided by the company. That is not just acting as a boon in terms of increasing the flexibility of the expatriates by creating cultural awareness but also in terms of their overall development too (Forster, 2000). This can further also be useful for the company as it can assist the company in accelerating their business abroad also.
An expatriate has to go abroad away from his own country to work for the organisation. Expatriate also has to face a lot of challenges while settling and living in the other country. In order to satisfy the needs of the expatriates and to meet their expectations the organisation has to provide them with effective compensation and reward packages. Expatriate compensation and reward packages have remained as a thwarting source for many organisations but these are those sources that form the base for the success in the operations of the organisations abroad (Sims & Schraeder, 2005). The key components of global compensation system include base pay, cost-of-living adjustments, allowances (Hardship allowances, home-leave allowances, housing assistance allowances, etc.), benefits (health care plans, trainings, etc.) and taxes.
Complexities involved in designing reward package
The reward and compensation systems in MNC should be designed in such a way that it can meet the needs HCN’s, PCN’s and TCN’s. The system or approaches for payment usually are of the following types which are (Relocate Magazine, 2014)-
- Going Rate System- As per this approach, link between the pay structure of the host country and the expatriate compensation is established concerning the local market rates and the local employee’s level of compensation.
- Balance Sheet System- This is widely used approach which ensures the same purchasing power as that of the home country and the same living standard as that of home country can be maintained.
- Global pay system- This approach needs an international pay scale devised and is implemented in such a manner that does not takes into concern home/host country systems.
There are a lot of complexities involved in the designing of the compensation and reward packages for the expatriates. Some of them are-
- According to the Society for Human Resource Management (2017), the most critical challenge is the huge amount of investments that is incurred for the preparation of the comprehensive international compensation system. Also, it is a point of concern of many MNC’s that they are not able to get the return on the investments made by them (Sims & Schraeder, 2005).
- The complexity involved in designing the international compensation and reward package also enhances as compared to that of the general reward system.
- Concerns regarding the escalation cost associated with the packages also form the part of the issue.
- The perfect knowledge of the expatriate reward packages and the related countries also is an issue and therefore cost incurred to hire the expert in this system also becomes the challenge.
Honda Motor Company also designs effective reward and compensation practices for its employees that not only attract the employees but also act as a measure to retain them. Honda offers equal chances to everyone based on the principles of personnel management (Honda, 2015).
Reward and compensation practices in USA
American Honda exclusive reward and compensation packages includes-
- Base salary and bonus- The base pay and bonus offered to the employees at the USA are the key component offered by Honda.
- Benefits and Allowances–
- Family and parenting benefits including work from home, childcare, etc. Vacation and time-off are offered in terms of providing compensation for both vacation and sick time to a few of employees. This includes sick days, paid holidays, volunteer time off, etc.
- Financial and retirementbenefits are also the part of the benefits and include pension plan, 401(k) plan, stock options, performance bonus, etc.
- Insurance, health and wellness includes occupational accident insurance, life insurance, mental health care, etc. are some of the benefits are also provided to the employees.
- Perks and Discountsinclude gym membership, company car facility, free lunch and snacks, etc.
- Honda also provide American Depository Receipts certificates as an award for one year service completion but these may attract taxes on them (Honda wellness, 2014).
The aim of Honda is to incorporate learning and employee performance development (Donovan, 2013). Honda aims at revising its reward and compensation policies from time to time.
Reward and compensation practices in Canada –
Canada Honda reward and compensation package includes-
- Basic salary- The employees at Honda Canada are offered the rates for their pays based on their designation, skills and abilities. The method for payment varies from hourly basis to monthly basis depending on the departments and work.
- Benefits and Allowances-
- It offers benefits which indulge in health benefit, dental, life insurance, disability and pension.
- It also involves tuition reimbursement program, subsidized complete service cafeteria and fitness centre at the site.
- Incentive programs like quality awards programs, suggestion programs are also initiated by Honda in Canada to attract and retain the employees (Honda Canada, 2017).
Evaluation - The reward and compensation policy offered by Honda in both the countries are quite motivating. These policies help the PCN’s, TCN’s and HCN’s to compete in healthy manner and to boost their morals. For an international company like Honda is also imparting the various facilities that is encouraging expatriates and the local employees too. Although, the policies are quite amazing but continuing with their practice of regular updating can make them even more effective.
Awareness of the expatriates regarding the culture and other aspect of the country in which expatriate has to go for the assignment has gained importance. The complexities involved in designing the expatriate compensation package are many in which huge investment involved is the biggest hurdle. HMC which is a Japanese company has really made satisfactory efforts at an international level. The measures adopted by Honda in countries like India and USA to impart the expatriate training are worth praise and they do play an important role in regard to handling the challenges like cultural shocks. The reward and compensation practices offered by Honda in America and Canada are really attractive. These policies include the major benefits and incentives like health care, financial benefits, retirement benefits, etc. which are morale boosting. But what can be recommended to Honda is that it should try to make efforts in terms of making the trainings more attractive. Also, post-assignment training can also be enhanced so that the reverse culture shocks can be avoided. According to Nazir, Shah & Zaman (2014), it can also be said that combination of international approaches for payments can be used by the company. It can be said that Honda is really performing well at the global level but scope of improvement is there.
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