INTERNATIONAL HR PRACTICES

JUNE 2023 EXAMINATION

ANSWER 1
INTRODUCTION:
Dow Limited, an Australian multinational corporation (MNC), is facing a situation where the
remuneration package for Australians employed in its subsidiary in Papua New Guinea is
significantly higher than that for Papua New Guineans performing the same job. This has led
to demotivation and complaints among the host country employees. This report aims to
explain why MNCs often prefer an ethnocentric approach in such situations and discuss the
limitations associated with this approach.

CONCEPT AND APPLICATION:

1.Ethnocentric Approach: The ethnocentric approach is characterized by a focus on the
interests and perspectives of the parent company or home country. MNCs often adopt this
approach due to several reasons:
a. Consistency and Control: By standardizing remuneration and employment practices across
different locations, MNCs can maintain consistency and control over operations. This
approach ensures uniformity in policies, procedures, and compensation structures, which may
align with the parent company's practices.
b. Skill and Expertise: MNCs may believe that employees from the home country possess
superior skills, knowledge, and experience compared to host country nationals. This
perception can lead to higher remuneration packages for home country employees as they are
deemed to bring more value to the company.
c. Transfer of Organizational Culture: MNCs often prioritize the transfer of their
organizational culture and values to subsidiaries. By employing home country nationals in
key positions, they can ensure the dissemination of desired practices and reinforce the parent
company's culture.
2. Limitations of the Ethnocentric Approach
a. Cultural and Diversity Issues: The ethnocentric approach can create cultural and diversity
challenges within the subsidiary. Pay disparities between home and host country employees
can lead to resentment, demotivation, and a lack of trust among the local workforce, as
evident in the case of Dow Limited. This may hamper employee morale and hinder teamwork
and collaboration.
b. Missed Opportunities for Local Talent Development: Overreliance on expatriate
employees may limit the opportunities for local talent development and career advancement.
Host country employees may feel disempowered and perceive limited growth prospects
within the organization, resulting in talent retention challenges.
c. High Costs: Employing expatriates often incurs additional costs such as relocation
allowances, higher remuneration packages, and housing and travel expenses. This can strain
the financial resources of the MNC, especially if the number of expatriate employees is
significant.

CONCLUSION:
MNCs, like Dow Limited, may prefer an ethnocentric approach to ensure consistency,
control, and the transfer of organizational culture. However, this approach has limitations,
including cultural and diversity issues, missed opportunities for local talent development, and
high costs. MNCs should recognize the importance of fair and equitable remuneration
practices to promote employee motivation, engagement, and retention. Embracing a more
inclusive approach that values and rewards employees based on their skills, performance, and
contributions, irrespective of nationality, can lead to a more harmonious work environment
and enhance the overall success of the organization.

ANSWER 2
INTRODUCTION:
As the Group HR Director of a small company venturing into international assignments, you
recognize the importance of equipping employees with the necessary skills and knowledge to
succeed in diverse cultural and business environments. However, due to limited in-house
resources, you are considering partnering with an external consulting firm to provide pre-
departure training for employees. This report aims to outline the key components that should
be covered in the training program and propose effective methods to measure its impact and
effectiveness.

CONCEPT AND APPLICATION:

Components of Pre-departure Training:
a. Cross-cultural Communication: Employees should receive training on cultural norms,
etiquette, and communication styles in the host country. This includes understanding non-
verbal cues, language basics, and cultural sensitivities.
b. Country-specific Knowledge: Employees should acquire knowledge about the host
country's business practices, legal framework, customs, and social norms. This helps them
navigate professional and social interactions effectively.
c. Practicalities: Training should cover practical aspects such as housing, transportation,
healthcare, and safety measures in the host country. Employees should be familiarized with
resources and support available to them during their assignment.
d. Job-specific Training: Employees should receive training specific to their roles and
responsibilities in the host country. This may include understanding local regulations,
industry-specific practices, and adapting to local market dynamics.
Measuring the Effectiveness of Pre-departure Training:
a. Pre- and Post-Assessments: Conduct assessments before and after the training to measure
knowledge gain and identify areas of improvement. This can be in the form of quizzes,
surveys, or interviews to gauge participants' understanding and preparedness.
b. Feedback and Evaluation: Gather feedback from employees who have completed the
training program. This can be done through surveys or interviews to assess their satisfaction
levels, perceived effectiveness, and areas that need further attention.
c. Performance Metrics: Monitor employees' performance during and after the international
assignment. Compare their performance with pre-established benchmarks to evaluate the
impact of the training program on their job performance.
d. Employee Surveys: Conduct surveys to gather feedback on the relevance, usefulness, and
applicability of the training program. This feedback can help identify strengths and areas for
improvement in the training delivery.

CONCLUSION:
To ensure a successful international assignment program, it is crucial to provide employees
with pre-departure training. Engaging an external consulting firm can be a viable solution for
small companies lacking in-house resources. The components of the training should include
cross-cultural communication, country-specific knowledge, practicalities, and job-specific
training. Measuring the effectiveness of the training program can be achieved through pre-
and post-assessments, feedback and evaluation, performance metrics, and employee surveys.
By assessing the impact of the pre-departure training, the company can make informed
decisions to enhance the effectiveness of the program and support the success of international
assignments.

ANSWER 3 (A)
INTRODUCTION:
Assessing performance in an international context presents significant challenges for
organizations. This is exemplified by the case of Mazowe, a Japanese general insurance
company operating globally with a large percentage of its employees based outside Japan.
The company's performance management policies vary across different regions, reflecting
diverse cultural and organizational contexts. However, dissatisfaction with the current
performance management practices has been identified through an employee satisfaction
survey, indicating the need to address the challenges associated with assessing performance
in an international setting.
CONCEPT AND APPLICATION:
Diverse Cultural Contexts: One major challenge in assessing performance across
international locations is the presence of diverse cultural norms, values, and expectations.
Mazvode's operations span continents, and each region may have its own cultural nuances
that affect the perception and evaluation of performance. For instance, the preference for
competitive and incentive-based performance management among younger employees in
Japan contrasts with the emphasis on developmental and feedback-driven approaches. These
cultural differences necessitate the need for a nuanced understanding of performance
evaluation methods in each location.
Varying Organizational Practices: In addition to cultural differences, organizations may have
different performance management practices across regions. Mazvode's case demonstrates
this with its performance management policies being measured and competitive in North
America, goal-driven in Europe, and a mix of approaches in other nations. The challenge lies
in harmonizing these diverse practices and aligning them with the company's overall goals
and objectives. It requires a careful balance between standardization and localization to
ensure fairness and consistency in performance assessment.
Employee Expectations and Motivation: Another challenge is aligning performance
management systems with employee expectations and motivation levels across different
regions. Employees in Japan seeking a competitive and incentive-based system, as well as
those in North America desiring a more development-focused approach, highlight the
importance of tailoring performance assessments to meet diverse employee needs.
Discrepancies in expectations can lead to dissatisfaction, demotivation, and decreased
performance. Organizations must strike a balance between meeting individual aspirations and
fostering a cohesive performance management framework.
Effectiveness and Validity: Evaluating performance in an international context requires
ensuring the effectiveness and validity of assessment methods. Performance indicators that
are relevant and meaningful in one region may not hold the same significance in another.
Organizations need to establish performance metrics that capture the local context while
aligning with global business objectives. Additionally, language barriers, varying educational
systems, and cultural biases can further complicate the accurate measurement of
performance. Ensuring the reliability and fairness of assessments becomes crucial in
international settings.

CONCLUSION:
Assessing performance in an international context is a complex task for organizations, as
demonstrated by the challenges faced by Mazowe. The diverse cultural contexts, varying
organizational practices, employee expectations, and the need for effective and valid
performance measurement pose significant hurdles. To overcome these challenges,
organizations must adopt a flexible approach that acknowledges the uniqueness of each
region while aligning performance management with global goals. Strategies such as
localizing assessment methods, fostering employee engagement and motivation, and ensuring
the fairness and validity of evaluations can help overcome these challenges and create a more
effective and inclusive performance management system across international operations.
ANSWER 3 (B)
INTRODUCTION:
Assessing performance in an international context presents several significant challenges.
This is evident in the case of Mazowe, a Japanese general insurance company operating
across continents, where performance management practices have faced widespread
dissatisfaction. In order to address these challenges, it is crucial to understand the variations
in performance management policies and employee expectations across different regions.
This essay will explore the major challenges faced in assessing performance in an
international context, taking into account the diverse approaches and perspectives observed in
Mazowe.

CONCEPT AND APPLICATION:

Cultural Differences: One of the key challenges in assessing performance internationally is
navigating the cultural variations that exist among different regions. Each culture has its own
values, norms, and expectations regarding work and performance. Mazvode's experience
highlights this challenge, as their performance management policies differ across continents
to accommodate the cultural differences. The company must carefully consider these cultural
nuances while designing performance evaluation criteria and processes to ensure fairness and
relevance
Employee Expectations: Another challenge lies in understanding and meeting the diverse
expectations of employees regarding performance management. As seen in Mazowe, younger
employees in Japan seek a competitive and incentive-based system, while employees in
North America prioritize development over task-driven evaluation. This highlights the need
for a flexible approach that aligns with the preferences and motivations of employees in
different regions. Mazowe must strike a balance between standardized performance measures
and customization to cater to the varied expectations of its global workforce.
Performance Evaluation Criteria: Establishing consistent and meaningful performance
evaluation criteria across international units can be challenging. Different regions may have
distinct business priorities, market dynamics, and customer requirements, which affect the
relevance of performance metrics. For instance, contextual performance is crucial in
customer engagement in North America, while goal orientation is emphasized in Europe.
Mazowe needs to carefully align its performance evaluation criteria with the specific contexts
and goals of each region to accurately assess performance and provide meaningful feedback.

CONCLUSION:
Assessing performance in an international context poses significant challenges due to cultural
differences, varied employee expectations, and the need for tailored performance evaluation
criteria. Mazvode's experience exemplifies these challenges, with dissatisfaction arising from
a misalignment between performance management practices and employee preferences. To
overcome these challenges, organizations must adopt a flexible approach that considers
cultural nuances, incorporates employee feedback, and customizes performance evaluation
criteria to specific regional contexts. By addressing these challenges, companies like Mazowe
can enhance their performance management practices and effectively drive employee
engagement, development, and organizational success on a global scale.