Crompton and Smythe Ltd.’s International Human Resource Management

Introduction

The case of Crompton and Smythe Ltd. Shows that an essential part of the IHRM process is that proper attention is given to the personnel function. The effective­ness of any work organization is dependent upon the efficient use of resources, in particular human resources. Crompton and Smythe Ltd. plans its international expansion. It is important to consider cultural differences and cultural norms of the foreign country (Armstrong, 2003). To go global, the company should take into consideration theories, methods and models to analyze international business perspectives, opportunities and possible threats. Corporate culture helps to account for variations among organizations and managers.

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Resourcing strategy

The idea of IHRM incorporates all the functions of HRM applied on the national level but pays more attention to cultural differences and diversity. In a general sense, diversity means the removal of prejudice from the organization and the individuals it employs to ensure that all employees, regardless of gender, ethnic origin, re­ligion and lifestyle, receive equal treatment in the organization. Organizations that have a multi-country operation or business should give some thought to how intercultural differences impede or enhance business success. The key issues concerning Crompton and Smythe Ltd management of the home country and host country operations are self-explanatory; for both of these players, the transfer of skilled and experienced employees is inevitably a disruptive event that will affect the smooth running of their local businesses. Similarly, for the assignee and their family, the key concerns are clearly definable, although the order of importance attached to each issue will vary. The various issues are discussed separately in the sections that follow. The corporate issues are necessarily more complex, involving the need to balance the interests of the home and host operations with overriding group interest, which include building and maintaining a cadre of effective, experienced and well-motivated (Black, 1999).

Suitable prospective

In Poland, cultural differences are important for teams’ effectiveness because they provide specific capacities for action from traits and should increase perfor­mance and subsequently advancement. It is widely considered that the organizing element of management should concern itself with the system and environment within which communication functions. The structure and function­ing of the international company must reflect, therefore, the nature of the environment in which it is operating. The managers single out significant national differences in the way people approach work and organizations (Brewster and Harris, 1999). In all societies, there is inequality between people, be it based upon physical, economic, intellectual or social characteristics. Questions of culture and communication are important because they help to create a favourite environment for employees in different countries and keep the traditions and corporate spirit of Crompton & Smythe. Culture and communication are manifested in the values, attitudes, and motivations of people and can affect business customs such as personal manners, colours, advertising, pride and status. For an international company, communication, therefore, is the means whereby people in an organization exchange information regarding the operations of an enterprise. It is the interchange of ideas, facts, and emotions by two or more persons by the use of words, letters and symbols. Every aspect of management requires good communication, but it is particularly important in directing an internationally diverse workforce. Behaviour itself is a form of communication (Bartlett and Ghoshal, 1999). Each culture may differ in the way that it experiences and uses such things as time, space, and relationships. The administrators of Crompton & Smythe strategy of the main objectives for each stage in the expatriate cycle:

  • Pre-departure. Create and sustain a sufficient and high-calibre demand pool for assignments.
  • On assignment. Facilitate business delivery consistent with strategy and justify the expatriate spend.
  • Package. Provide competitive and comprehensive compen­sation and benefits program to retain key staff.
  • Next assignment. Integrate valuable assignment knowledge within the organization to ensure continuity of the cycle. Diversity management tools should be used to manage international employees or diverse workforce (Brooke, 1986).

Pre-departure

The next step in strategic planning is to analyze the external reasons for deploying Crompton and Smythe in terms of global business strategy, which drives organizational capabilities and requirements and, in turn, generates the need for mobility. In smaller, export-orientated companies, the dominant international business motivation is likely to remain opportunistic; for international companies, the dominant focus will probably be business control and technology transfer in selected markets. For truly multinational companies, the international business focus becomes the management of the group’s portfolio of businesses while the global corporation, by definition, is focused on managing a worldwide business (Brewster, 1993).

The organisational structures of these four types of companies in the globalization continuum follow their international business focus. Export-orientated companies are usually organized by function or division, but the next level of international companies relies on centralized core competencies with local coordination. In multinational corporations, the organizational balance shifts towards decentralized, nationally self-sufficient subsidiaries (Budhwar and Debrah, 2001). Finally, the global corporation seeks to develop an integrated ‘borderless’ structure that fosters interdependence within a strong corporate culture. These organization requirements, in turn, determine the sourcing of key talent and the characteristics of international personnel expa­triates. Export-orientated companies can only draw their Crompton and Smythe from the headquarters country, which is their sole source of key talent. International companies may have a choice between their headquarters country and key operating countries to source mid-career executives and business specialists, but the number of ‘from-to alternatives is likely to be limited (Dowling et al. 1999).

On assignment

Within multinationals, the alternative combinations drawn from developed operations countries or headquarters will grow and include younger executives who are given international exposure and experience within career development programs. In global corporations, Crompton and Smythe are drawn from worldwide centres of excellence and include senior as well as mid-career executives with business specialist and developmental staff deployed in growing numbers in new markets. Following these definitions, the company will be able to set its HR policies for the development and deployment of Crompton and Smythe. For example, Crompton and Smythe’s corporation has ruled that top management positions in any country must be filled by local nationals with international experience. Further examples, in contrast, are the diverse IME strategies of two global automotive corporations for their joint ventures in Poland. Volkswagen, the Chinese market leader in passenger car manufacture, has established a management structure in its Shanghai plants where Chinese and German managers work in parallel positions at each management level from the general manager (Hannagan, 1995).

The development of Crompton and Smythe strategy also involves determining the different categories of Crompton and Smythe and the types of people to be assigned. Expatriate assignments may be categorized by length of appointment – six months or less, perhaps, in the case of training local staff for skills or technology transfers; two to five years (which may even result in localization at the end of the assignment) in the case of senior line management appointments. Appointees for these assignments are usually drawn from mid-career managers at the sub-divisional board level and, in the case of technology transfer appointments, may include case-hardened older managers who may be at retirement age post-assignment (Emmott et al. 1992). There has been a growing trend towards so-called ‘commuter’ appointments where the Crompton and Smythe employee travels from their base every week. Very often, the commuting approach is adopted at the instigation of the appointee whose family are unwilling to move and may not represent the employer’s first choice for assignments of longer than six months. Although the considerable cost of moving a partner and family may be avoided, commuting generates many strains on the employee, both socially and on work performance, and may have an adverse effect on peer relationships with local managers who resent the apparent privilege and reduced involvement (Dijck, 1995).

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In multinationals and global corporations, there is a further category of junior developmental Crompton and Smythe who are being given early international experience both to load the pipeline of available talent and to cement organizational and cultural integration within the company. Junior developmental assignees are normally in their mid-20s to 30s, often without family commitments, possibly having single status. Finally, in the global corporation, there will be a cadre of career internationalists employed at the headquarters level and drawn from any country within the span of the group’s activities which are committed to moving from one international assignment to the next. They are the cultural glue of the organization, and the world is truly their oyster (Hickson, 1993).

Selection Criteria

For multinationals and global corporations, the solution lies in creating a talent pool from which Crompton and Smythe can be j selected as assignments arise. With this objective in mind, the company should assess incoming staff on their potential for international assignments when hiring.

  • cultural sensitivity;
  • interpersonal skills;
  • listening;
  • flexibility/adaptability;
  • ability to learn;
  • personal ambiguity tolerance;

Selection is a two-way process. Given the emphasis that employers now place on accommodating partner needs, companies understand that acceptance of an expatriate appointment is a collective family decision and have become mindful of the factors in expatriate partner suitability (Hickson, 1993). Interestingly, Towers Perrin has found that employers and employees agree on the relative importance, in descending order, of the following characteristics, although, in a recent survey, a rather higher percentage of employers than employees mentioned each factor, except for language skills:

  • family flexibility;
  • personal resilience;
  • personality;
  • cultural sensitivity;
  • interpersonal skills;
  • international experience;
  • employability;
  • language skills (Terpstra, 1985).

Within the company, the selection process for each appointment ideally involves the HR and finance functions and line management within the division to which the appointee will be assigned. However, the whole process of Crompton and Smythe selection is a mine­field as the following collection of facts and figures demonstrates:

  1. the cost of intended assignments is normally 2 to 3.5 times the home package;
  2. 40 per cent of international assignees (IAs) return early; 97 per cent of IAs agree success is directly related to the happiness of their partner;
  3. pre-return (or next assignment) preparation; managing re-entry or next assignment; evaluation (Kirkbride, 1994).

The transition phases are particularly stressful for the assignee and their family; companies experienced in expatriate placement are careful to provide as much information and administrative support as possible in handling the logistics of the move abroad and the family’s return. In larger corporations, the development of peer group family circles among other expatriates in the host country has been particularly helpful in acclimatizing new arrivals to the unfamiliar environment and culture (Hendry, 1994).

Next assignment

Transition, either return to the home country or localization within the host country, may also involve some reduction in the compensation package. This is an issue that needs careful handling and communication. In some cases, companies may phase out the additional allowances or benefits over a period rather than withdraw them immediately. Enhanced communication is an ongoing theme in the effective implementation of Crompton and Smythe strategy, including handbooks and newsletters for family consumption and a company Web site giving full information on company policy in all HR areas (Held et al. 1999). All too often, company perceptions of IME satisfaction or dissatisfaction with aspects of Crompton and Smythe reward strategy differ keenly from reality, as do employee perceptions of what the corporate strategy may really p be. Such misconceptions are invariably rooted in communications ft failure (Harzing and Van Ruyssevelt, 1995).

In the light of the company’s articulated Crompton and Smythe strategy, management should now turn to determine reward strategy and compensation policies. In the case of the smaller company consid­ering a single assignment to meet an informal business opportunity, the Crompton and Smythe strategy will assist in making the business case and fixing the reward package in terms of the confirmed need for an expa­triate appointment and a reasoned cost/benefit analysis. A successful reward strategy encompasses much more than the compensation package, although that may be the key practical element in ensuring that the appointee, partner and family set off on the assignment with confidence and in a positive frame of and is focused strongly on helping partners to resolve dual-career issues. For partners who decide to step out from their home country careers for the period of the assignment, financial assis­tance is often given to obtain a job in the host country or to maintain professional education standards during absence from work. However, few, if any, companies would directly compensate the partner for loss of income during their absence. First, they are subjective and reflect experiences and cultural environments. Second, they may be self-imposed or imposed from the outside, as is the case when a society establishes the norms in contrast with the establishment of personal norms. Third, even though they deal with what one ought to do, they do not provide unambiguous, absolute guidelines. In fact, several “oughts” may be distinguished — the moral ought, the legal ought, the economic ought, and the aesthetic ought — they may result in conflicting conclusions. Thus the question of how a marketing executive ought to behave in conflict situations is difficult to handle.

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Compensation

Payroll and tax are other sensitive areas in Crompton and Smythe administration. Very often, companies prefer to keep the details of Crompton and Smythe reward packages confidential from a local host company operations and will • continue to pay expatriates from the centre, making appropriate tax deductions. Some global and multinational corporations have 15 chosen to form service companies that employ all Crompton and Smythe and lease out their services to the operations to which they are assigned. It is sometimes suggested that the registration of such service companies in tax havens will reduce the taxation burden. However, this device is unlikely to benefit Crompton and Smythe employees, who are generally taxed according to their place of domicile rather than employment (Harzing and Van Ruyssevelt, 1995). The home base or headquarters should remain responsive to the daily needs of expatriate employees and their families. Cutting the umbilical cord between the employee and the home office generates insecurity, and there ought to be at least one member of HR staff with responsibility for the welfare of Crompton and Smythe expatriates who is able to provide a helpline service. For instance, if employees share different religious beliefs or belong to another culture than the general staff, it is crucial to create a friendly atmosphere among employees using discussions and informal communication to reduce cultural differences. Employment gaps are often measured as gaps/no gaps (continuous employment), reducing variance. Employment gaps and job changes are negatively related to managers’ promotions. In this situation, training of staff is the best solution to the skills shortage and changes in technology. At­tention to language skills in recruitment and opportunities for em­ployees to learn another language is commonplace solutions that need no discussion. The understanding of social behaviour and good manners in each coun­try is also a very important sphere of IHRM practices. The previous area is closely connected with the national differences in culture, which cause people to look at the same issue in different ways. The solution is to ensure that there is a shared understanding of these differences and deliberate action to make choices in a way that enables all cultures to work in the most effective manner. Each country can customize the policies of the manual in order to meet local requirements and cultural differences. It can concern national and religious holidays, weekends and communication practices typical for a particular country (Harzing and Van Ruyssevelt, 1995).

Conclusion

In the light of the company’s articulated strategy, management should now turn to determine reward strategy and compensation policies. In the case of the smaller company consid­ering a single assignment to meet an informal business opportunity, the Crompton and Smythe strategy will assist in making the business case and fixing the reward package in terms of the confirmed need for an expa­triate appointment and a reasoned cost/benefit analysis. A successful reward strategy encompasses much more than the compensation package, although that may be the key practical element in ensuring that the appointee, partner and family set off on the assignment with confidence and in a positive frame of and is focused strongly on helping partners to resolve dual-career issues. For partners who decide to step out from their home country careers for the period of the assignment, financial assis­tance is often given to obtain a job in the host country or to maintain professional education standards during absence from work. However, few, if any, companies would directly compensate the partner for loss of income during their absence. For Crompton and Smythe, success depends upon effective planning and a strategic approach in international business.

Bibliography

Armstrong, M. 2003. Human Resource Management. Kogan Page. Behavior. 2nd edn. Boston: Kent Publishing.

Bartlett, C. and Ghoshal, S. 1999. Managing Across Borders: The Transnational Solution. 2nd edition, London: Ramsden House.

Black, J.S. 1999. Globalising People through International Assigignments, Reading, M.A.: Addison Wesley.

Brewster, C. and Harris, H. (eds.). 1999. International HRM: Contemporary issues in Europe. London: Routledge.

Brooke, M. 1986. International Management: A Review of Strategies and Operations. London: Rootledge.

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Brewster, C. 1993. Developing a ‘European’ model of human resource management. International Journal of Human Resource Management. 4 (4) 765-784. Hutchinson.

Budhwar, P. S., Debrah, Y. 2001. Rethinking comparative and cross-national human resource management research. International Journal of Human Resource Management. 12 (3), 497 – 515.

Dijck, J., 1995. Transnational Management in an Evolving European Context’, in Terence Jackson (Ed.) Cross-Cultural Management, Butterworth-Heinemann.

Dowling, P. J., Welch, D. E. and Schuler, R.S. 1999. International Human Resource Management, 3d edn, South West Publishing.

Emmott B., Crook C., Michlethwait J. 2002. Globalisation: Making Sense of an Integrating World, Economist Books.

Hannagan, T., 1995. Management Concepts and Practices, Pitman Publishing.

Harzing, A. and Van Ruyssevelt, J. (eds). 1995. International Human Resource Management. London: Sage.

Hickson, D.J. ed. 1993 Management in Western Europe: Society, Culture and Organization in Twelve Nations, Berlin.

Held, D., McGrew, A., Goldblatt, D., and Perraton, J. 1999, Global Transformations, Polity Press, Cambridge.

Hendry, C. 1994. Human Resource Strategies for International Growth, London: Routledge.

Kirkbride, P. S. (ed). 1994. Human Resource Management in Europe: Perspectives for the 1990s. London: Routledge.

Terpstra, V. 1985. The Cultural Environment of International Business. 2nd edn. Cincinnati, OH: South-Western

Torrington., D. 1994. International Human Resource Management. London: Prentice Hall.

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