H2O Company : Human Resource Functions Analysis

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The growth of any organization depends heavily on the capability of its human resources department to acquire and recruit the relevant employees to serve in the various departments within the company. In most cases, employing competent staff to take responsibilities within an organization proves expensive. This leads to most organizations opting to train internal staffs to occupy positions left vacant by other employees. Sometimes, work within an organization may prove too much for the available staffs. To prevent the company from failing to meet all their customers’ demands, organizations opt to outsource some of its functions be it within the country or to other international organizations. For effective development in an organization, there is need for employers to conduct regular performance evaluation of their employees. This proves significant when it comes to promotion, laying-off and improvement of working conditions within an organization. Human resource department cannot be able to meet all its tasks without adequate finance. As result, there is the need for adequate finance to be set aside for its budget. This is due to the numerous expenses incurred within the department. Employee motivation within an organization depends on the kind of rewards given to the active employees. The human resource department must come up with some of the best employee rewards to facilitate in employee motivation. For companies that wish to extend their services or products to other countries, there are numerous legal and cultural requirements that its employees need to be aware of before getting into these countries. This paper is aimed at looking at some of the various issues affecting H2O’s human resource department and give recommendations on what the company ought to do.

Training and development

For many organizations, hiring employees is an expensive process. As a result, many companies prefer to spend on training new employees properly rather than acquiring competent staffs. Other companies invest on training and development programs aimed at training contracted employees. This is in a bid to improve the current skills or develop new skills. Some of the benefits accrued from coming up with a perfect training and development program include increase in employee motivation leading to increased productivity in the organization. As employees continue being trained, they develop a sense of ownership of the organization. They discover their role in the organization and the reason why the organization is determined to invest on them. Organization efficiency is also improved as employees are trained on new methods of performing certain activities at a high rate. As employees become more efficient, the organization gets more revenue due to increase in employee output. As a result of employee motivation, many opt to continue working with the same organization. This significantly helps in reducing organizational expenses that could have been incurred while training new staffs as others leave due to lack of motivation. Training within an organization can take place in different locations. For organizations without training rooms, it can take place in conference rooms. Lunch rooms can also be used to organize and hold training and development sessions when they are not in use. Various approaches are used for employee training in United States. Some of these methods include off-site training, online training, webiners as well as educational methods. Based on the effectiveness and cost associated with each method, an organization can opt for the most cost effective method to use in its employee training (Danielson, 2008, para. 1).

For online training, special programs are designed that address all the relevant activities, ethical and legal issues affecting any department within an organization. Depending on the nature of the organization, online conferences are held in organizations where employees are taken through training sessions. Training provides for an interactive session where demonstrations are done on how to conduct some of the activities within an organization. Employees are also allowed to ask questions that affects them in their daily operations. The method helps in reaching a wide range of audience for companies operating within different branches. It saves the cost of organizing for several training sessions due to limited space within an organization. Through this method of training and development, employees can gain a lot of experience in conducting activities within their respective departments. This is because they are capable of accessing a lot of information stored and shared electronically. Learners are taken through hands-on lab training by connecting them with remote computers containing applications and simulations on various organization activities during the training sessions. The technique saves organizations a lot of time that could be used organizing for training materials, getting the appropriate trainers and training venue. However, the technique proves not viable for staffs with limited knowledge on computer applications. Cases of employees not being committed to the training may also lead to the method being ineffective (Harder & Harder, 2009, para. 2).

Off-site training is another training and development method used in United States. In this method employees are taken for training tours outside the organization. Here employees can interact with one another and develop interpersonal skills. They can talk and share their organizational problems with their departmental heads well that when they are in the organization. Assimilation rate of what is taught to employees is high when using this method of training. Being in a different environment breaks the monotony in the organization leading to employees being able to concentrate on what is being taught. Employees are given a chance to brainstorm on ways of overcoming problems as well as improving efficiency in their organization. The training may take the normal educational method or comprise video demonstrations on improving organization efficiency. Some of the problems associated with this training method are finding the best location to hold the training. Organizations spend a lot of money to acquire training venue only to realize later that the venue did not please employees. As people travel for training, work back in the organization piles up making the training method not favorable for organizations that require to be always connected to their customers (Harder & Harder, 2009, para. 5).

Best practices for training methods

For employee training and development to be effective, various practices need to be observed by human resource managers. The managers need to provide a clear description of the job for easier development of training materials that will cover all areas of the job. The managers need to ensure that they provide the relevant training required by employees. At times, employees are taken through training on something irrelevant from their areas of operations. They also need to ensure that they are well aware of the skills, abilities and knowledge that will be required by their employees in future. This can be achieved by understanding long-term objectives of the organization and their effects on employees. Looking for learning opportunities when conducting daily activities within an organization will help in ensuring that training meets all the needs within the organization (Danielson, 2008, para. 4).


Based on the nature of H2O Company the best methods that the company can use for its employee training are online and webinars techniques. As its employees deal with production of software, it is evident that they all know using computers. Information stored online will help them in developing new techniques of improving their software concerning its reliability, efficiency as well as making it more user-friendly and secure. The methods are also cheap for conducting employee training within different locations. There is no need for training staffs to travel from one branch to another thus saving the company money and time used in traveling. Off-site training and normal educational training methods would prove expensive for the company. As the company wish to open international branches, using off-site training would require it to set several training dates for the different branches. Normal educational training is expensive concerning time and paying trainers (McNamara, 2008, para. 3).


Cases arise whereby human resource department of various organizations become overwhelmed by its activities. Human resource department of H2O is not an exception. At this time, the departments opts to outsource some of its activities to ensure that organization remain efficient in conducting its functions. Some of the functions of H2O’s human resource department that can be outsourced include employee training, employee recruitment, employee performance appraisal as well as management of employee benefits and promotion. Coming with advertisement strategies for the organization is another human resource function that can be outsourced. Outsourcing may have significant benefits to an organization if well used. However, failure to use it properly may cost the organization dearly. Various stages are followed before an organization’s human resource department resolve to outsource some of its activities. The department needs to conduct a thorough investigation into the organizational belief on the role of outsourcing to its activities. This helps in determining whether outsourcing will be productive to the organization. The department needs to critically analyze its activities to determine the most favorite to outsource. It helps in deciding the location where these activities will be conducted from and the appropriate service provider to outsource from. Outsourcing without proper considerations may lead to organization outsourcing some of the critical functions which incase performed poorly may result in organization collapsing (Tower, 2005, para. 3).

Before outsourcing, the human resource department needs to develop the mechanism to use in outsourcing to determine the legal, ethical, pricing and quality of service required. This ensures that there are no misunderstandings between the organization and the outsourcing company in future. After the duties have already been outsourced, human resource department needs to conduct regular evaluations to correct some of the problems encountered as well as ensuring that the service provider meets all the organization requirements. The success of outsourcing depends on various factors. These include the level of support by the senior managers in the organization. Despite human resource outsourcing some of its activities, the undertaking may not be fruitful if it does not gain support from the executives. This is because they are the final decision making organ in the organization. The outsourced activities may not be effective if no proper communication is made to the affected employees. This is because some employees may feel to be cheated or not trusted in the organization. This may result in employee morale going down leading to poor performance in their respective fields. Regular management of the service providers from the organization is paramount. This would help in ensuring that the services are provided in accordance to organization expectations (Tower, 2005, para. 7).

Savings associated with outsourcing

Some of the savings associated with outsourcing include saving on money spent in paying employees. For all organizations, labor cost makes the largest percentage of organization expenditure. Human resource department tries to look for alternative methods to reduce on this expense. Outsourcing forms one of the most viable methods. No organization can let go an opportunity presented that can help it cut down on operation cost. There are activities in an organization that are complex and hard to be conducted within the organization without incurring a lot of expenses. For instance a human resource department that deals with employee recruitment, training and performance appraisal may be overwhelmed by its activities. Outsourcing employee recruitment task to another organization that concentrates on employee recruitment can help in it being able to meet the rest of its activities efficiently and with minimum cost. Activities such as employee training would require H2O to have adequate space where conferences can be help. However, acquiring such space would cost the organization a lot of money (Richardson, 2009, para. 2). Outsourcing the task of employee training to an external organization can help in eliminating the cost of acquiring space within the organization. One of the benefits that have resulted from outsourcing is overcoming the overhead cost associated with processing employees’ payroll. This task ties up a lot of activities that could be performed by human resource staffs. Outsourcing this task leaves the employees free thus being able to conduct other vital tasks within their department.

Outsourcing some of the human resource activities helps the organization to become updated with the most recent government regulations. This helps in ensuring that the company is always compliant with the required operations procedures. The human resource department is furnished with the most effective employee management techniques helping it improve its administration. This is because the department may lack time to look for effective administration methods. Outsourcing employee performance appraisal can lead to employee motivation. There are some cases human resource staffs use bias methods to promote employees (Richardson, 2009, para, 5). Outsourcing employee appraisal task to external firm ensures that employees are promoted based on their performance. This motivates employees who are committed to the organization as their effort is always acknowledged. Some activities within the human resource department require purchase of hardware and software and establishment of system for them to be carried out effectively. These are activities such as processing employee payroll which will require a computer and processing software. Outsourcing such activities would spare H2O from purchasing these computers and software.

Costs associated with outsourcing

Despite outsourcing having numerous benefits, there are various associated costs. In the case of H2O’s, these include its human resource department decision to outsource payroll processing activity, employees’ privacy and security will be compromised. This is because information to do with their salary will leak to outsourcer. This will lead to most employees fearing of their security in the organization. It can result in an organization losing some of its competent employees with others stopping to commit themselves to organization duties. Outsourcing does not encourage the creation of talents within an organization. As the organization grows, functions within the human resource department become complex. Outsourcing these functions leads to organization not taking the initiative of training its incumbent human resource staffs on methods of doing these functions. Eventually, the organization may incur heavy costs in trying to outsource the services compared to what it would have incurred in training its employees. Lack of communication between the outsourcer and the company’s human resource department may lead to the outsourcer providing poor quality services. This would be costly to the organization concerning gaining market share (Collings & Wood, 2009, para. 3). As the outsourcer may be providing services to many organizations, failure to monitor the activities of the outsourcer may lead to it providing the services late failing to meet the organization’s consumer needs. Before an organization embarks on outsourcing, there is need for it to consider how its employees will react to the issue. Employees may adversely react to the action leading to poor performance. Another problem associated with outsourcing of human resource activities is the inability of staffs to cope with the new service provider. If a task such as pension management is outsourced, it becomes hard for employees to pass their retirement information to outsourcer.

Examples of outsourcing organizations

Numerous organizations provide good human resource outsourcing services. Some of these organizations are Hewitt associates, Affiliated Computer Services and Aon Human Capital Services. Affiliated Computer Services (ACS) providers numerous human resource functions to Delta Airlines. Some of these services are relocation services, benefits and compensation management, employee recruiting and employee call center services. ACS has helped Delta change how it used to serve its employees and retirees and at the same time improved organization efficiency and operation cost. Hewitt Associates is another outsourcing company that offer human resource services to PepsiCo which is food and beverage producing company. Some of the services it offers include human resource application development, workforce and benefit administration, contact center and payroll management. The human resource applications are aimed at improving employee efficiency in PepsiCo’s numerous branches in United States. For many years, Aon Human Capital services have provided human resource services to AT&T. Some of the services include payroll processing and transactions, managing current benefit plan service providers as well as human resource administration. This has helped AT&T concentrate on other activities within the organization paving way for Aon Human Capita Services to use its expatriate to develop e-enabled services for AT&T. This has facilitated in employee management significantly reducing cost that could be incurred in employee management. AT&T has also been able to greatly satisfy its customers leading to increased profit (Articles Base, 2008, para. 2).

Recommendations for H2O on outsourcing

Based on the benefits accrued from outsourcing some of the human resource activities, it is good for H2O to outsource some if its human resource activities. Some activities require a lot of time to conduct. These activities may not be so important to the organization and outsourcing them would help human resource staffs concentrate on some of the activities that greatly affect the organization. Some of the activities that it can outsource include payroll processing, employee recruitment and training. Before H2O decide to outsource these functions, there are some considerations that it has to make. There is need for the human resource to have a clear understanding of all its functions and their effects to the company. This will help them in identifying functions that are more tied to organizations objectives and those that are not. Functions that are centered to organization need not to be outsourced while those that are not centered to organizational goals can be outsourced. This will help in ensuring that the company does not deviate from its objectives. By outsourcing some of these functions, staffs working on them will be freed to engage in other activities that will help the company gain competitive advantage. H2O also need to consider outsourcing individual activity instead of duties of the whole human resource department (Mike, 2007, para. 4).

Performance management

For effective operations within an organization, there is the need for a regular conduction of employee performance management. In most cases, during normal operations of organization duties, staffs lack an opportunity where they can interact with their managers and discuss some of the issues that affect them in their daily operations of organization duties. During employee performance management, managers get time to sit with their subordinates and discuss on the various challenges that employees get during their day to day operations and look for various ways of solving these problems. Some of the reasons for conduction of employee performance management is to review the performance of employees over a given period. The main objective of an organization is to ensure that it gets the most competent and productive employees. Conducting performance appraisal for employees helps in determining their productivity. The organization can identify some of the problems that hinder their productivity thus being able to overcome them. It is also able to ascertain the gap between the actual performance and the desired performance for every employee. Cases arise where employees deviate from their desired level of performance as they continue executing their responsibilities within the organization. Conducting management performance helps in correcting and ensuring that employees keep to their desired level of performance within an organization thereby ensuring organization efficiency. It’s hard to control employee performance if one does not know how they are performing. Human resource managers conduct employee performance appraisal to determine employees who are performing and those not performing within their organization thus being able to take control of the activities within the organization (RoseIndia, 2000, para. 4).

The growth of every organization depends on the level of skills and commit of its employees in conducting organization duties. At times human resource department organize for employee training at the wrong time. Staffs may be trained on skills that are not currently required in the organization or be trained when the specific skills has become obsolete. Employee performance management helps in identifying the various training needs required within an organization. Managers can organize for the training in advance ensuring the quality of service of products offered by their organizations. They are also able to identify the various training requirements that would be required in future and arrange for them to be conducted. For fair promotion and transfer of employees within an organization, there is need for employee performance appraisal to be conducted. Through employee management, human resource managers can identify some of the employees that commit themselves to organization duties. They are also able to determine those who perform and those who underperform within the organization. This helps in ensuring that competent and committed staffs takes higher operations positions within the organization. It also facilitates in transferring employees to fields that they are best suited. Feedback given to employees helps them in understanding what they are expected to do in their areas of responsibility. They learn when they are performing and when they are underperforming thus making them strive to ensure that they are always alert and keeping to organization expectations (RoseIndia, 2000, para. 6).

Analysis of theoretical and applied employee performance management

Employee performance management entails assessing and improving employees’ ability within the organization. Managers look on areas where their employees are not able to meet organizational goals effectively and look for ways to improve. This can be through employee training or recruiting experienced employees to cater for the problem. The managers also ensure that they foster good behavior among employees to facilitate in enhancing employee coordination. Performance management should facilitate in ensuring that all employees are aware of what they are expected to deliver within the company.

One of the best employee performance management is exhibited by General Electricals in United States. In it bid to improve employee performance, the company has developed an environment where employees are free to interact with their employers are decide on operations within the company. In the past, employees were not allowed to make any decision concerning matters affecting the company. The company believes in its values and as a result, it ensures that every employee is conversant with organization’s objectives. Training is conducted to ensure that every employee has the knowledge to effectively carry out duties in his or her area of specialization. The company conducts annual employee performance assessment where every employee is ranked based on performance. This helps them determine those employees to promote and those to lay-off (RoseIndia, 2000, para. 9).

How performance management is linked to organization strategy

For organization to attain its goals, there are laid down strategies that employees have to follow when executing their duties. Their performance need to be aligned to these organization strategies. Performing performance appraisal helps in identifying areas where employees are not working as per the set strategies. It also helps in identifying constraints faced by employees as they perform their responsibilities. There arise cases where organizations need to change some of their strategies in bid to meet organization objectives. Such changes can only be identified by conducting regular employee performance management. Through performance management, employees are briefed on organization strategies and the various methods of ensuring that they keep to these strategies.

Performance management philosophies

Different scholars have come with numerous philosophies to do with performance management. Some tries to explain whey performance managers behave in certain ways when conducting their responsibilities while others explain some of the components of an effective employee performance management scheme. One of the philosophers asserts that performance management focuses on vision, strategy, values and spirit. For employees to be able to execute their duties effectively they have to be aware of the organization vision (Tyna, 2008, para. 1). This acts as the driving force for every employee as well as the gauge used by performance management team to determine whether employees are performing their duties in a way that will lead to the organization attaining its visions. The vision can not be achieved without the organization coming up with strategies to facilitate in its attainment. Strategy is a vital component for effective performance within an organization. Failure to effectively communicate organization strategies to employees would lead to the organization taking long to achieve its objectives. Strategies help in ensuring that employees conduct their activities in a manner that will lead to attainment of organization goals. It is possible to identify and correct areas where employees deviate from organization objectives by looking at areas where organizational strategies are not followed. Organization values helps in ensuring that employees strive to perfect the quality of services they offer to the organization. To attain long term business objectives, human resource managers need to develop a sense of ownership among the staff. This helps employees get spirit of working hard to attain organization visions (Tyna, 2008, para. 4).

Another philosophy asserts that performance management focus on developing team work as well as improving employee behavior. For effective employee performance, there is need for teamwork development among the employees. This helps in sharing skills on ways of improving efficiency in their performance as well as enhancing communication within the organization. One of the benefits of developing team work in an organization is reducing the need for recruiting new employees to work in an organization. This is because employees gain skills on how to perform various tasks within the organization. Performance management aims at ensuring that every employee’s decisions on matters to do with organization running are considered. Every employee in an organization is said to have unique characteristics. As a result, some employees can perform certain tasks within an organization effectively while others can not. In conducting employee performance, managers identify capabilities of different employees making it possible to assign them to the right tasks within the organization. Performance management is aimed at developing employee behavior that would help them to effectively perform the tasks they are assigned within an organization (Brode, 2002, para. 3).

Based on the available performance management philosophies, the best to apply in H20 is the one that asserts that performance management focuses on vision, strategy, values and spirit. Communicating organization visions and strategies to employees would help in ensuring that they work hard to attain H2O objectives. Having clear strategies on organization performance would ensure that employees offer quality products and services as they will have a guideline on which to conduct their operations. For employees to produce quality software, they need to have a sense of being part of the company. Performance management that focuses on developing and maintaining working spirit among employees would ensure that this is achieved. Thus for best performance management practice in H2O Company, its human resource managers need to ensure that they focus on company vision, strategy, values as well as cultivating a working spirit among employees (US Office of Personnel Management, 2009, para. 1).


Human resource department acts as the backbone of the organization. This is because it is the department responsible for coming up with strategies that would facilitate in achieving organization’s objectives. It is also responsible of recruiting, training and deploying employees to specific areas of operations within the organization based on their competence. For human resource depart to effectively conduct it duties, there is need for adequate fund. However, most organizations allocate their human resource department inadequate fund. As a result, they end up not conducting some of their duties such as employee training. The main reason for allocating inadequate fund is the inability by the workers to project their expenses (Octara, 2008, para. 2). Numerous miscellaneous expenses are met by human resource as it continues executing its duties. Most of these expenses are never accounted for when budgeting for human resource. The problem of failing to align human resource activities to the organization needs also leads to the department incurring a lot of unnecessary expenses. Some times the department may spend a lot of money training its staffs on skills that are not necessarily productive to the organization. It might also recruit new employees to perform some tasks that could be performed by the available staffs without affecting organization efficiency. Before coming up with a human resource budget, the budgeting team must conduct a thorough analysis of its functions to make a successful forecast of its expenditures. Some functions needs to be analyzed concerning their cost and the benefits they bring to the organization. If they happen to be costly, they can be outsourced to external outsourcers thus reducing human resource expenses (Sustainable Development Communications Network, 2001, para. 2).

Due to numerous functions of a human resource department, its budget consists of several components. Some of these include: manpower cost which is the cost associated with acquiring the relevant employees for the organization. This is divided into advertisement cost, recruitment cost and cost incurred by managers as they travel to recruit employees. Training and development cost. Some times human resource may take the initiative of training organization employees on how to perform various activities within an organization. This requires money for acquiring training materials and even hiring training experts to offer the training. Various equipments within the human resource department facilitate in execution of its functions. These include computers, software as well as systems. When budgeting, cost of acquiring, maintaining and upgrading these facilities need to be reflected in the human resource budget. Other expenses found in human resource budget are compensation costs. These are compensations offered to employees, which include medical benefits, house allowance, transfer expenses offered to employees during their transfer, commissions and other expenses enjoyed by employee’s dependants such as his or her children. Employee salary need also be included in human resource budget as well as miscellaneous expenses such as outsourcing costs (Octara, 2008, para. 5).

Recommendations for addressing budget cost

According to a research conducted by Hewitt Associates, approximately seventy five percent of human resource managers have a problem in reducing human resource cost. One of the major reasons for this is lack of good forecast on organization expenses as well as failure to weigh their various functions concerning the benefits they bring to the company. Employee salary makes the biggest portion of human resource expenditure. To reduce on its expenses, various human resource departments have opted t reduce on their headcounts. This does not work well with the organization for it has to incur unemployment compensation cost before laying down some of its employees. Other methods can be used to reduce human resource cost. Some of them are reducing employee salary and at the same time not reducing the amount of time worked by every employee. By so doing the company can be able to reduce human resource cost. Employees can retain their jobs; continue enjoying the benefits they were getting from the organization while the organization avoids paying unemployment compensation charges. Human resource department may also opt to reduce the salary and amount of time worked by each employee. This can be achieved by allowing employees have alternating off days (ZeroMilliom.com, 2009, para. 4).

Sharing services with other organizations or outsourcing can also facilitate in cutting down on human resource cost. Some human resource functions are not very vital to the organization. However, these functions are seen to consume a lot of time. Outsourcing these functions may prove to be cheaper than having them performed within the organization. These functions include payroll processing and employee recruitment. Employee training can be another way of reducing human resource cost. Recruiting new employees would mean adding human resource headcount, consequently increasing its expenditure. Training internal employees would facilitate in reducing human resource cost as employees can be in a position to handle numerous tasks within the organization. This can help in employing job rotation within n organization rather that recruiting more staffs. Employee benefits add to human resource cost. An organization may opt to do away with some of the benefits to minimize cost. This may not be received well by employees. To avoid them reacting adversely, an organization may opt to increase their salary and remove some of the benefits given to the employees (Christa, 2009, para. 2).

Investing in higher organization performers can be another option that can help in reducing human resource cost. An organization may decide to invest on employees who are committed to the organization. These employees can be trained to deal with complex functions within the organization instead of recruiting competent staffs. In case where these employees attend international conferences, the organization may organize for them to attend state conferences cutting down on travel costs. Incase some conferences may benefit the employee as well as the organization, the human resource may decide to cost share the conference expenses with the employee. The method can save human resource the cost of having to employ or outsource some of the complex and important functions. Employees can feel to be part and parcel of the organization thus increasing their spirit and commitment to organization activities. Costs incurred in purchasing and installing equipments within the human resource department can also be reduced. Instead of the department purchasing new equipments all the time, it can invest in upgrading the available equipments and systems. This is cheaper than purchasing new equipments for the organization. As employees are already familiar with the available equipments and systems, acquitting them with knowledge on the added-on functionalities of the system would be cheaper than acquiring new equipments that will require people with knowledge to operate them (Fowler, 2007, para. 9).

Employee Rewarding

Rewarding employees acts as a motivating factor to increase their productivity. Most organizations look for effective rewarding methods to ensure that they have retained and motivated their skilled personnel to continue working in their organizations. Different countries have different methods of rewarding their employees. When a country wish to send its employees to work in a different country, there is need for it have clear information on some of the rewards given to employees working in that country. Rewarding their employees equally with other employees in the country makes them feel equal with others in the country thus committing themselves to working for the organization. There are various rewards given employees working in United States. Apart from the base salary, every private organization offers other benefits to its employees. All employees are provided with medical benefits. About seventy one percent of employees working in United States are provided with medical benefits by their employers. For employees with families, employers cater for seventy one percent of the premiums and eighty two percent for single employees (Overman, 1992, para. 5).

For full time state and local government workers, most of them have access to retirement and medial benefits. Full time workers working in private organizations also enjoy retirement benefits. Part time workers in United States’ private organization are rarely provided with these benefits. Employees who take sick leaves are also paid for them by private companies. Employee benefits offered by companies in the country differ concerning the experience and kind of work performed by the employees. For instance, employees working in service providing companies have less access to medical and retirement benefits. For professional and other workers in private companies, they are offered paid holidays and vacation leave. Employees also participate in 401 (K) saving plan which is a tax –omitted retirement saving plan. This saving plan is established by employers and varies from one company to another. Upon opening the saving account, an agreement is reached upon between the employee and his or her employer on the amount to be contributed to the account. This amount is deducted from employee’s salary before taxing. It helps employees pay less tax (Weiner, 2007, para. 4).

Taxation of foreign employees in United States

Foreign employees working in United States are subject to various tax deductions. For employees originating from countries that have established tax treaties with United States, their wages are exempted from income tax. Foreign employees working in United States are expected to pay tax only on United States income. They are taxed on effective connected income (ECI), or fixed, annual, determinable or periodic income (FDAP). 30% tax deduction is made on fixed or determinable periodic income. These are dividends, interests, pensions, rents or stock transactions. Generally, every foreign employee has to pay 30& of his or her gross salary as tax and 10% of proceed acquired from sales of property such as real estate (United States Departyment of labor, 2008, para. 3).

For every employee in U.S., he must pay social security and Medicare taxes. This money caters for employee coverage under United States Social security system. The money is deducted by employers from employee salary. These deductions are made regardless of whether employee will qualify for Medicare or social security benefits. Deductions are also made regardless of the citizenship of the employer or employee. There are instances where deductions re extended even to services provided outside the country.

Best employee reward practices

As rewarding employees acts as one of the method of improving their productivity, there is the need for every organization to ensure that it provides competitive rewards to its employees. Some of the best practices organizations can take are such as the ones practiced by CIBER. The company believes that its success lies on their employees and thus there is need for it to offer better employee rewards to improve their productivity. This helps them to recruit and retain most highly qualified staffs. Some of the benefits offered by CIBER include medical benefits, education, and retirement savings, as well as employee stock purchase plan. Employees are provided with an insurance cover on short-term and long-term disabilities. Once an employee has worked for six months and happens to suffer from short-term disability, the company pays all the benefits to the employee on the eight day from when he or she falls sick. Long-term disability benefits are paid to employees after they have gone for six months with the disability. Life insurance cover is also offered to employees. The company caters for two and half of the amount paid to employees on life insurance coverage. Employee dependants are also provided with insurance cover where spouses get $ 10,000 and children $ 5, 000 (CIBER, 2010, para3).

For employees who seek to pursue further education to improve their skills on company operations, the company offers them a $ 2,000 per year to assist in meeting their tuition fees. The company offers a virtual learning environment to its employees. Employees are taken through free training seminars, mentoring, forums offered by experts as well as being supplied with articles on performance improvement techniques. After working for two years with the company, employees are entitled to $1,000 to cater for college fee of their children. Opportunity is given to employees to buy company shares through deductions from their salary. The offer is made at a discounted price. Interest-free loan of about $ 2,000 is offered to employees who wish to purchase personal computers and a compensation of $100 to those who buy software (United States department of labor, 2009, para. 6).

Greenpeace is another US company that offer favorable benefits to its employees. Apart from health benefits, employees are entitled to fifteen days leave after working with the company for two years, twenty days leave after working for ten years and twenty five days leave after working with the company for more than ten years. Parents are given paid parental leave of up to twelve weeks. For employees who use public means to travel to workplace, they are given $40 per month as transport allowance. After five years, employees are given twelve weeks to advance their career knowledge. Everything is catered for by the company. Employees are entitled to leave during public holidays as well as sick leaves (Tower, 2005, para. 1).


As H2O enters the new market, one of the ways that will help it retain its employees is through offering them competitive benefits. Every company in the United States is struggling to recruit the most competent employees to help it gain competitive advantage. Providing poor benefits to H2O employees might lead to these employees moving to other companies that offer better benefits. Some of the benefits that the company needs to offer to its employees include house and transport allowance. As it sends some of its employees to work in the U.S, these employees will have to incur house rent cost. Catering for their house rent would act as a motivation. As these employees will have to travel from their country, they have some dependants who they will leave behind. The company may decide to move the employees together with their dependants or move the employees alone. To motivate and retain its employees H2O need to assist them in taking care of their dependants by offering medical benefits to these dependants. It can also cater for part of the tuition fee of the employees’ children. It can also offer some leaves to employees after working for a certain period where they can travel to meet their relatives and dependants. For those wishing to advance their career, sabbatical leaves can work a long way in motivating them to remain and be committed to company business (Clouden, 2010, para. 8).

International issues

Before H2O sends its employees to the U.S, there are various conditions that they have to meet for them to be allowed to operate in the country. One of the challenges that the company is likely to face is acquiring visas for its employees. Without a visa, no employee can be allowed to live o work in the country. There are various types of visas in U.S which depend on the type of job and period one is expected to stay in the country. The country offers immigrant and nonimmigrant visas. Before a business is granted a visa, it has to state the amount of money it expects to invest in the country. On being granted the visa, it is illegal for employees to extend their stay in the country beyond the stated period. The company is also required to have adequate funs to support its employees for the period they will be in the country. The business is required to produce certificate of incorporation, business permit or license as well as give the exact number of employees it has for it to get a visa. It is compulsory for foreign companies working in United States to pay tax. If the business generates income from American sources, them it is entitled to paying income tax. The business regardless of whether it generates income from the country is subject to gross-basis tax. This is from its investment income such as dividends (Nicks, 2008, para. 2). However, for countries that have established trade treaties with U.S. investors from such countries are exempted from some taxations.

Compensation package for H2O staffs to work in U.S.

For employees going to work abroad, there is need for an organization to prepare their package in a manner that it equates to what could earn if they were working in their home country. Apart from making their base salary more attractive, the team needs to be offered goods and services allowance to cater for their living in United States. Housing allowance will relieve them the burden of paying for their house rent. Different countries have different taxation programs. The company needs to ensure that the amount of money paid by these employees as tax is catered for by providing them with other benefits. If the employees happen to relocate to U.S. with their family, there is need for the company to ensure that it has catered for relocation expenses. Employee’s spouse will be forced to forfeit the work she was doing back in the country while the children transfer from their former school. All these will cost the employee and the company must ensure that it has compensated him or her to retain its employees. Other benefits that need to be included in their package include medical benefits, transport allowance in case they will have to travel to get to workplace (Nicks, 2008, para. 5).

Cultural considerations before sending employees to work abroad

Before sending employees abroad, there are cultural considerations that H2O need to make both in home country and U.S. For instance, some people prefer to live and work in a place where they are close to their families. Taking such employees away from their families would make them unproductive. Different countries have different cultures when it comes to exchanging business cards. There is need for the company to be aware of how business cards are exchanged in United States to facilitate in company establishment in the country. As employees will have to interact with people from different culture in U.S., the company needs to ensure that its employees have been acquainted with various cultural practices in U.S. This is imperative as it will help them market the company freely without violating cultural norms of the Americans. Understanding the way Americans conduct their businesses will significantly in ensuring H2O is attuned to this culture with limited hardships. There are those hours that people go for a siesta. At this time no business is conducted almost throughout the country. Understanding the peaks and off-peaks of business performance would facilitate in ensuring H2O employees capitalize on them (Heller, 2003, para. 1)

Recommendations for selecting, sending and monitoring employees

For H2O to select the most qualified employees to send to United States, human resource managers need to first identify the various needs of the business to be established in U.S. They need to come up with a procedure on how they will rank candidate qualifications and qualities. Having ordered the qualification requirement list starting with the most essential it will be possible for the managers to select the most qualified personnel for the company. Once the management has identified the relevant qualifications for the tasks, it has to ensure that its advertisement message does not include words that will appear to discriminate. This is to get a wide range of qualified employees to choose from. Every job assignment requires an employee to perform certain tasks to accomplish its objectives. To select qualified personnel, H2O need to conduct skills test on its applicants (Heller, 2003, para. 2).

Some employees may not perform well if not monitored. Employees working abroad need to be monitored to ensure that they work according to organization requirements. One method that can be used to monitor H2O employees working abroad is through telephone. Employers may monitor calls made by employees to clients to determine whether they are working. Electronic tagging can also be used as a method to monitor employees. Hare employees working abroad can be asked to ware microcomputers. The microcomputer can then send radio waves to a central station back in home country where the employees can be monitored.


The success of H2O Company greatly depends on the ability of its human resource department. This is because the department bears all the responsibilities concerning employee recruitment, training, performance appraisal and many others that affect organization performance. Failure of the department to recruit competent personnel would lead to the company not being able to expand its operations to the United States. The department is also required to come up with good compensation package for the employees working abroad to ensure that they commit themselves to attaining company’s objectives. It is the responsibility of human resource managers to look into all legal and cultural requirement needed before sending employees to work in U.S. if they come has to succeed in establishing itself in U.S. The duty of coming up with employee monitoring techniques also lies with the human resource personnel. Failure to have effective monitoring methods may cost the company as employees might decide to pursue their interest and fail to attend to company activities.


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