Pay rates have always been an important issue when it comes to hiring workersespecially when dealing with professionals whose talent and experience are highly soughtin the job market. In our case study, we will be discussing the difficulties and challenges of hiring expatriates which in this case will be revolving around pay. The case is about theproblems that arose at a German software Company (Typware) when the managementdecided to hire Anne Prevost whom they consider to be an ‘intelligent careful strategist.
’Anne is generally agreed to be the perfect match for the job but the rate which Anna isrequesting for the job is causing controversy at Typware because some other workerssuch as Jurgen Mehr (Head of Typware European Marketing) feel threatened by theamount the new hire will be receiving.
Case DescriptionThis case illustrates a german software company’s inability to effectively compile afair compensation package for the hire of an american ex-pat. Renate Schmidt, the headof human resources at typware, is faced with a dilemma of how much to offer AnnePrevost.
Thomas Gutschein, the CEO of typware, has made it clear that Anne is a neces-sary strategic acquisition. Many managers, including the European head of marketingJurgen Mehr, have expressed discomfort and/or threatened by the high salary proposedfor Prevost. Schmidt has no reference in determining a fair ex-pat package as this is therst time in Typware’s history that they hire an outsider to work at HQ.
Schmidt facesproblematic issues, one being that Typware does not use a uniform pay scale and overthe past decade many executives have received up to 30 percent extra salary based ongeographical circumstances.
Having researched the employee salary les and not ndingany help from them, Schmidt calls in a favor from Rainer Barth. Barth, her contact at aconsulting rm, helps her compile a list of questions that need to be asked in order to geta more accurate idea of how Prevost’s salary will be determined. Finally, the last issueneeded to be stressed is that Prevost has another offer on the table and Typware needsto act fast if they are to successfully lock in this asset.
Case Study: In a World of Pay2Section 2Problem Statement:Stafng and Job Analysis:Typware’s recruitment and selection process does not have a clear job assessmentsystem evidenced through the hiring efforts of Anne Prevost.
HR Activity in Theory:Stafng and Job Analysis:”A World of Pay,” the article discussing Typware’s employment methods, focusedtoo much on Prevost’s strengths as a candidate. Though she may have been a great as-set to the company she previously worked for, the duties she would have if she chose togo with Typware were not clearly specied. When hiring, the characteristics of a vacancyneed to be dened in order to recruit a suitable employee. Typeware’s assessment sys-tem focused m ore on keeping Prevost away from the competitors rather than paying at-tention to the job analysis.
Obtaining more organizational effectiveness within the company, with regard tostafng and assessment systems requires recruiting and selecting more strongly basedon job analysis rather than the general qualications of an applicant alone. A clear jobanalysis addresses the job description and recruitment methods of a hiring company, re-sulting in a more structured approach to hiring international employees.
First, Typware must clarify its job descriptions to improve human resource planningwithin the company. By facilitating more detailed job analyses, the efciency of ndingpotential candidates for vacant posts will be raised substantially. Wages and salary ad-ministration can be restructured because payment can be more strongly based on thefulllment of employee duties rather than trying to compete with wages on the interna-tional job market. The fact that Renate Schmidt needed to call Prevost a second time foranother line of questioning indicates the poor job description and HR information, be-cause such questions could have been known prior to the rst interview with proper jobanalysis.
Once the job analysis is claried, the recruitment process can be broadened. Bybroadening the methods by which recruits are sought, applicants can be more readilyfound, no longer leaving Typware with the tough choice of whether to hire just one indi-vidual or not. Typware will likely have several candidates to ll the vacancy, leaving inter-national applicants with less room for bargaining their salary and compensations.
Case Study: In a World of Pay3Two methods with which Typware can expand its recruitment sources are via theinternet and through employment agencies. Recruiting electronically would grant Typwarea large source for nding more talented recruits that meet the job specications. Typwarecould place the vacancy on its own website, granting public access to anyone who is in-terested in the company. This method leaves Typware free to give a clear job descriptionso that there is a larger chance to nd suitable applicants for the post. If electronic va-cancies fail to bring the desired results, Typware can recruit through employment agen-cies. A private employment agency would be responsible for lling higher posts, like theone Prevost applied for. The employment agency would look for people who may still becurrently employed and help to maintain condentiality between the employer and thecandidate.
Typware’s receiving of applicants internationally brings on the added challenge oftrying to formulate a standard for hiring internationally; for example, Schmidt received in-formation indicating that four other multinational companies in Germany did not have setpolicies or standards yet. Due to the lack of an international hiring structure, the efciencyof the recruitment and selection for those other companies was greatly hindered sincecompensations and salaries became all the more difcult to balance. In the best interestof Typware and surrounding companies, Typware should formulate an international hiringmethod, which they can implement in almost any international applicant situation.
Analysis & Implementation:Stafng and Job Analysis:If Typware were to implement the proposed stafng changes with regard to stafngand job analysis, there would be some added costs such as getting a web designer, orpaying for a headhunter. However, the added benets greatly outweigh the cost. The hu-man resources activities to be implemented include ensuring clear job descriptions, di-versifying recruitment methods, and formulating an international hiring structure.
Schmidt’s task as the head of human resources for Typware is to ensure a clear jobanalysis within the company at all times. Assuming she has a team reporting to her, shemust stress to its members the importance of a detailed job analysis. She should reviewsome of the job analyses from her team to ensure that the description is clear cut. In do-ing so, Schmidt produces more effective negotiations and interviews with potential em-ployees.
The recruitment methods can be diversied in various ways. Two methods whichseem to most closely t Typware’s vacancy predicament are electronic recruiting and us-Case Study: In a World of Pay4ing private employment agencies. Recruiting electronically requires some technologicalexpertise, but considering Typware is a software company, that should not be an issue.
Typware can utilize its own employees for web design by placing the job and the job de-scription on the company website. The benet of placing the job advertisement on thecompany website is that the applicants who visit the website are more likely to knowsomething about the company. Also, the applicants they would receive are more likely tobe closer in accuracy to the advertised post, because since it is the company website,Typware can feel free to make a detailed job description. Then, looking into private em-ployment agencies would fall into the department of Schmidt and her team. They wouldneed to nd a highly spoken private employment agency so as to ensure that they receivereturns on their nancial investment. Beyond that, after the team has contacted theagency, the responsibililty of nding a suitable candidate for Typware is left to the agency.
Formulating an international hiring structure has quite a few complexities. Appli-cants such as Anne Prevost would most likely look into the potential extra costs of taxrates, ination, benets, and oating currencies. Accommodations such as schooling fortheir children, health care, social security, housing, and culture shock also need to be ac-counted for. To meet all these needs in salary and benets would mean a salary that is nolonger within equal range of their peers. Renate Schmidt can discuss ncancial optionswith a local private school, so that Typware’s international employees will not need somany added benets. Health care and housing can also be worked out in a similar fash-ion, thus helping to further reduce costs. The costs really start to add up when there is noplan worked out at all beforehand. In the best interest of the company, Typware shouldorganize at least a minimal structure for hiring international employees to aid in more ef-fective stafng through exemplary job analysis.
Case Study: In a World of Pay5Section 3Problem Statement:Diversity of Workforce and Employee Rights:The lack of a diversity policy and the absence of concern for employee rightscauses dissatisfaction within the workforce.
HR Activity in Theory:Diversity of Workforce and Employee Rights:In In a World of Pay the characters are faced with many common dilemmas thatcause problems or at the very least delays for processing new or existing candidates. Wewill be explaining, then applying diversity in the workforce and employee rights in rele-vance to the issues at hand.
Equal employment compliance refers to the laws and regulations of a country inwhich a company operates. It is important for companies to identify with the well knownEEO or Equal Employment Opportunity movement started in the US. This is relevant be-cause of the ways countries and companies are evermore intertwined, creating a vastblend of cultures, setting the grounds for discrimination. Equal employment compliancehelps to avoid discriminatory scenarios. Diversity is one of the components of that policyand stipulates that an employee’s salary and benets are not to be determined or effectedby his/her race, national or ethic origin, colour, religion, age, sex, sexual orientation, mari-tal status, family status or disability. Typware’s CEO seems to have little or no concern forequality amongst his employees, which causes great concerns.
Equality in the workplace promotes a company culture that cares for its people. Itcreates an atmosphere where people want to work, there is courtesy and respect, peopleare listened to and trust and integrity are main aspects in which your staff relates to eachother. Furthermore everyone benets when the workplace is fair and equitable, and peo-ple feel valued.
Analysis & Implementation:Diversity of Workforce and Employee Rights:In a World of Pay a lack of Equal Employment Compliance compromises policiesfor hiring foreigners and integrating them into the headquarters. This stirs up inner ofcedisputes between Jurgen Mehr, Typware’s European head of marketing, and RenateSchmidt, head of human resources. It is of utter most importance that Typware quicklyCase Study: In a World of Pay6revises it’s internal policies to match those set forth by the countries in which they oper-ate, primarily Germany.
In the case they are looking to draw up a proposal for one candidate. Thus a minorinfringement, if at all, on their local policy. Typware is based in Germany where the lawsare generally more favorable for the employee, meaning that once Anne Prevost is hiredlocally she will be entitled to a variety of benets and advantages non-existent in standardUS contracts. This a point to be noted when her arrangement is drafted. Typware wouldnot be disputing any of the existing German legal framework as a result of hiring AnnePrevost. Although this is the surface case, the underlying problem is a lack of equal em-ployment policy structure. On a note, the institutions governing equal employment op-portunities in Germany are ranging from legislative and administrative institutions tocourts and tribunals to workers’ and employers’ organizations such as the Biebestrat.
In the case Renate Schmidt discovers that female and minority employees madeless then their white male counterparts. This is not only demoralizing and damaging tothe spirit of the workforce but it also conicts with the legislatures of the country. In notcomplying with the country’s equal employment compliance laws, Typware could ndthemselves involved in serious legal action against them. Renate Schmidt needs to takea rm ground in her talks with the CEO and explain the importance of implementing astrict pay grade system.
As shown by current trends, the company need to re-structure their policies tomatch that demanded by the country. The implementation of such a pay grade systemwould benet them in various ways. One way is that it would bring them up to code onequality and employee rights. Another is it would prevent outburst like the one Renateexperienced with the German CIO who found out his Japanese counterpart was paiddouble his salary.
Typware needs to adopt new policies and treat all their employees with equality andshow a concern for their rights. In doing so, they gain a competitive advantage on theirglobal market and can continue to grow. While engaged with other HR activities they canformulate templates to process and recruit the right people for their organization. This willfacilitate their ability to correctly asses talents and consequently provide fair salary andbenets packages in line with market practices. However, if they fail to established a uni-formed pay scale and comply with the laws of the country they will suffer irreparable in-ternal damages that will lead the inevitable downfall of Typeware.
Case Study: In a World of Pay7Section 4Problem Statement:Compensation and benets:…it appears that typware’s inability to update its compensation and benet systemhas resulted in a chaotic situation as evident by the issues arising from the hire of AnnePrevost.
Compensation and benets:The use of benets by employers can be categorized into two main aspects whichcan be either as an inspirational tool to motivate employees to be more active in carryingout their tasks or it can be a form of compensation for a job well done. Benets can bedescribed as a payment made in recognition of a workers commitment to an organization.
In relation to the case study, one of the major HR issues that faced Renate Schmidt wasbased on the fact that the company does not have a stipulated benet program. This isbecause the employee benet program would have provided a guideline for Renate todraft up benets for the proposed new hire; Anna Prevost.
The irrational nature of Typware’s pay system has resulted in benet disparities anda difcult salary system. Such disparity like female and minority employees of Typwarereceiving less pay when compared to their white male counterparts is obviously one ofthe main reasons Jurgen Mehr is not taking the hiring of Anna Prevost lightly. This is be-cause he feared that if a female employee will start with a salary close to his, she mightearn more than he does in the future. In his words “This isn’t fair, and it’s humiliating.”Jurgen Mehr is not just troubled because she is a new hire but it is a ‘she’ and also a for-eigner, which also brings us back to EEO.
Nowadays, organizations tend to be institutionalizing benets such as savings planand pension because these are part of employment package that attracts employees andhelps the organizations to retain the good employees. However, Typware seems not tohave paid attention to these issues, because their benet system has not been updatesfor sometime. The importance of benets program to employees has become very signi-cant these days because when employees do not feel an appreciation for their commit-ment to an organization, there is a high possibility that they will withdraw that commit-ment and in some cases might leave the organization. This is based on a simple logic that”when you appreciate things that people do, it motivates them to keep on doing so.” Ineffect, benets have become part of organizational practices because it plays a signi-Case Study: In a World of Pay8cant role in helping employers retain good employees and encourages performance im-provement.
Performance management:Theories and performance appraisal systems have developed as means to meas-ure employee’s performance at the work place, but none have been able to provide anaccurate assessment of employee’s performance. However, the importance of appraisalsystem can not be overlooked because they have proved to be good in detecting em-ployee’s strengths and weakness. Performance management can be dened a “meansthrough which managers ensure that employees’ activities and outputs are congruentwith the organizations goals.”1 One of the main purposes of performance management isto develop employees’ who are effective at their jobs. This is because when employees’are not performing as well as they should, performance management seeks to improvetheir performance.
It appears that since Typware launched its aggressive campaign in the internationalmarket in 1996, little or no steps have been taken to promote employee development.
Lots of emphasis has been paid to issues surrounding pay, with little or no steps towardsperformance management which is signicant for awarding of benets. In addition, Re-nate’s statement ‘it will make others who have been with us for a long time feel that wedon’t care about them’ is a clear indication that the organization lacks important HR activ-ity. Such HR activity includes human resource development and performance manage-ment.
Also important when considering the performance management, is the link be-tween performance management and the organizations strategies and goals. This is be-cause nowadays systems such as the performance planning and evaluation system areconstantly being used to bridge the link between performance management and organi-zations strategies. Performance management and evaluation (PPE) system can be de-ned as “any system that seeks to tie the formal performance appraisal process to com-pany’s strategies by specifying at the beginning of the evaluation period the types andlevel of performance that must be accomplished in order to achieve the strategy.”2Case Study: In a World of Pay91Ibid p 3302Ibid p 332Section 5Reactions:1. What did the student think at the on set of the case?The case prompted some interesting issues in the global work place. It alsoshows how sometimes those in charge are not always fully capable, and muststrongly rely on their employees.
The case also illustrates how a globally competitive company can go foronly a short time without identifying with the local legislation before it catches upto them and causes serious problems within the organization.
This case reects on how organizations deal with HR issues such as paywith regards to hiring new employees. The organization has repeatedly violatedsome of its compensation and benet program by offering expatriates abroad extrabenets. This in turn resulted in a chaotic situation at the headquarters with em-ployees storming the ofce of Head of Human Resources to demand for equalbenet.
2. How did they feel about the key characters in the case?The CEO, Thomas, seems to fail to address the core issues, especially inregards to formulating a more stable pay structure. The problems from the paystructure trickle down and cause a chain effect of problems within the company, aswas shown through the complaint of managers, and the efforts of trying to hireAnne Prevost.
Furthermore, Anne Prevost is not the key to solving Typware’s problems asthought by the CEO. She is a valuable asset only if the core issues are correctionswiftly and re-structuring of the company occurs.
Renate Schmidt showed some good reasoning in a tight situation. She wasable to sort out the larger issues within the company and had a well structured ap-proach to issues. She usually dened the issue, and tried to nd some precedenceon it rst. Then she would go through contacts to see who could help her achieveher set goals.
The animosity we feel from Jurgen’s reaction to an American is a clear re-ection of how employees will treat each other when the work atmosphere is notfair and equitable.
Case Study: In a World of Pay10Renate who is the head of human resources is faced with the challenge ofincorporating the demands of Anna Prevost (potential new hire) into the organiza-tion’s ineffective HR policy. The HR policy is ineffective because they lacked a sta-ble salary system.
3. What is the student’s opinion about the relevancy/application of HR activity In aWorld of Pay?Given the fact that the organization lacked an effective HR activity such aspay, it has resulted in a difcult situation with regards to drafting up an organiza-tional benet program for the proposed new hire (Anna Prevost). Such programswould have provided a guideline and minimized the amount of work to be done byRenate for the hiring of Anna Prevost.
In a World of Pay showed how important HR activities are in preventing suchissues from arising. Had Typware more strongly followed set HR activities, thenthey could have minimized the amount of work involved to rectify the larger issuesat hand. However, Typware did not follow HR activities closely enough and theirfailure to do so led to numerous problems within the company.
Case Study: In a World of Pay11