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Human Resource Issues Case

Phone and Build’s subsidiary in Shining Sand, Shinecall, is a joint stock company directly controlled by Phone and Build and incorporated in Delaware. Twenty-five expatriates from the United States and one from Germany are on the executive team at Shinecall. Two Shining Sand nationals are also part of the executive team. The rest of the 70 employees are all nationals of Shining Sand. The head of the human resources department at Shinecall mistakenly sent an e-mail listing the salary and benefit packages of one of the US executive expats to the two local Shinecall executives. The local Shinecall executives are angry because their salaries are much lower, and their benefit packages are completely different. John has been dealing with the troubles in Shining Sand for a few months and has been consulting with the local national head of human resources. John decided to try to fix the problems by sending out two more expatriates from the United States on five-year contracts. One is 66-year-old Dan, who has a lot of international human resources experience. The other is Sarah, a 42-year-old woman, with 15 years of experience in management. Shinecall has applied for visas and work permits for both Dan and Sarah, as required under Shining Sand law. The head of human resources wants to fire the top ranking local national executive, Ali, because she says he is the cause of all the trouble. She wants to replace Ali with Mohammed, a national of the country who would be glad to take Ali’s place. The employment law of Shining Sand requires mandatory retirement at age 65, so the labor office of Shining Sand is refusing to grant Dan a work permit. Although there is no local law prohibiting women from taking management positions, the labor office of Shining Sand refuses to grant a work permit for Sarah.

Question

Step 4: Human Resource Issues

Belinda has asked your team to advise John Smith, an American expatriate who oversees operations for Phone and Build in the Middle Eastern country Shining Sand. John is having some problems with some of his employees. Read more about the Human Resource Issues case.

In order to address John's issues, you will need background information on Employment Discrimination and Cross-Cultural Ethical Business Decision Making.

Belinda has asked you to include the following information in your memo. As you think about your answers to each of the following questions, take notes and create an outline for your memo:

1. From solely an ethical perspective (not a legal perspective), what is the right thing for Phone and Build to do with respect to the disparity in pay and benefits between the US employees and the non-US employees in Shining Sand? Should expatriates be paid more than the local nationals of Shining Sand? Why or why not? How would you explain the reasons for the differences in salary and benefits if you were sent to Shinecall's offices in Shining Sand?

2. What laws would govern these employment issues if Mohammed, Ali, Dan, and Sarah all worked for Phone and Build's headquarters in the United States? Describe each person's situation, the laws that apply, and what rights each person would have.

Answer 1

To: John Smith

From: Stephen Alex

Date: May 29, 2018

Re: Effective management of local nationals and expatriates

This memo is trying to address the recent issues related to the payment for local nationals and the expatriates include some suggestions to deal with the issues in Shining Sand. As the local executives in Shining Sand have understood the difference in pay level and the benefits paid to local staff and expatriates, we should take necessary steps to keep the local employees motivated.

The information might have affected the employee productivity as well as their commitment towards the organization.

According to my point of view regarding ethics, the expatriates can be provided with benefits like housing and educational expenses of the children to keep the employees motivated to choose onsite assignments and successful completion of the same. But the salary level should be maintained equal for both local and expatriate employees for the jobs performed in similar environment if the responsibilities and the skills required for the job are same. Hence Phone and Build should take necessary steps to minimize the disparity in pay by increasing the local employee salary levels. The decision would help to regain the local employee support lost through the information leakage. The expatriates should be paid more as they need to pay more to manage the expenses and ensure the same standard of living as in home country. Else no employee should be ready to take up the onsite responsibilities and relocate to the host country. They need to face more challenges in work while adapting to the work environment and hence they should be paid more to keep the expatriation attractive. The same should be ensured through expat benefit packages which would make it easier to explain the reasons for differences to the local employees. Company can assure them by pointing out the fact that they can also they can also receive the benefits under the expat scheme once they get onsite opportunities. If I was sent to shine call’s offices in Shine Sand, I would conduct an employee interaction session and explain them on the expenses an expat needs to undergo comparing to a local employee. I would explain the challenges they need to face related to diversity factors like culture, language, customs and law.

While recruiting expats we should adhere to the employment laws of that location. If the mandatory retirement age for Shining Sand employees is fixed at 65, we need to withdraw the decision to send Dan as he is 66 years old though age discrimination is prohibited in US through federal law. We need to find another person within the age limit instead of Dan respecting the laws. If Sarah is qualified for taking up the assignment according her job performance and other qualifications, Shining Sand should grant work permit as there is no local law prohibiting women from taking management positions. Else it would be considered as sex discrimination and Sarah is protected from sex discrimination in the host country according to Title VII of the civil rights act 1991 as the law is extended for American citizens working in foreign countries. According to the law Sarah has the right to avail work permit and work in Shining Sand. Ali cannot be fired without strong evidence that shows the wrongful actions of Ali against the organization or without any performance issues. Else the organization will have to face the charges for illegal firing and discrimination charges based on the fact that Ali has raised the concerns regarding unequal pay. The replacement of Ali with Mohammed may lead to allegations of favoritism and hence it is advisable not to replace Ali with Mohammed if Ali’s performance meets the company expectations.