HRM and Employment Relations Issues Faced by Expatriate Managers in USA

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Executive Summary

Toyota is the largest car manufacturing companies of the world, having a turnover in millions of dollars. Recently, the company has decided to relocate one of its managers from the Melbourne branch to the American branch. The manager would have to face many issues related to the HRM and employment relations in the American soil. This briefing report has been made to provide some a brief information about the various risks and challenges that the expatriate manager would have to face in the USA.

Some of these risks are related to the recent changes in the policies and regulations by the newly elected American President; Mr. Donald Trump. The change in the immigration policies by the Trump Presidency can indirectly affect the overall working of the expatriate manager in the USA. Meanwhile, this report also deals with the HRM and employment relations issues that the expatriate manager would have to face. Finally, some recommendations are provided to the manager, depending upon the cultural similarity and labor laws.

Table of Contents

Executive Summary. 2

Briefing Report Outlining the Employment Relations and HRM Issues a Manager Relocated to USA Would Have to Face. 3

1.0 Introduction. 3

1.1 Purpose. 3

1.2 Scope. 3

1.3 Methods Used. 3

2.0 Company Background. 3

3.0 Analysis of Risks and Challenges. 4

3.1 Effect of Trump Presidency on Expatriate Manager 4

3.2 HRM and Employment Relations Issues that May Effect Expatriate. 6

4.0 Recommendations. 9

5.0 Conclusion. 11

6.0 References. 1

1.0  Introduction

1.1 Purpose

The main motivation of writing this briefing report is to provide future information of the HRM and employment relations issues that a manager who will be located to the USA from the Altona manufacturing plant Melbourne, Australia would have to face.

1.2 Scope

This report can provide brief information about the consequences of employment relations and HRM issues that a manager relocated to the Melbourne branch would have to face.

1.3 Methods Used

Many research papers, books, and relevant journal articles have been analyzed to provide a brief information to the reader including the issues of employment relations and HRM that the expatriate manager in Melbourne would have to face.

2.0 Company Background

Toyota is the world’s largest car manufacturing company, has reached new heights of sales and profit maximization. Toyota is also one of the earliest companies of car manufacturing that came into inception in the year 1924. The actual production of the automobiles had started in the year 1933 and Toyota launched its first A1 passenger car. Toyota became the largest automobile manufacturing company in the year 2012 after beating General Motors and Volkswagen Group. Toyota has now been producing around 10 million vehicles per year (Toyota, 2016).

3.0 Analysis of Risks and Challenges

3.1 Effect of Trump Presidency on Expatriate Manager

The new fiscal year is about to begin and the newly elected American President Mr. Donald Trump has already announced many policies that will directly affect the economic and business conditions in the USA. All the large and small industries, including car manufacturing industries would be affected by these changes. There are many decisions that may also affect the living conditions of the expatriates in the American soil. The very first such policy that would adversely affect the expatriates is the increase in the annual basic salary of the H1-B Visa holder expatriates to $130,000 from $60,000 per annum. There are many foreign technology employees who are hired by the American companies in a hope to save some amount on annual salary, but after the hike in the annual pay for these expatriates; there are chances that the American companies would abort hiring highly skilled professionals from foreign countries who come in the country by H1-B Visa.
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 This decision may also affect the workings of Toyota’s branch in the American soil where most of the employees do not properly know how the TPS (Toyota Production Systems) model works. If the company is unable to hire experienced professionals from their home country, then they would have to provide extensive training to the employees of the host country to let them know the basics of TPS model, which may increase the cost for the company. Moreover, the manager relocated to the American branch would also have to face problems to manage the production and the newly hired foreign employees (TheEconomist, 2016).

There are many decisions taken by the Trump Presidency that may affect indirectly, if not directly on the living conditions of expatriates in the USA. For instance, Trump has announced that he is going to ban the residents from some Muslim countries like Afghanistan, Pakistan, Syria, etc. to enter inside the USA. Although this may not affect the expatriates directly, but it might affect their living conditions in the USA indirectly. The hate crime against some expatriates from other religion like Hindu, Muslim, Buddha may increase inadvertently.

Some incidents of hate crime against the people from other religion have already taken place recently and the Muslim ban and other such policies may worsen the situation in the future in American soil. There are chances that around 728,000 people who have come to USA as minors and received Deferred Action for Childhood Arrivals when the Obama administration was in Presidency would be forced to be deported when the program initiated by Obama administration ends. There are chances that many disputes are going to arise since countries may reject to accept the refugees back in their country (Lee, 2017).

There are many requirements of minimum wage workers, blue collar workers, and semi-skilled workers in the manufacturing plants of the care manufacturing industry like Toyota. Many minimum wage workers are asking to increase the minimum wage amount from $7 to $10 in many industries, but the Trump Presidency is not willing to make such a hike, instead it is looking to suggest tax breaks to benefit the American workers. This is the reason why the minimum wages, blue collar, and semi-skilled workers have started protesting the Trump policies of not increasing the minimum wages and the availability of such workers in the future may become worse.
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 These workers are also worried about the future changes in the Obamacare health plan by the Trump Presidency and are being skeptical about it. All these changes may directly or indirectly affect the operations that the manager would have to handle in the American branch of the company. This may further affect the overall sales and revenue generation for the company. Trump Presidency has done an insult to an injury after announcing a threat to the Toyota Company over its decision of starting a new plant in Baja California, Mexico. The newly elected President had warned Toyota of paying big border tax if they plan to build a new plant in Mexico. Toyota had announced further statement in support of their decision that the company would not take away from the US employment (Garcia, 2015).

3.2 HRM and Employment Relations Issues that May Effect Expatriate

Managing a workforce of foreign employees that are not acquainted with the policies, society, and culture of the home country may be a very daunting task for the expatriate manager. The expatriate manager would have to work hard before he or she finally manages everything properly in the host country. The first HRM issue that the expatriate manager may face is to understand the amount of failure of foreign projects in the USA. Failure of the project in the foreign country is defined as the premature return of the employees to their home country or the failure of the expatriates to achieve the desired business goals in the host country.

The various researches done in this field suggest that almost 65% MNC’s in USA experience expatriate failure rates of 10% or more in many cases. Some of the main reasons in case of MNC’s for failure in the USA are: inability to adjust with the spouse, other family problems, immunity in the behavior of manager’s personal or emotional nature, and inability to cope with overseas responsibility. It is thus evident that most of the international projects failed due to family and personal problems (Prenhall, 2014).

There are also many HRM issues in USA that the Toyota company has to bother about before finally relocating the expatriate manager. The first issue in this case that the Toyota HR department would have to face in this case to prepare a proper transport for the expatriate manager. The next HR issue that the HR department of the Toyota has to bother is to prepare a proper accommodation and if the accommodation is not available, then managing a lodge initially for the expatriate manager. Another major issue that the HR department has to worry about is to prepare the pay package in the form of USA currency. Toyota company has to manage to provide the pay package of the expatriate manager in the form of foreign currency, which involves many issues of currency evaluation and taxation.

The regulations related to Income Tax and pay packages in USA are much different to that of the Australian regulations and it really tidy for the HR department to prepare pay package for the expatriates. Meanwhile, the currency exchange also either increases or decreases the overall amount of pay package, depending upon the exact change in the value of the currency of home country to that of host country. If the salary package created by the HR department of the company is not in accordance with the pay package in the home country, then the expatriate manager would not be able to provide his maximum support to the company because of some negativity arising in his mind due to the pay package (Edwards, 2005).
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Another major obstacle in managing the Toyota branch in the American soil by the expatriate manager is the complex employment relations regulations of the EEOC (Equal Employment Opportunity Commission). EEOC is responsible to handle all the employment relations related conflicts in the USA. It has the following provisions for the employee working on the MNC’s of USA: —

  1. Discriminatory Employment Decisions: — The title VII, ADEA, and the ADA prohibits any kind of discrimination by any person working in the American companies, which includes all kinds of discrimination like hiring, agreement, recruitment, transfer, firing, layoffs, and any kind of other privileges of employment.
  2. Discrimination in Compensation and Benefits: — The title VII, ADEA, and the ADA prohibits any kind of discrimination in providing compensation that should be based on sex, color, race, ethnicity, religion, age, or disability. Apart from this, EPA also prohibits any kind of pay discrimination between women and men who are performing the equal work substantially.
  3. Harassment: — The Title VII, ADEA, and the ADA prohibits any kind of harassment either mental or physical in nature inside the premises of the companies working in the USA. They also prohibit offensive conducts that may create a hostile work environment based on color, race, ethnicity, sex, religion, age, nationality, or disability. Employers must take precautionary steps to avoid any such kind of conduct and employees are responsible to report harassment at an early stage.
  4. Retaliation: — The Title VII, ADEA, ADA, and EPA prohibits employers for any kind of retaliation against employees in case they are accused of opposing unlawful discrimination or have participated in a discrimination related proceedings(Occhialino, 2005).

These regulations of the EEOC seem clear in the first place, however, there are many complications in following and maintaining these regulations for an expatriate manager. The manager relocated to the American branch of the company would have to clearly understand all these regulations and other related employment relations regulations in order to avoid any kind of discrimination to the employees under any circumstance. There are still many complications in case of understanding and reporting for any violation of these regulations. For example, suppose that the company hired an Indian employee and then she relocated to the American branch of the company. She is hired at an Indian wage, which is below the minimum wages in the USA, she gets sexually harassed, and she suffers from an injury in the workplace.

This employee may file claims with the US department of Labor for the wages less than US minimum wages, the EEOC for sexual harassment, and the OSHA (Occupational Safety and Health Administration) for the injury. However, the employer would always have the situation in his hands because the company could assert its threshold “choice-of-Indian-law clause” defense against all these charges.

4.0 Recommendations

Although working in the American soil may be very daunting in the first place for an expatriate manager, but there are some reliefs provided by the Federal and State Labor Laws. In general, working conditions in the USA are not subjected to many legal regulations. The main law that controls the labor related issues in the USA is FLSA (Fair Labor Standards Act), which covers most of the companies working in the public and private sector. These companies come under the regulations of the FLSA under the following conditions: —

  1. The employer in consideration is a school, hospital, or a government agency, or its workers are involved in interstate commerce among 2 or more States.
  2. The company has 2 or more employees working under its employment, having an annual sales of around $500,000 or more.

Another facility provided to the expatriate manager is by the FMLA (Family and Medical Leave Act), which entitles every employee working in the American soil to take up to 12 weeks of job protected unpaid leave per year in case the employee is suffering from serious health conditions, to look after a new born baby or a newly adopted child, or to take care of a family member who is sick. The employee has to meet the following criteria in order to take the leave: —

  1. The employer of the employee is a school, public agency, or a larger company having at least 50 employees.
  2. The employee works in a location where the employer has 50 or more employees working within 75 miles of area.
  3. The employee has worked for at least 12 months for the employer.
  4. The employee has completed at least 1,250 hours of working during the 12 months employment period(McKenzie, 2011).

Another beneficial factor for the expatriate manager to work in the USA is the similarity in the cultural values of the Australian and American society. In order to understand the cultural differences between the two countries, a country comparison analysis has been done with the help of Geert Hofstede’s 6 dimension model and the results are shown in the figure 1 below. It is proofed from the country comparison graph of the two countries that Australia and USA are almost same in all the 6 dimensions of the Hofstede’s model, which suggest that the countries share same cultural and social values.

employment relations issues usa 300x268 - HRM and Employment Relations Issues Faced by Expatriate Managers in USA

Figure 1. Country Comparison Australia Vs USA (Hofstede’s, 2016)

This similarity in the culture of 2 societies can really help the expatriate manager to manage the foreign employees working under his or her management. The first dimension that can help the expatriate manager to cope with the foreign employees is the ‘Power Distance.’ Power Distance dimension suggests that the less powerful employees of any organization within a country accept and expect that power is not distributed properly. The score of both Australia and the USA is almost same, which suggests that the hierarchy in these societies are established for convenience.

The managers in such society always rely on individual employees and teams for their expertise. Another dimension that should be helpful for the expatriate manager is the ‘Individualism,’ which suggests that a high score in this dimension means that the society is highly individualistic in nature. This suggests that both Australian and American societies bothers about themselves and their immediate family members as well. This dimension can help the expatriate manager to cope with the behavior of the foreign employees towards him and the company (Hofstede’s, 2016).

5.0 Conclusion

The effects of the internet and globalization has been motivating the MNC’s to start their branches all over the world. Toyota is also looking forward to get benefit from the effects of advance technologies and globalization and that’s why it has been looking to start new branches in some States of USA and other countries. This briefing report can provide a rough estimation of the risks and challenges that an expatriate manager relocated to the American branch would have to face. However, there may be some limitations and exceptions of this report in terms of validity and reliability.

The newly elected President of USA; Mr. Donald Trump has imposed many policies and regulations that can affect the life of an expatriate manager in the American soil that are discussed in this report. Some HRM and employment relations issues that may trouble the expatriate manager are also discussed in this report. Finally, some suggestions are also made for the expatriate manager, to get rid of these issues.

Subject – Management

Pages – 13

Word Count – 3000

Price – $1.99 Only

6.0 References

Edwards, T. (2005). International HRM: National Business Systems, Organizational Politics and the International Division of Labour in MNCs. Cornell University, 1-21.

Garcia, F. (2015, April). Donald Trump threatens Toyota over ‘plan to build new plant’ in Mexico. Retrieved April 6, 2017, from www.independent.co.uk/: http://www.independent.co.uk/news/world/americas/donald-trump-toyota-baja-california-plant-jobs-twitter-latest-a7511981.html

Hofstede’s, G. (2016). Geert Hofstede’s Country Comparison. Retrieved April 6, 2017, from geert-hofstede.com:

Lee, C. E. (2017, February 6). The Trump Effect: The President’s Wild Start Churns Domestic Politics Around the World. Retrieved April 6, 2017, from www.wsj.com: https://www.wsj.com/articles/the-trump-effect-domestic-politics-around-the-world-are-churned-by-wild-start-in-office-1486657540

McKenzie, B. (2011). U.S. Employment Law for Global Employers. Cornell University ILR School, 1-76.

Occhialino, A. N. (2005). Why the EEOC (Still) Matters. Hofstra Labor and Employment Law Journal, 1-39.

Prenhall. (2014, January). Managing Human Resources in an International Business. Retrieved April 6, 2017, from wps.prenhall.com: https://wps.prenhall.com/wps/media/objects/728/745520/chapter13.pdf

TheEconomist. (2016, November). The economic consequences of Donald Trump. Retrieved April 6, 2017, from www.economist.com: http://www.economist.com/blogs/freeexchange/2016/11/global-economy

Toyota. (2016). Company Overview: Toyota. Retrieved April 6, 2017, from toyota.com: http://www.toyota.com.au/toyota/company

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