As per the official website of Honda, it is a motor company which was established in the year 1948 and developed motorcycles by using its engineering development. The founder Soichiro Honda developed the company by taking it worldwide. The company believes in being innovative and progressive (Honda, 2017). The company was taken worldwide to grab the opportunity of globalisation and to expand its business. Honda made massive surveys in different markets to take its business overseas. The company is known among the best automobile company in the world and it aims at providing the compensation to its employees which makes them feels valued and so that they can deliver best to the organisation.
The assignment will cover the cross cultural training which should be provided by Honda motor company to create cultural awareness. It also includes how the expatriates should be trained to overcome cultural shock in different nation. The task will also discuss about the reward and compensation systems provided by Honda to balance the needs and desires of the nationals of the host country, parent country and third country. The complexities in designing the reward and payments will be discussed with the practices which the company adopt in UK and USA.
Cross cultural training is the approach which ensures to increase the knowledge and skills of the people to make them adjust in the new culture and to prevent them from the culture shock. When a business runs in various countries, it needs to have an in-depth understanding of the business and the cultural requirements so that positive outcomes can be generated (McNulty & Selmer, 2017)
The company, Honda has moved out in many countries, out of its comfort zone so as to take the opportunity of globalisation. The company has seen its future success in India as the country is an emerging economy and have huge population. The company has settled its business in India and the professionals/ expatriates who migrate to the country for work have to be trained in order to make them aware about the culture of India so that they do not face culture shock. Cultural awareness is significant as it decides the success or failure of the task for which the expatriate is moving to the different country. The global managers need to be taught about the knowledge of the country’s language and its culture. The knowledge of language is important so that they can communicate in a common language. The values and social culture of India need to be told to the expatriates so that they could have ability to handle them well (Ko & Yang, 2011).
An expatriate should be trained for having a global perspective and should have an understanding of the world so that they can cope up with any mistakes they make or can clear the misunderstandings. The expatriates should be trained for dealing the corporate relationship in India and about the legal constraints of the country. The country is rich in culture and so this should be told to understand what can be the needs and demands of the population. Honda focuses mostly on the rural population of India so an expatriate should also be made aware about the characteristics of the rural and urban population of the country and the difference between their requirements. An expatriate should be taught about the technical expertise and emotional intelligence which he might need in the completely different environment (Hånberg & Österdahl, 2009).
So, an expatriate should be provided a cross cultural training by Honda to deal with the culture of India and it should involve the offshoring process and the method of business of the offshoring partner. The future expatriates are needed to be trained about the cultures, norms and the environment in which the companies in India work. Training should be provided related to the cultural and family issues and about Repatriation and post departure process. It will help an individual to deal with the culture shock in another country (Sangwan, 2015).
Honda selects various methods in order to train its expatriates for the overseas assignments in different countries. To train them for the overseas assignments in India and USA, the company has to take several measures which will be as per the cultural requirements of both the countries.
First of all, the type of the international assignment will have to be identified so that the suitable training can be given to the expatriates. All the technical or functional requirements will be covered and made clear to the expatriates. The cross cultural training will be given to provide knowledge of culture of the other country to the expatriates. Like the expatriate visiting India should be trained about the technical expertise and requirements in India, the resources available, language and the currency which is used in India. He will also be trained about the products of Honda which are manufactured and sold in India and what the consumer expects from the company. The training requirements for the expatriate visiting USA will be different because the needs and requirements of the Customer of USA are different. The technical availability of USA plants is also different from the other countries. USA is a developed country while India is a developing one which makes each other very different from each other in terms of networks, resources, requirements and others (Cernek & Makova, 2013).
Not every training method is effective in every organisation and Honda should chose the one which is best fit for its employees to visit other countries and perform well (Barrett, 2014). Training should be given to the expatriates on the cultural issues so that they can be made aware about the culture of host countries and the do not have to face culture shock. The training provided to these employees includes making them understand the key differences in the cultures of the host country and home country the cultural diversity is made clear to them to make the international assignment successful.
According to the Hofstede’s cultural model, culture is that term which distinguishes one category of people from others (Hofstede, 2011). There are different levels of culture which should be taught to the expatriates by Honda for sending them to India and USA for international assignments.
Figure 1: Different levels of culture
There is a national culture which shows the value differences between different groups or regions and other is organisation’s culture which is about the differences in practices between organisations and within the departments of same organisations. This has to be to be taught to the expatriates by Honda to train them for international assignments (Hofstede, 2011).
The managers of Multinational corporations take pa related decisions which benefits the Host country nationals, parent country nationals and third country nationals. There are different pay systems which are adopted keeping in mind the local laws and the global policies.
The reward package of an expatriate employee involves several components. This is to be taken care of that the employees do not loose economically. The components are:
Base Salary: Base salary is the cash compensation to the employee and the key part of the package which involves the Foreign Service premium and cost of living allowance. It may be paid in home currency or in the currency like dollar or pound (Reiche, 2011).
Foreign Service incentive: For accepting a foreign assignment, the employees are paid extra premium which is based on the hardships and time period of the assignment.
Allowances: This involves various allowances like cost of living allowance, Housing and travel allowance to maintain standards of the expatriates in foreign country (Tornikoski, 2011).
Education allowance: Also, education allowances for children are paid so that their education does not get harmed.
Spouse assistance: The employees taking international assignments are also paid to support the relocation of their spouse too to offset the loss of income of the spouse (Burgess, 2016).
There are some complexities in designing the compensation for the expatriate employees which involves setting the right salary as per the country in which they are visiting. The company has to pay sufficient amount in order to retain good employees. Another challenge is costing out the options which mean that they have to maintain feasibility of the costs (Mulligan & Finkelstein, 2007). The other complexities include tax implications, legal requirements and different systems of payments in different countries which could create differences in the employees and the management. For e.g. in some countries the pay levels are decided on the basis of seniority and in other countries pay systems are based on performance. The workers compensation laws are different in every country which might also create some complexities. Taxation is another complexity which affects the compensation of an expatriate (Jiang, et al., 2009). For e.g. in US the country has tax treaties with forty two countries which makes it easy for the home countries to manage the information.
As per Honda, the human resources department of the company hires the employees and based on its Three Principles of Personnel Management it provides equal opportunities to all its employees to show three capabilities and to pay them accordingly. The compensation system of the company in built in line with the basic needs and as per the conditions of ever region (Nazir, Shah and Zaman, 2014).
There are lot of factors which are to be taken into consideration while deciding the reward and compensation of the employees in foreign countries. These factors include needs and requirements of the employees, their families, currency rates of India and USA and the spending rates of the country. For example, in USA the employee will need more remuneration package whereas India is way too cheaper and an employee will need lower remuneration package to stay for a period of time in India. For international compensation, there are various approaches which Honda can adopt to reward its employees for international assignments. These approaches may include Going rate approach, The Balance sheet approach and The Local Plus approach (Zingheim and Schuster, 2008).
Going rate Approach: As per this approach, Honda treats its employees as the citizen of the Host countries which are USA or India in its case. This considers localisation which means that the structure of the salary of the expatriate is designed as per the salary structure of the host country. The local market rates are considered for designing the compensation packages (Reiche, 2011).
Balance Sheet approach: This is the method which is used by most of the organisations. Honda may use this approach of compensation by maintaining the expatriate’s standard of living throughout the international assignment as he has in the home country. So, the employees who belong to UK will be paid in USA and India same as per the compensation structure in UK. The adjustments are made as per the salary structure of the host country so that no loss is to be beared by the employee (Reiche, 2011).
The local Plus approach: As per this method, the foreign employees are paid as per the local salary structures of the host country and extra benefits of transportation, housing and other are paid.
Honda mainly believes in compensating its employees with all their needs and requirements. Balance Sheet approach is the method which helps in retaining the employees and maintains their interest in the international assignments.
Conclusion
It can be concluded that Honda is a well renowned company across world which tries its best to create satisfied workforce. Honda trains its employees for the international assignments they take and provide them cultural training to save them from the cultural shock. The training might include training for language, culture and economy of the host country in which the employees have to visit. The report also focuses on the measures which can be used to make the expatriates overcome from the cultural shock they face in the new country. The second task of the report discusses the compensation and reward practices which can be adopted by Honda for their expatriates in India and USA. There are certain complexities which are also discussed while designing the reward package of the employees. Different approaches of pay systems are discussed which can be adopted by Honda to fit the employee into the global environment.
References
Barrett, B G 2014, ‘Training Global Managers to Prepare and Train Expatriates for More Efficiency and Effectiveness’, Journal of Economics, Business and Management, Vol. 2, No. 3.
Burgess, T 2016, ‘6 Key Components of International Payroll’, Forum for Expatriate Management.
Cernek, M & Makova, K 2013, ‘The Issue of Asian Origin Expatriates As a Part of the Diversity Management in the Moravian-Silesian Region’.
Hånberg, C & Österdahl, G 2009, ‘Cross-Cultural Training of Expatriates’, Uppsala Universitet.
Hofstede, G 2011, ‘Dimensionalizing Cultures: The Hofstede Model in Context’, Online Readings in Psychology and Culture, 2(1).
Hofstede, G 2011, ‘Dimensionalizing cultures: The Hofstede model in context’, Online readings in psychology and culture, 2(1), 8.
Jiang, Z, Xiao, Q, Qi, H& Xiao, L 2009, ‘Total Reward Strategy: A Human Resources Management Strategy Going with the Trend of the Times’, International Journal of Business and Management.
Ko, H & Yang, M 2011, ‘The Effects of Cross-Cultural Training on Expatriate Assignments’, Intercultural Communication Studies, XX: 1.
McNulty, Y, & Selmer, J (Eds.). 2017, Research Handbook of Expatriates, Edward Elgar Publishing.
Mulligan, I & Finkelstein, D 2007, ‘Challenges for Global Compensation’, International HR.
Nazir, T, Shah, S FH and Zaman, K 2014, ‘Review of literature on expatriate compensation and its implication for offshore workforce’, Iranian Journal of Management Studies, 7(2), p.189.
Reiche, S 2011, ‘Expatriate compensation: a review’, IESE Business School.
Sangwan, A 2015, ‘Cross Cultural Training and Global Competencies – A Study of Indian MNC’, IOSR Journal of Business and Management, PP 20-24.
Tornikoski, C 2011, ‘Expatriate compensation: A total reward perspective’, University of Vaasa.
Tornikoski, C, Suutari, V, &Festing, M 2014, ‘Compensation package of international assignees’, The Routledge companion to international human resource management, 289-307.
Zingheim, P K and Schuster, J R 2008, ‘Workforce Retention and Pay and Reward Practices in America’s Best Hospitals’, WorldatWork Journal, 17(2), p.16.
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