IX. Discussion Questions and Suggested Answers
13.1. Discuss the strengths and weaknesses of the following methods for
establishing base pay in international contexts: home country-based pay,
headquarters-based pay, and host country-based pay.
13.2. For a country of your choice, conduct research into the cultural
characteristics and summarize these characteristics. Discuss whether you feel
that pay-for-performance programs are compatible and provide your
rationale.
Responses will vary based on country selected. For example, if a U.S. company were to
decide to locate in Japan, certain cultural norms may need to be used by employees in
order to safely establish a strong relationship with the people. For instance, in most food
Learning Objective: 13-2. Describe and explain preliminary considerations
13.3. Discuss your reaction to the following statement: “U.S. companies should
increase base pay (beyond the level that would be paid in the United States)
to motivate employees to accept foreign assignments.”
Increasing base pay in order to motivate employees to do anything is often a sound idea,
Learning Objective: 13-2. Describe and explain preliminary considerations
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13.4. Allowances and reimbursements for international assignments are costly.
Should companies avoid international business activities? Explain your
answer. If you answer no, what can companies to do minimize cost?
Answer to this question can be found in the MyLab
13.5. Of the many reimbursements and allowances that U.S. companies make for
employees who take foreign assignments, which one is the most essential?
Discuss your reasons.
The most essential reimbursement and allowance that U.S. companies make for
employees who take foreign assignments is home-leave benefits and travel
X. End of Chapter Case; Instructor Notes, and Questions and Suggested
Student Responses
Case Name: Jenkins Goes Abroad
Instructor Notes:
Many Human Resources practitioners face the new challenge of expanding operations
globally. Even if a company is sending just a few employees abroad, if the duration is
Suggested Student Responses:
13.6. How should Dale approach the determination of the consultant’s salaries as
expatriates?
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Initially, Dale should consider the fact that the assignment is relatively long term. The
consultants will be in the U.K. for a period of more than a year, and therefore, an
adjustment to their pay is most likely appropriate. As the U.S. dollar is currently weak
13.7. Should Jenkins offer any incentive compensation or additional benefits to the
expatriates? Why or why not?
Based on Dale’s initial discussions with the consultants, it seems they may be hesitant to
take the assignment because of their concerns with their long-term career growth.
Therefore, an incentive such as a foreign service premium may be appropriate. Because
XI. Crunch the Numbers! Questions and Suggested Student Responses
Calculating an Expatriate’s Base Pay and Incentives
13.8. Calculate your colleague’s new base pay rate.
5% increase in base pay = $3,750
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13.9. Calculate the (a) foreign service premium, (b) hardship allowance, and (c)
quarters allowance.
a) 20% foreign service premium = $15,000
b) 15% hardship allowance = $11,250
13.10. Based on your calculations for the previous questions, how much will your
colleague receive for her 1-year assignment in Beijing, China?
Total compensation = $78,750 + $15,000 + $11,250 + 53,200 = $158,200
XII. Assisted-graded Questions
13.11. Describe the two choices available to companies to protect expatriates from
double taxation. Which of the two approaches is most fair to expatriates and
why?
13.12. From the company’s standpoint, what are the pros and cons of following the
balance sheet approach?
13.13. MyManagementLab Only – comprehensive writing assignment for this
chapter.
13.14.
XI. Additional Cases from the MyManagementLab Website; Instructor
Notes, and Questions and Suggested Student Responses
Case Name: Independent Contractor or Part-time Employee?
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Instructor Notes:
Uncertainty and the need for flexibility lead many employers to engage contingent
workers as part of their workforce. Independent contractors are often hired for their
specialized skills to complete specific projects or perform a job for a designated amount
of time. Often a company will prefer to hire someone as an independent contractor in
order to have more flexibility and also to contain benefit costs as the company does not
provide benefits to an independent contractor. However, as an employer does not have
certain obligations to an independent contractor, it is important that they are properly
classified under state and federal employment laws.
Suggested Student Responses:
13.15. Why would EcoSafe prefer to engage Laney as an independent contractor?
EcoSafe would have fewer obligations to Laney as an independent contractor. They
would not be obligated to pay Federal income tax withholding, overtime pay, insurance
13.16. Based on the information provided, do you think Laney should be engaged as
an independent contractor?
Because of the legal implications of the classification as an independent contractor, it is
important to properly classify an employee. Under the IRS’s 20-factor test to determine
if a person is an employee or an independent contractor, there are several considerations
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