978-0134320540 Chapter 14 Solution Manual

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VIII. Discussion Questions and Suggested Answers

14.1. Discuss the main differences between the minimum pay regulations in the

United States (Chapter 2) and one other country’s practices discussed in this

chapter. How do these differences affect companies’ ability to compete with

other companies worldwide?

The answer may vary depending on the country chosen by students. In 2007, U.S.

Congress passed an increase in the federal minimum wage from $5.15 in increments to

$7.25 in 2009. Currently, approximately 24 states have minimum wage laws that specify

higher minimum wage rates than federal level specified in the FLSA. Specific FLSA

14.2. Discuss the main differences between retirement systems in the United States

(taking into account legally required and discretionary programs) and one

other country discussed in this chapter. Does it appear that the costs of

retirement programs are creating burdens for competitive advantage?

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In the United States, individuals may receive retirement benefits from three sources: 1)

employer-sponsored retirement plans provide employees with income after they have met

a minimum retirement age and have left the company, 2) OASDI program provides

government-mandated retirement income to employees who have made sufficient

contributions through payroll taxes, 3) individuals may use their initiative to take

advantage of tax regulations that have created such retirement programs as individual

retirement accounts (IRAs) and Roth IRAs. Canada has two different state pension plans:

1) for Quebec residents and 2) for the rest of the country. Both of the plans are similar to

14.3. Discuss the main differences between paid time-off practices in the United

States and one other country discussed in this chapter.

Answer to this question can be found in the MyLab

14.4. Discuss the main differences between health care systems in the United States

(Chapter 10) and one other country discussed in this chapter. Does it appear

that the costs of health care programs are creating burdens for competitive

advantage?

In the United States the health care system is privately run, however, most employers

provide health care insurance as a benefit. Companies with more than 50 employees are

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AACSB: Analytical thinking

14.5. Describe the purchasing power exchange rate and indicate how it is helpful

to compensation professionals whose work spans multiple countries.

IX. End of Chapter Case; Instructor Notes, and Questions and Suggested

Student Responses

Case: North American Expansion for Threads Apparel

Instructor Notes:

Organizations that expand their operations internationally must understand the basic legal

requirements as well as norms for pay and benefit in the country where they are doing

Suggested Student Responses:

14.6. What are some labor-related factors that Threads should consider when

comparing Mexico and Canada?

Beyond the availability of the right talent, an important consideration is related to costs

and employment practices. A company must consider local pay rates, and costs of

14.7. What are some labor-related factors that would favor Canada as the location

of the new facility? Mexico?

The employment environment in Canada is more similar to the United States than

Mexico. As such, Thread’s management may find it easier to transition into the Canadian

X. Crunch the Numbers! Questions and Suggested Student Responses

Comparing the Rates of Change in GDP Per Capita for Select Countries

14.8. What is the 5-year change in GDP per capita (2002–2006) for (a) the United

States, (b) Australia, (c) Singapore, (d) Denmark, and (e) Italy?

Country 2002 2006 Difference

United States 45,418 49,130 3,712

14.9. What is the 5-year change in GDP per capita (2007–2011) for (a) the United

States, (b) Australia, (c) Singapore, (d) Denmark, and (e) Italy?

Country 2007 2011 Difference

United States 49,571 48,282 -1,289

14.10. State whether the rate of change for the more recent 5-year period

(2007–2011) was lower than or higher than the rate of change for the earlier

5-year period (2002–2006) in each country: (a) the United States, (b)

Australia, (c) Singapore, (d) Denmark, and (e) Italy.

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Country (2007-2011) (2002-2006) More recent

period higher or

lower?

United States -1,289 3,712 Lower

XII. Assisted-graded Questions

14.11. Why is it important for HR and compensation professionals to learn about

compensation practices in other parts of the world? Discuss.

Answer to this question can be found in the MyLab

14.12. Which factor do you think is most important when deciding whether to

establish business operations in another country? Explain your rationale.

Answer to this question can be found in the MyLab

14-13. MyManagementLab Only – comprehensive writing assignment for this

chapter.

XII. Additional Cases from the MyManagementLab Website; Instructor Notes,

and Questions and Suggested Student Responses

Case: Expatriate Problems at Global Appliance

Instructor Notes

There are many human resource management practices that affect the success of

international assignments including the selection and training of expatriates. The design

of the compensation package also has a significant effect on the success of international

assignments. There must be incentives for employees to take international assignments

and also financial risk to the employee should be minimized. In ensuring the success of

expatriates, careful attention should be paid to the pay and benefits given to those asked

to work in an international assignment. In this case, the Human Resources Director most

likely needs to speak with more employees and current expatriates to understand their

concerns, but initially examining their compensation program is a good first step.

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Suggested Student Responses:

14.14. How can compensation practices affect the willingness of executives at Global

Appliance to take international assignments?

Easing financial concerns helps make an international assignment more attractive. Often,

an employee may respond positively to incentives, but at a minimum does not want an

AACSB: Analytical thinking

14.15. What are some aspects of Global’s compensation practices that Jackson

should examine?

Jackson should first examine the base pay of the expatriates and ensure that their process

for setting base pay at least allows the expatriates to maintain their same purchasing

power. He should also examine incentives in place. If they do not currently offer a

foreign service premium, they may want to consider doing so. He should also examine

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