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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
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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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