As a compensation professional, what would you do? What factor(s) in this ethical dilemma might influence a person to make a less-than-ethical decision? What if Serenity Resorts relocated a senior manager for two years to oversee the initial operation setup and was providing them with a full expatriate compensation package? How might that impact the Expatriate being assigned and the position that would put them in?
As a compensation professional I would refuse the offer from the local labor standards chief. Not only is his offer unethical but it is bribery. As HR professionals we cannot afford to make such unethical decisions. According to SHRM “as of Jan. 1, France’s minimum wage is 10.03 euros (approximately U.S. $11.39) an hour. However, collective bargaining agreements often provide higher minimum wages” (Dieterling, 2021). Since the French minimum wage is $11.39, we cannot risk underpaying employees due to governmental/local laws. As directed by the EU, “under the laws of all member states employers must provide employees with a written document about the terms of the employment contract” (Martoccio, 2020, Pg.347). Since this is the case “French labour law provides that the employer must inform the employee in writing of the conditions applicable to the employment contract” (Audouze & Albiol, 2018). If Serenity Resorts was to accept the local labor standards offer, they would be placing their organization at a legal risk. Since Serenity Resorts would be underpaying employee wages their employment contract could be considered illegal. In this case I would focus on displaying what is at risk for the local labor standards chief especially since “the country’s economy also stood to lose substantial tax revenue if the resort were to fail” (Martoccio, 2020, Pg.355). This might provide Serenity Resorts a more ethical platform to use when dealing with the local government officials. Hopefully this would help the organization find a more legal fixture for their problem.
The main factor that might influence a person to make a less-than-ethical decision in this case would be the calculated cost savings based on substandard wages. Since Serenity Resorts has already exceeded their budget, they will be unable to produce a profit. Also, since “Serenity’s total pension contributions would be significantly less at the lower pay rates, thus creating further savings” (Martoccio, 2020, Pg.355). Serenity Resorts would also be able to achieve profitability after 2 years if they took the offer. These factors coupled together could potentially lead a compensation professional to make a less-than-ethical decision. At the end of the day, we must remember that our job as HR professionals is to protect our organization from all potential liabilities and legal risks.
If Serenity Resorts decided to relocate a senior manager to oversee the operation for 2 years, it would require substantial modifications to the employee’s domestic compensation package. Since the assignment is over one year it would be considered an extended assignment. This extended assignment would require features that enhance the employees’ sense of stability and comfort overseas. These features would “include housing allowances, educational expenses for children, and adjustments to protect expatriates from paying “double” income taxes (i.e., U.S. federal and state taxes as well as applicable foreign taxes)” (Martoccio, 2020, Pg.324). As we learned such moves come at a high price (monetary incentives) and given Serenity Resorts situation I do not think such a plan should be made. The cost of an expatriate’s compensation package would be significantly higher than if they simply hired a local manager. If Serenity Resorts provided a full expatriate compensation package for this employee, they would be putting the organization at an even greater disadvantage.
Another potential issue with sending an expatriate to fulfill this role is it could lead to resentment from the local workers. Since this senior manager would be getting a full expatriate compensation package their incentives would be quite lucrative especially when compared to that of the local workers. Some of these “main incentives are foreign services premiums, hardship allowance, and mobility premiums” (Martoccio, 2020, Pg.328). These factors could lead to a lack of productivity, morale, and motivation from the local workers. If this was to occur, we could very well be setting up the senior manager for failure.
discussion 2 from ashvini:As a compensation professional, what would you do?
As a compensation professional, I would definitely advise of not agreeing to the labor standards chief’s bribe. The chief’s hint of “looking the other way” is definitely unethical. Serenity’s chief operations officer also acted unethically as he accepted the offer. Serenity can face serious legal actions if this were to ever be reported. This is unethical because Serenity would be agreeing to pay their employees below the minimum wage, thus making illegal actions. Underpaying these employees will no got unnoticed. According to our text, under the European Union, “all member states employers must provide employees with a written document about the terms of the employment contract.” France, being apart of the European Union, must oblige to this. By law, Serenity must provide these contracts to their employees. The contract cannot have false information stated, as this will also lead to legal action.
What factor(s) in this ethical dilemma might influence a person to make a less-than-ethical decision?
I believe the tricky aspect to this case involves the country’s economy. If the resort were to fail, the country’s economy would lose substantial tax revenue. This creates an influence or pressure on both the labor standards chief and Serenity’s chief operations officer to make an unethical decision. Also with the sudden increase in wage, Serenity’s executives might not have budgeted for that. However, it is always crucial to oblige and follow the union’s/country’s employment laws, and in this case pay employees the minimum wage set.Going forward, Serenity’s chief operations officer and the labor standards chief should come up with a legal solution. They should also cut back on costs related to the new build. Labor costs should be nonnegotiable as a way to cut down.
What if Serenity Resorts relocated a senior manager for two years to oversee the initial operation setup and was providing them with a full expatriate compensation package? How might that impact the Expatriate being assigned and the position that would put them in?
As we have learned through the text, expatriates come with a cost and can be expensive especially for an extended assignment. The core compensation is made up of base pay, incentive compensation, foreign service premium, hardship allowance, and mobility premium. Final determination of an expatriate’s compensation package “should come only after companies carefully weigh the strengths and limitations of alternative methods.” In the case with Serenity, executives must carefully decide if having this expatriate is absolutely necessary and determine if they can afford it. If an expatriate were placed, they would possibly have to deal with underpaid employees, or eventually become overwhelmed. I would also advice to not continue with an expatriate as it may not be necessary, and can add to any debt Serenity may be in.
discussion 3 from Eric:
Summary
: Serenity Resorts was established in 1985 in Arizona, USA. By popular demand, it expanded to several more resorts throughout the United States. Leadership decided it would then expand overseas, starting with building a resort off the French coast. However, construction costs exceeded the budget, which would potentially hinder Serenity’s ability to make a profit. In addition, France’s minimum wage unexpectedly increased 15% due to inflation, creating more pressure on profitability. The country’s economy had a lot riding on this project, and substantial tax revenue would be lost if the resort failed.
One solution between Serenity and the local government was to pay workers less than the minimum wage, resulting in major savings of labor costs. The local labor standards chief would look the other way if Serenity bribed him. The bribe would be significantly less than paying workers at or above minimum wage. The plan would allow Serenity to become profitable after 2 years. Serenity’s COO took the labor chief up on the proposal. (Martocchio, 2020)
As a compensation professional, what would I do?
I’d quit. Why would I want to work for a company who is unethical? I would be really concerned if my COO agreed to underpay workers below minimum wage to save on labor costs and increase company profits. If I was involved in that decision making process and went along with it, then I too would be unethical. It’s not worth it. An article states than in addition to addressing the potential fallout of your supervisor’s actions (in this case, the COO), you must also understand how these actions might threaten your reputation and job. If you can’t distance yourself from the behavior, you might need to leave the company or report the situation (Williams, 2017). If things escalated and it was uncovered that Serenity bribed a local official to under pay workers to generate a profit, I would not only be out of a job, but I could face some serious legal consequences. No thanks.
What factors in this ethical dilemma might influence a person to make a less than ethical decision?
Money. It comes down to money. In this case, there were two unexpected shortcomings in the project- construction costs exceeding the budget, and France’s minimum wage increasing unexpectedly by 15% due to inflation. The COO, with Serenity’s best interests in mind, chose to not do the right thing by paying off the local labor chief in France so that Serenity would underpay its workers in order to turn a profit after 2 years. Even though there is the potential for this to be leaked out to news outlets, ultimately creating bad press for Serenity, the COO ultimately was influenced by money so that Serenity could profit in years. It would be interesting to see how much in profits Serenity would lose if vacationers boycotted staying at Serenity due to their unethical pay practices in France.
What if Serenity Resorts relocated a senior manager for two years to oversee the initial operation setup and was providing them with a full expatriate compensation package?
I think it would be counter-productive to relocate a senior manager from the USA to France for two years and provide them with a full expatriate compensation package. Due to the construction and minimum wage challenges Serenity is facing in France, paying a senior manager above what he/she is already earning in the USA does not seem to make the most financial sense. International compensation plans include a variety of unique incentives to encourage expatriates to accept and remain on international assignments. The main incentives are foreign services premiums, hardship allowance, and mobility premiums (Martocchio, 2020). So now Serenity would be under paying its workers in France, yet paying a premium to send a senior manager overseas for two years. That gives Serenity an even worse look if word got to the press that French workers were being under paid, yet a senior manager is receiving these unique incentives on top of their lucrative base pay. If anything, it would be more practical to hire an experienced manager from France.
How might that impact the Expatriate being assigned and the position that would put them in?
I don’t think it would impact the Expatriate in a good way. First of all, the Expatriate is a senior manager who should be aware of the situation to bribe a local official to look the other way while underpaying workers. So that manager should not take the assignment for that reason. But if somehow, that manager was unaware of the bribe, and took the assignment, then ran the new resort in France while its workers were being underpaid, then it could result in a terrible situation for that manager by running a resort illegally by paying the staff below minimum wage. But looking at it from another perspective, how would Serenity even attract and retain quality staff by paying below minimum wage? Unless there were people in dire need of employment, I’m not confident that anyone would want to take a job at Serenity, knowing it pays below minimum wage.
discusion 4 from Maria: The offer from the locale labor standards chief is not only morally and ethically wrong but a bribe that would cause some very serious legal consequences when discovered; none of which I would want to be a part of. I believe money can be a motivator for some and that is why there are many cases in the media of bribery by top executives.
Relocating a senior manager for two years to oversee the initial operation setup and providing them with a full expatriate compensation package will cost the company more in the long run because all the relocation expenses will have to be paid. Since it is a long term relocation the package would include “housing allowance, educational expenses for children, and adjustments to protect expatriates from paying double income taxes (i.e., U.S. Federal and State taxes as well as applicable foreign taxes)”.(cix Martocchio, 2020, pg. 325).
Last Completed Projects
| topic title | academic level | Writer | delivered |
|---|