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?
What factor(s) in this ethical dilemma might influence a person to make a less-than-ethical decision?
(1) Hubris. (2) Privilege. (3) Not a healthy enough fear of getting caught. (4) Not a healthy enough understanding of what a waste jail would be. (5) Pressure from the leadership to remain profitable despite (a) cost overruns on construction, (b) increases in wages. (3) The spurious offer from the local labor standards chief to look the other way
Martocchio, J. J. (20190104). Strategic Compensation, 10th Edition. [[VitalSource Bookshelf version]]. Retrieved from vbk://9780135201930
Rubenfeld, S. (2014, September 24). Corruption Currents: From Expat Complaints to Whistleblowing’s Cost. WSJ. https://www.wsj.com/articles/BL-252B-522
discussion 2 from Trina As a compensation professional, what would you do?
As a compensation professional, I would first research minimum wage and pay laws in France. In doing so, I would find that the current law states that people under the age of 17 with less and 6 months of work experience can be paid at 80% of the minimum wage, and when they reach 17, they can be paid at 90% of the minimum wage until they are 18. Also, apprenticeships can receive anywhere from 25% to 78% of the minimum wage depending on age and level of experience (Expatica, 2021). So lower level positions such as the cleaning staff could be filled with people in these age groups which could help with some cost savings and achieve profitability. However, once these employees reach 18, the cost savings goes down. Plus, management and leadership positions at the resort should be filled with more experienced workers, which means a higher salary and then not as much cost savings. However, if this law didn’t exist, then as a compensation professional I would strongly advise against paying the workers less than minimum wage. It’s illegal and unethical. Employers are subject to punishment by the government of France if they pay below the minimum wage with penalty payments of
€ 1524
for each worker that is being paid the lower rate and this penalty is applied as many times as there has been violations (Wage Indicator, 2020). This could end up costing the company more money in the long run and will give them a bad reputation. Also, I can’t imagine they would have much luck finding workers willing to work below the legal minimum wage unless it’s a situation where they are living in poverty and are willing to work for less just to be able to have a job.
What factor(s) in this ethical dilemma might influence a person to make a less-than-ethical decision?
I think that being able to cut costs and turn a profit faster would be the main factor for someone to make this less-than-ethical decision. Other factors could be that the decision maker isn’t an ethical person to begin with, making this decision much easier.
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?
This would cost them more money to implement. The full U.S. expatriate compensation package consists of base pay, incentive compensation, foreign service premium, hardship allowance, mobility premium, standard benefits, protection programs, paid time off, relocation assistance, educational reimbursements for children, home leave and travel reimbursement and rest and relaxation allowance (Martocchio, 2020). When that is all added up, it has the potential to be twice the cost of the compensation package in the U.S. So from a business perspective, it would be strategic to place an expatriate to help build the business, from a cost savings perspective, it will work against them.
Reference
French minimum wage and average salary in France. (2021, June 07). Retrieved from https://www.expatica.com/fr/working/employment-law/france-minimum-wage-982310/
Martocchio, J. (2020). Strategic Compensation: A Human Resource Management Approach (10th ed.). Boston, MA: Pearson Education.
Wage Indicator. (2020, July 13). Minimum wages regulations – France. Retrieved from https://wageindicator.org/labour-laws/labour-law-around-the-world/minimum-wages-regulations/minimum-wages-regulations-france
Discussion 3 from Sam This case is a sticky situation. There are a lot of factors that pressure Serenity to succeed, which led to the company excepting a less than ethical proposal. Firstly, the resort wound up being way overbudget, which lowered the chance to see profits sooner. The main issue is that this resort has government money in it and is supposed to dramatically increase tourism in the island nation, so if this project fails, the nation’s economy takes a hit as well. So essentially there is pressure coming from the company leadership and the government of that country.
There are a few strategies I found when going overbudget that Serenity could consider since they found that abiding by local laws is only going to drain funds further.
1. Consider the resources you’re using. Serenity should evaluate combinations or resources that would be cheaper than what they may have originally planned to use. Or if there are further construction projects, they may want to consider having it take longer than it should to save money.
2. Find reasons to eliminate or replace nonlabor costs. This includes materials, supplies, training, etc., where they should see cheaper alternatives.
3. The project may have gone overbudget because more work was done than what was committed to. Serenity should monitor labor very closely and make sure that absolutely no unplanned work is being requested or completed.
4. If the resort’s core components are completed, but it is not 100% finished, it should be communicated with the client that maybe not everything can be completed on time, but the main functionality will be there so it can be closer to budget without cutting into labor (Mochal, 2003).
Conversely, if an expatriate was used, there are several pros and cons associated with that. If this island nation has less than ideal living conditions, obviously incentives will be offered. A full package would need to have a base wage increase, foreign services premiums, hardship allowance, and mobility premiums, not to mention possible restructuring of their benefits. There are possibilities of cost savings when it comes to taxes, but this may be a costly venture (Martocchio, 2020). While expatriates have a good understanding of what the company wants and the talent pool of the local market may be small, I don’t believe using an expatriate would be helpful in this case since most of the problems arose because of local regulations, not those of the United States. Not only this, but 25% of expatriates get burnt out and go home early due to stress or culture shock, they are 2 to 5 times more expensive than a local hire, and legal risks may come up if local immigration policies are not followed. One study found that 64% of international companies suffered penalties regarding this issue (Laird, 2015). In the end, it seems like they didn’t do adequate research or set up contingency plans when things in the foreign country changed. Putting a local in charge of the project I believe would be better than an expatriate considering Serenity is working with the government and is facing more local problems than anything.
Laird, M. (2015). The Pros and Cons of Hiring Expats. HR Exchange Network. Retrieved from https://www.hrexchangenetwork.com/hr-talent-management/articles/the-pros-and-cons-of-hiring-expats.
Martocchio, J. (2020). Strategic Compensation: A Human Resource Management Approach (10th ed.). Boston, MA: Pearson Education.
Mochal, T. (2003). Apply these six techniques to get an overbudget project back on track. TechRepublic. Retrieved from https://www.techrepublic.com/article/apply-these-six-techniques-to-get-an-over-budget-project-back-on-track/.
Discussion 4 from Daniel Per Expatica.com, the minimum wage for working adults is €10.03 per hour in the country of France. Any under the table agreement to pay substandard wages lower than the minimum wage would be unethical on the part of a compensation specialist, unless those employed were under the age of 18(“French Minimum Wage and Average Salary in France,” 2021). I myself would not accept the locale labor standards chief’s proposal. Factors that might influence a person to accept this proposal would be the pressure of knowing that “Construction of the resort far exceeded the budget, threatening Serenity’s ability to make a profit”, in addition to the corrupt locale labor standards chief practically endorsing this in exchange for his own monetary gain (Martocchio, 2020, p. 338).
If serenity resorts were to relocate a senior manager to oversee this operation, they would need to make substantial adjustments to the domestic compensation package as this assignment will exceed one years’ time. Per Martocchio, “extended assignments necessitate features that promote a sense of stability and comfort overseas. These features include housing allowances, educational expenses for children, and adjustments to protect expatriates from paying “double” income taxes” (Martocchio, 2020, p. 324).
The following are the main components of an international compensation program for expatriates’
“Core Compensation “
“Base pay”
“Incentive compensation”
“Foreign service premium”
“Hardship allowance”
“Mobility premium “
“Employee Benefits”
“Standard benefits”
“Protection programs”
“Paid time off”
“Enhanced Benefits”
“Relocation assistance”
“Educational reimbursement for expatriates’ children”
“Home leave and travel reimbursement”
“Rest and relaxation leave allowance”
(Martocchio, 2020, p. 325)
References
French Minimum Wage and Average Salary in France. (2021, June 7). Expat Guide to France | Expatica. https://www.expatica.com/fr/working/employment-law/france-minimum-wage-982310/
Martocchio, J. J. (2020). Strategic compensation: A Human Resource Management Approach (10th ed.). Pearson.
Discussion 5 from Brigitte Regardless of the chief’s proposal, France belongs to the EU, and Article 137 of the treaty implies that “the community shall support and complement the activities of the member states in social policy. It defines minimum requirement at the EU level in the fields of working and employment conditions and regarding the information and consultation of workers.” (Martocchio, 2020, p. 347). Moreover, even though the EU does not attempt to complement the employments laws of its states, all states employers must provide a written contract about the terms of the employment (Martocchio, 2020, p. 347). Thus, since all employers in France must provide a contract for employment to all employees, and all employees under an ordinary employment contract is entitled to the minimum wage regardless of his status (indefinite or fixed term employee), lowering down their wages below the minimum wage could bring legal issues to Serenity. Also, in the above case the main factor here that might influence a person to make a less-than-ethical decision is the chief, he might try to make things even more difficult for Serenity if the company doesn’t agree with his proposal. However, Serenity could also present the fact that “The country’s economy also stood to lose substantial tax revenue if the resort were to fail.” (Martocchio, 2020, p.355), to force the chief to work with them in a more ethical manner. Furthermore, the minimum gross monthly wage in France as of 1 January 2021, is EUR1,554.58 for a 35-hour working week; the minimum wage in the US is 7.25 per hour or $262.50 per 35 hours/week; so I do not believe an US employee will be willing to go to another country to earn less than what he could earn in the US; I know an US manager will not be making the minimum US wage in France, but just for comparison reasons. Even if the employee is willing to go to France to help establish and operate the new resort, Serenity will have to develop that special compensation package to compensate the employee for his and his family’s personal sacrifices such as cultural change; also, expatriate packages are very expensive, it includes relocation allowances for housing, education, automobile, home travel, hardship, language courses, and tax assistance and tax equalization, in most extreme cases also include cost of membership to a local golf club, yacht club, gym, etc., expat lite package, and repatriation costs. Therefore, sending an expatriate will cost even more than hiring a local manager, and the issue here is that Serenity is trying to reduce operations and labor costs. Also, if the expatriate goes to France, I believe he will have to deal with the unhappy locals working for the resort which for him will be very difficult to build a healthy corporate culture under those circumstances. The best approach for Serenity will be working with the chief to find a better legal solution that will help both parties.
References:
Grange, J. & Ventejou, C. (2021, March 1). Employment and employee benefits in France:
overview. Thomson Reuters Practical Law. Retrieved from:
Employment and employee benefits in France: overview | Practical Law (thomsonreuters.com)
Hall, B. (n.d.). What to expect in your expat compensation package. BlueSteps. Retrieved
from:Expatriate Compensation and Benefits – What to Include in Negotiations (bluesteps.com)
Martocchio, J. (2020). Strategic Compensation: A Human Resource Management Approach
(10th ed.cix). Boston, MA: Pearson Education.
Last Completed Projects
| topic title | academic level | Writer | delivered |
|---|