Effectiveness of expatriates remuneration in shell

Under the Applied Research Method I have discussed the effectiveness of the expatriates’ revenue. I have selected the Shell Company which is having globalised business network and there are lot of expatriates are working under the Company.

Through this research wanted to achieve & identify effectiveness of expatriates’ remuneration in Shell. After establishing the key objective and specific objectives I have realised limitations of the study.

Under the literature review part I have found lot of relevant theories which are explaining the revenue of expatriates and its influence to the general business environment. Also I have presented details of previous researches and secondary sources which are relevant to the topic.

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Under the research methodology discussed both primary and secondary data collection methods. Under primary research methods can use survey method and in-depth interviews. As secondary sources we can use the internet, news papers, trade magazines and government institutional data. Especially I can get more details from the Shell Company’s internal records.

SECTION 01: INTRODUCTION

Who is Expatriate & Why need expatriates

The person who is living for short time period or permanently in another county calls expatriate. Purely the culture and the country should be different than the originals. From ancient time this trend is practicing. But in the 20th century this conditions improved and at presently there are lot of expatriates are working in many global territories. Normally employers are sending their capable employees to some subsidiaries in abroad and get their assistance to expand the business in that market. Also there is a revenue / salary differences in globally and people from developing countries are going to developed countries to earn more money. Lot of skilled professionals is moving to developed countries to increase their income. Globally expanded expatriates are generally earning higher income compared to locals.

Any established multinational can recruit employees locally. But they recent to recruit 100% due several issues as to maintain original corporate culture and identity use experienced people who were working with the same company, minimize the influence level of domestic employees. Also companies sending existing staff members to own subsidiaries in other countries to give better training and teach good practices. Final expectation of the expatriates from their side is to get better financial benefit and get career advancement. From the employers side tries to get skilled labours and minimum investments for the HR function.

When we consider the remuneration of expatriates there are lot of differences and revenue policy is based on the cost of living in certain countries. If we take European country the living cost is high and expatriates should get higher salary to cover the cost. Expatriates in developing countries are having enough salary compared to others due to law cost of living. But still there is no more recognized calculation method to salary arrangements for expatriates.

1.2 Selected Company Background (Shell)

Shell Company is a well established energy and petroleum company who is doing operations globally. The mother company of Shell is Royal Dutch Shell PLC which is integrated England and Wales. The company is operating over 100 countries and having over 100,000 staff. Also Shell Company is doing mass production to the world and providing 2% of oil and 3% gas of the world market. There are number of Shell service stations located in the worldwide and delivering the production (3.2 million) gas barrels per day. The Shell Company was recognized as the best company in fortune 500 companies in 2008.

(Shell. (2010, January 07). aboutshell. Retrieved from http://www.shell.com: http://www.shell.com/home/content/aboutshell/)

1.2.1 Global Expatriate Policy of Shell

Shell is having thousands of their employees who are working in other countries. They are getting the maximum benefit of mixing cultures and talents towards performances. Also it is considering the well being of their expatriates.

We examine policies that target international rotators, commuters, international mobility and international business travels. We modified these policies to be flexible and clever to deal with different requirements that we experience day to day. This adds value to these policies rather being just earning and retirement policies. Now we are looking for all inclusive policies that cover everything from lodging requirement to coaching.

(Company, S. (2010, January o6). hrcareer_remunerationbenefits_08052007. Retrieved from http://www.shell.com:)

1.3 Research Aims & Objectives

Shell staff in European region is well paid. The executives are offered sound salaries and benefits that are sufficient for medium class living states. However, to reduce expatriates allowances these benefits need to be resettled. According to that the incentives, housing allowances, cost of living increments need to be changed. By this way we can cut cost involve with these expenses. However, it doesn’t certify the cost effectiveness of this process. As the expatriate remuneration scheme is very sensitive, we should concern that whether business are ready to reduce salaries of their international class business executives. The remuneration scheme that we produce should be attractive to these businesses.

As the expatriate remuneration scheme the salary and benefits for a same job status may be varied and complicated. Shell gain benefit by learning from most respected experts in the field. Therefore it is highly important to identify the effectiveness of this remuneration scheme to achieve following objectives.

Key Objectives

Identify effectiveness of the expatriate remuneration scheme

Other objectives

The compensation scheme should help the company to retain and motivate talented staff of the company and maintain the current excellence in the market place, whilst being cost-effective.

The policy should be consistent among every country where shell operates

Be alert on latest developments in the industry and stay in the benchmark position in the market.

Combine the expatriate package with incentives and performance schemes and make sure that the expatriates get reasonable package.

1.4 Limitations of the Study

Sample size not enough – For 100% accurate conclusion should cover 50% of the total market. Because of difficulties to conduct particular target market researcher should be selected small sample size.

Limited secondary data – There are no detailed information on expatriate’s remuneration of Shell. Also can’t find updated records through any other institutes related to the same industry and having only outdated records.

Researcher has concerned only UK, but in some others countries in Asia, Africa, America, Middle East should consider.

Didn’t put more influence on other macro factors as governmental influences, legal issues & economic changes. Political stability, foreign forces, employments and wages, etc. PESTEEL factors making direct effect to the industry as inflation, cost of construction, country situation, and regulatory framework.

SECTION 02: LITERATURE REVIEW

Expatriates give benefits to multinational corporations (MNCs) when they endorse border spanning roles. They do so by relaying local in rank and identifying opportunities that meet interior needs of MNCs. Many findings indicated that local practice and the diversity of social networks were favorable to the boundary spanning behavior of expatriates, whereas ecological uncertainty and overseas experience had little consequence. By engaging in border spanning activities, expatriates feel less role vagueness and gained role benefits, and were keener to use the resources that were found within special communities of the host country. As well, those expatriates who engaged in more boundary spanning behavior had higher job pleasure and more power within their personal companies. There are lots of theories based on this practical process.

2.1 Theoretical Background

As we discussed earlier, the expatriate scheme break the “hardship” in salary schemes worldwide. These flexible compensation schemes can be used to ensure the equality among employees worldwide. However, the followings actions are excluded from expatriate remuneration policy.

Business visits

Short term international assignments

Joint ventures

Franchise planning

Improved employment of local expatriates

According to Fish and Wood (1997) the international management should have different qualities in completing their assignments in their overseas assignments. Working internationally and obtaining practical knowledge is rather important than the structured training sessions. The competencies that international manger should have are foreign verbal communication skills, transformational, worldwide and transactional communication.

2.2 Opportunities for Expatriates

The term “international skills” represent the knowledge in HRM, culture, values, work ethics and office behaviors in different countries. Gathering such skills will be benefited to executives to go up in their career ladders.

In addition to that they are benefited by the structured mentoring programs for who seeks suitable work for their spouses or partners. And according to some authors 25% of these partners who are male. (Wentworth, 1999:22; Harvey and Wiese, 1998).

2.3 Individual Income Distribution as a Determinant of Economic Growth

First we should talk about how the different allocations of salaries will be incentives to employees. As a result of this a disparity on individual income can be created. Then this assignment discusses the relationship between individual income and the economic growth. This impact of income sharing on the per capita income is a widely discussed topic. (Yun, 1992). The well structured income distributions are excluded from this topic and examine the relationship between individual income and the economic growth. According to that our firs aim is to identify the relationship between per capita income and the economic growth.

(http://findarticles.com/, 2010)

2.4 Connection between expatriation and apparently inequitable salaries

According to HRM theories the expatriation and inequitable salaries pays on the experience of persons. This type of unacceptable conditions should be based on the modernized considerations. Through the ‘flexpatriate’ expense systems (by Senko, 1990; Dolins, 1998) was discussing ht issue. Therefore it is necessary to add allowances and special packages for the basic salary. As per the survey conducted by Foster-Higgins (1996) presented that 34% of participants / expatriated said their expatriate expenses forcefully reduced. In 1996 conducted another survey on the same topic (Sheley, 1996:64) about 351 multinational companies. But they have said that around 31% of participants are not getting expatriate premiums and facing lot of difficulties in some countries.

2.5 Cost Concerns

There’re some campaigns running to salary localization in some countries as Hong Kong, Malaysia and Singapore. (Eg. Fung and Nankervis, 1995; Wes, 1998). Their request to match their salaries with the living cost of the present country as well as their home country expenses.

Lot of multinational has reviewed their existing expatriate packages in the global crisis in 1997 to 1998. As an example Motorola Company is paying salary for 140 expatriates who are working in China and it is higher than salaries of its 5,600 local employees (Anon, 1998) and this shows the difference and the gap between local and expatriates cost. Therefore the company has measured the minimum requirement of the cost and reduced the above gap by using local skilled workers in company process in China.

2.6 Competitiveness in a Global Market

There is a big competition for expatriate remuneration in multinational and especially players in the same industry try to recruit skill labour. Rundle and Yardley, 1999 was discussed the above competition and he says each company should try to reduce their functional cost and offer better payments for expatriates by reflecting broader targets.

Further Rundle and Yardley, 1999:21) has discussed and introduced proposal as to use skilled expatriates from developing countries. Especially from Asian region can recruit many for low remuneration packages as their home cost is far less than European countries. Also Asians can easily adopt to any culture of the world.

SECTION 03: RESEARCH METHODOLOGY

To get accurate result should consider both of qualitative and quantitative techniques and can be used to collect primary data from the target audience. Also can be used effective secondary sources to develop the research and to have a sophisticated output

Figure No: 1 – Research Methodology Structure)

Primary Research Method

Initially collecting raw data / which not exist call primary research data.

3.1.1 Survey Method

I would like propose sources of data collecting through a questioner which has around 10 questions (8 Close ended & 2 open ended) with 30 sub questions. Also has used 4 questions to measure demographic factors of expatriates. Conducted a self administered survey in hand delivered method & through emails. Target audience was representative sample of expatriates working for multinational companies. Minimum 100 expatriates should be in the survey as a sample plan, of above mentioned target audience. Sample size is small because of difficult to find prospective people in this segment and their busy schedules. But through this sample can take clear picture, cause of detailed and accurate questions hit to touch points.

3.1.2 Interview Method

Can be interviewed subject experts, expatriate job creators and professionals who are working. Have being used structured check list to conduct the interview. Sampling plan should be 15 number of above mentioned participants and professionals interviewed and collected information and their own ideas / views on the subject. From probing questions easily can have an idea about the requirements, basic needs, required benefits & etc.

3.2 Secondary Research Method

This method means of using already collected information and gather them and take accurate decision about the subject.

3.2.1 Published Secondary data

Should collect initial relevant documents published by Shell Company. Through annual reports, remuneration reports, HRM policies we can realise limitations and strengths of the existing expatriates policy. It is very important to refer internet and find relevant articles written by industry experts. Also can collect data from past researched focused on HRM practices. Industry magazine articles, web details and mass media will give perfect direction.

3.2.2 Internal data of Shell

Internal data collections as existing customer researches, competitor analysis, marketing and communication plans and other important and relevant data captured. We should refer existing HRM reports as wage registry, employee satisfaction levels, employee turnover levels & etc.

3.3 Data presentation and analysis method

While many specialized in expatriate’s education, psychology, management, and other social science fields achieve research and use statistics to analyze results, many more understand writing the results of research and be relevant it to the real world. Therefore it is vitally significant to be able to significantly analyze a research report to decide if the methods and results are suitable and if they apply as a specialized.

This is through statistical calculations (Mode value, etc) Graphical presentations as charts and graphs should shows that how currently are they practicing and their views on impact. Survey method has analyzed by this methods. Other three methods has used throughout the whole research as findings. But these methods not concentrated as other factors. Through statistical calculations (Mode value, etc) researcher has to be analyzed the survey? Also given the first priority to the survey method and under analysis part deeply discussed only this method. All other findings have applied throughout the whole research.

Although a clear difference between data gathering and data examination is commonly made in quantitative research. This is more common problem for many qualitative researchers. The value of the research is based on the analysis data and the way of presentation of information. Therefore even collected accurate information researcher will fail to use in effective way due to this type of problems. The term of “modes of analysis” is the best matching word than using the “data investigation” in conducting qualitative researches. These modes of investigation are different approaches when gathering and analyzing data. The common thread is that all qualitative modes of examination are concerned primarily with documentary analysis.

3.4 Ethical Implications

Topic of the Research – to give unique impression the title should be changed as “Effectiveness of Expatriates Remuneration in a Multinational Organization (Shell))”. The topic should be contents of global perspective other than limiting too few areas.

Expected Duration – I would like to propose this research should be completed within one month time. Because researcher should have time to get further details from secondary sources as well as primary sources.

Study Methodology – should be presented the validity of any extracted information. Therefore it is necessary to select valid theories and accurate information. When taking secondary information should consider the date presented and relevant and responsible parties who has relies (responsible body or authority).

Recognize Field Researchers and Shell Company base – the research should be conducted by an independent party. To get perfect idea should not head by any internal officer and try to influence for relevant research officers. Should give accurate internal data to them

Required Study – should be realistic on above given objectives specifications. Should refer updated sources and consider on the theories and previous researched done which have mentioned as literature review.

Scientific Background – should collect information and analysis on untouched areas and lack of data available areas. To get the maximum validity should consider the internal existing problems and decision required areas.

Potential Benefits and Risk – there are lot of benefits from the final result of the research. Company can reduce unwanted expenses and give accurate solution to expatriates who are working in other countries. But sometimes some of employees will get reductions from the existing salary and it will be more sensitive risk to the company.

Informed Authority – HR management is having the authority of inform the result to the top management. But it should be the accurate information received from the researcher. Then the top management will decide the package adjustments and will be able to fixed perfect formula to pay expatriates.

Data Protection – Shell Company is a reputed multinational and they cannot violate any data protection regulations. They have to inform this requirement to the research agency and get approval in writing. Also should protect the research findings as an internal record, without forwarding to wrong persons and publishing.

(Association, S. R. (2010, January 7). ethics03. Retrieved from www.the-sra.org.uk: http://www.the-sra.org.uk/documents/pdfs/ethics03.pdf)

CONCLUSION

Through the research should get more accurate data. Especially primary data, which I have proposed, will be more advantage to get relevant data. Survey should be conducted with close ended questioner and sample level should be 100 expatriates working in several countries under Shell. Need to take 20 in-depth interviews get real details. Specifically should be selected more relevant secondary sources to research objectives.

Even we have collected accurate details should properly evaluate and analyze to get perfect details prior to take decisions. I have introduced mode value method to analyse primary data. Also it is necessary to present the collected data in pleasant manner to get the effective decisions based on them.

Also should clearly identify limitations of the research as lack of data, accuracy & the validity of secondary data, language barriers in collecting primary data, legal regulations as data protection activities and company internal records and etc. Finally should conduct the research under proper time frame and get the accurate details.