Group Exercise
 You are an American Executive in the computer
industry.
 You currently manage a manufacturing division for
the company in Santa Clara, California, USA. The
division has 1000 employees.
 You have been offered the opportunity to manage
the company’s manufacturing division in Tokyo,
Japan. That division also has 1000 employees.
 This is a career development opportunity that you
want. It will enhance your experience and future
career growth.
 The company expatriate policy is to select people for
foreign assignments that understand the people
managing differences required for success; and to
financially, and in lifestyle keep them whole while
maintaining competitive compensation and lifestyle.
 You must describe the key cultural differences
between the United States and Japan; and:
 List how each cultural difference will require a
different treatment of employees (U.S. versus Japan)
(can use Hofstede.com, your textbook, economist, CIA factbook, etc.)
What are the key cultural differences in
Japan?
Cultural Factor:
RELIGION
Education
Economics
Politics
Family
Class Structure
Languages
History
Natural Resources/
Geography
The United
States:
Tokyo, Japan:
1. How will you have to manage differently
because of those differences?
1.
2.
3.
4.
5.
6.
7.
.
.
.
.
.
.
.
Compensation
 More than just level of pay
 Health care
 Pension plans
 Vacation
 Personal time off
 Recreation/health facilities
 Great variations within a culture and across cultures
Compensation (Cont’d)
 Great variations across countries
 Many companies look for low-cost labor
 Labor not the only cost a company should consider
 Companies should consider tax issues for both the
company and for the employee
 Perks part of total compensation
Meaning of Compensation
 Exchange of effort and output for wages and benefits
 Western individualist cultural perspective
 Achievement
 Protection or safety net
 Entitlement and obligation
Predicted
Compensation
Practices
across
Cultures
Differences in Performance Evaluation Systems
Across Three Countries
CEO Compensation
 Relative compensation
 Perks and other compensation
 Total compensation
Oceans Apart: CEO Compensation In Several
Countries
Paid Vacation Days in Various Countries
Potential Sources of Costs Associated with
Expatriation
Expatriate Housing Costs in Ten Foreign Cities
Taxes
 Technical and difficult to deal with
 Large number of tax, securities, and currency control
rules
 Consider marginal tax rates and tax-equalization
agreements
Tax Rates Around The World
Living Expenses
 Food, transportation, clothing, entertainment, etc.
 Difficult to estimate due to fluctuations
 Keeping lifestyle and consumption choices
Cost Estimates for Goods and Services in Various
World Cities
Purchase Power Parity
 The degree to which an expatriate’s money will
purchase the same items in a foreign locale.
The Big Mac in Various Countries
The Balance Sheet Approach to Expatriate
Compensation
COMPENSATION
The company has asked how you should be
compensated in order to make sure you are kept
“whole” and that your compensation is competitive.
You must present a rationale and specific amounts and
items that you believe you should receive
Total Compensation Comparison
Items (examples)
Base Salary
Bonus / Incentive Pay /
stock
Health care
Pension plans
Vacation
Personal time off
Recreation/health
Housing
Transportation
Living Expenses
US—Your current cost What you should
(you may use NY $$)
get in Tokyo
INTERNATIONAL MANAGEMENT -- GROUP EXERCISE.
TOTAL COMPENSATION FOR EXPATRIATE EMPLOYEE in
Total Compensation for employee if based in the U.S. :
Direct payments
Base Salary (annual - in U.S.)
U.S
Tokyo
$226,000
$0
$152,000
Tokyo
Support for Adjustment at Foreign Assignment
Home Leave (every 4-8 weeks)
$31,000
Personal Security
Incentive pay / Stock / etc.
$22,000
Car / Driver
Pension plans
$15,000
Domestic Help
Vacation (4 weeks)
$0
Spouse Employment
Personal time off
$0
Child care Provider
Recreation/health
$0
Language / translation services
Housing
$0
Cultural training
Transportation
$0
Repatriation assistance
$6,000
Tax Reduction / equalization
$0
Home Furnishing Allaowance
$0
Education Allowance
$0
Hardship Premium
$0
Goods and services Differential
$0
Temporary Living Allowance
$0
Assignment completion bonus
$0
Extension Bonus
$0
Help Renting U.S. Home
$0
$0
$226,000
Annual Bonus (in U.S)
Health care
Tokyo:
Social Club fees
Imported food and other goods
$0
INTERNATIONAL MANAGEMENT -- GROUP EXERCISE.
TOTAL COMPENSATION FOR EXPATRIATE EMPLOYEE in Tokyo:
Total Compensation for employee if based in the U.S. :
U.S
Direct payments
$226,000
Base Salary (annual - in U.S.)
$152,000
Annual Bonus (in U.S)
$31,000
Incentive pay / Stock / etc.
$22,000
Pension plans
$15,000
Vacation (4 weeks)
$0
Personal time off
$0
Recreation/health
$0
Housing
$0
Transportation
$0
Health care
$6,000
Tax Reduction / equalization
$0
Home Furnishing Allaowance
$0
Education Allowance
$0
Hardship Premium
$0
Goods and services Differential
$0
Temporary Living Allowance
$0
Assignment completion bonus
$0
Extension Bonus
$0
Help Renting U.S. Home
$0
$226,000
Tokyo
$0
$0
Tokyo
Support for Adjustment at
Foreign Assignment
Home Leave (every 4-8 weeks)
Personal Security
Car / Driver
Domestic Help
Spouse Employment
Child care Provider
Language / translation services
Cultural training
Repatriation assistance
Social Club fees
Imported food and other goods
$0