Central Queensland University Australia | Challenges of an Australian HR manager may face in London | |

Subject: HRM in the Global Environment
HRMT20022
Subject: HRM in the Global Environment
HRMT20022

Over the last few decades the number of expatriates is increasing worldwide. These men and women represent a very important asset for organisations which are developing new business across the world. These expatriates are generally sending abroad to develop strategies or resolve problems in the host country. Consequently, the organisation has to be informed of any issue that expatriates might face and affect the work abroad in terms of international human resource management (IHRM) and industrial relations (IR) issues. Deb (2009) define IHRM as ‘a strategic process of managing a global and diverse pool of talented people in such a way as to achieve aims and objectives of the organisation both at parent and subsidiary level successfully, follow ethical practices on human and business issues and be adaptable to local cultural norms and other human needs and aspirations’. And Dowling, Festing and Engle (2013, p.242) define IR as ‘The board field of study that looks at wider issues of work and employment’.
The purposes of this essay are to identify and discuss the IR and HRM issues an expatriate from Melbourne could face while living and working in London. In relation to Industrial relations issues, the role of unions, employment contracts, regulations, visas, taxation, labour laws and employ compensations will be discussed. When it comes to human resource management, the essay will discuss culture, language, family, soft skills, allocation, medical secures and weather.
Over the last decade, the participation in trade unions has been decreasing worldwide. The trade unions do not have the same level of power or the same affiliation in all the countries (eds Phelan 2007). Australians believes that trade unions are a fundamental human right. This right has been validated by the government with the federal conciliation and arbitration system from 1993. On the contrary, British’s trade unions have been failure over the time because the lack of government recognition for this kind of unions and their rights (Shaw 2001). In addition, Knox and Nixon (2006, pp. 52-53) suggest that trade unions in the UK are ‘being characterised as being voluntaristic, with minimal intervention from the state in employment relations’. In contrast, Australian trade unions have an active role. They can make a large portion of union-enterprise agreements with widely support of the government. (Knox & Nickson 2006). Nevertheless, the trade union density in 2013 was 17% and 25.4% of the workforce in Australia and United Kingdom respectively (Organization for Economic Co-operation and Development 2015). In addition, Knox and Nickson suggests in the British context that ‘Trade union were perceived as being likely to interfere with the managerial prerogative, slow down the decision making process and create dual source of authority within the organisation’ (2006, pp.52). These differences between Australia and The UK in terms of trade unions have key implications for the manager, such as the active role in the employee requirements, a negotiation skill and develop good relationship.
Today, written labour contract is not necessary but useful when a person starts a new work relation. The contract is normally made under the local labour law. In the case of international work relation (Expatriate labour contract), it is added the period of time that the employee will be in the overseas work, the amount and currency of the payment, any detail about compensation or other incentives offered by the organisation and all the repatriation terms (Martin 2004). Furthermore, it is no mandatory but recommendable make a decision about which will be the applicable law in case of dispute. The law applicable in the employment contract might be a mutual agreement of the parties otherwise according to the international labour law, the law applicable will be where the worker habitually does their work (Hill & Chong 2014).

Australia as a part of commonwealth has access to different kind of visa depending on the time and the work that the Australian worker is going to do in UK. There are options for less than 6 months or for more than 6 month and if the worker is classified as skilled worker or temporary worker (Department of Visa and Immigration 2015). For example, a worker who will work more than 6 months and he has been offered a role in his employer’s UK branch is able to submit an application as skilled worker. The worker visa and dependants must be approved before the travel. The organisation and the worker must have all the information about cost or any document needed for the application.

Taxation is other relevant aspect for the expatriates and the organisation because the organisation international taxation approach affects the payments that expatriates will received and the possibility of double taxation for the expatriate. The organisation has many options of approaches according with Dowling, Festing and Engle (2013) the most common options are tax equalization and tax protection. In the former, the company retains the amount of taxes which the expatriate normally pay in the home country and pay all taxes in the host country and in the latter, the employee pays taxes up the amount he would pay in the home country. To illustrate, Australian’s maximum marginal rate for personal income tax is 45% and for United Kingdom is 40% (OECD 2008). If the company chose tax equalization, the difference between the payments will be returned to the expatriate according the employment contract as a global compensation. The double taxation is avoided when both countries have a reciprocal or bilateral agreement in taxation. The UK has many reciprocal or bilateral agreements to prevent double taxation (Daltry & Cotton 2006). In 2003, Australian and United Kingdom signed the “UK/ Australia double taxation convention” which includes in the article 14 regulations about incomes from employment and in the article 22 eliminates the double taxation problem. The differences between the personal income tax in Australia and United Kingdom implies a good negotiation skill for that manager.
Labour laws vary from one country to another. Organisations with international subsidiaries may encounter the differences between both host country labour law and home country labour law. Brown (2012, pp. 130-131) claims that ‘International human resource managers are increasingly confronted by foreign regulations that apply to their expatriate and local employees’. There are at least four issues that the organisation should be noticed in this case. First, the Australian labour law (This includes states and country laws). Secondly, the British labour law which may apply to Australian employee working in the UK soil. Thirdly, Australian labour laws applicable to Australian employee working in Australian company in an extraterritorial soil. Finally, the British labour laws applicable for British people in the Australian company in British soil (Brown 2012). Australian in particular has been changing the labour laws frequently, the last two decades labour laws has been modified with a series of major changes and the unification of federal, territory and states are far away of the end (Mitchel et al. 2010). A fundamental issue for an expatriate is related with the compensation package. Dowling, Festing and Engle (2013, p.335) define compensation as ‘the sum of direct benefits (such as salary, allowances, bonus, commission) and indirect benefits (Such as insurance, pension plans, vacations) that an employee receive from an employer’. The design of the correct compensation package is based on the different factors, such as GDP per person, taxation, inflation, etc (Balsam 2001). Sims & Schraeder (2005) claims that compensation package are affected by the host country’s cost of living. Normally, the expatriate and dependant attempt to live at the same standard of living that they have in the home country, as result the host country cost of living affects the salary. The organisation, to adjust the salary to this new country, collects information about cost of living allowance by an archetypal customer spending prototype to find the differences. Nazir, Hussain and Zaman (2014, pp. 194) states that housing allowance smooth the progress of expatriate in maintaining life style up to the level at home and this compensation part, including taxes, constitutes the greatest Disbursement’. London cost of living is one of the highest in the world, the organisation must be create a compensation package according with this reality. Shanaha and Treuren edn (2003) suggests that all details of the compensation package must be informed to the expatriate before the acceptance of the international assignment. The next section will address IHRM issues that the manager could face. Under Hofstede’s cross cultural management study, this investigation identified five cultural factors: Power of distance, uncertainty avoidance, femininity versus masculinity, individualism versus collectivism and long-term orientation. The power distance represents the acceptance of the unequal power distribution in institutions in other words, the distance between employee and employer in emotional bases (Dowling, Festing and Engle, 2013). British has a low power distance index (35) as Australia (36), regarding the strong class-system in British, in some way they belief that the people should be treated as an equal (The Hofstede Centre, 2015). Other factors as individualism versus collectivism and femininity versus masculinity are pretty close. The former, represents the degree of people interdependence in a society and the latter represents the society’s values, femininity orientation prefers quality of life and interpersonal relationships while masculinity orientation prefers success and heroism (Dowling, Festing and Engle, 2013). The principal differences are in the uncertainty avoidance index (UAI) and the long-term orientation index (LOI). Firstly, the UK (LOI 51) is more concern about maintain relationship in the long-term than Australia (LOI 21). Secondly, the British (UAI 35) seem to be more adaptable a new situation without any fear than Australian. Finally, The Australian (UAI 51) do not feel anxiety or happiness when confront new situation (The Hofstede Centre, 2015).
Moreover, the family adjustment in the host country can be a point of failure or success for the expatriate. Lee and Kartika (2014, pp. 5485) claim that ‘the overseas assignment in a changing environment requires the family restructure, develop, and adapt in response to the demands of the new situation. Pressures within family will affect expatriates’. This adaptability potential might be part of the selection process and it should be under the same criteria as for expatriates. In fact, spouse’s expectations and children needs are important in the final decision. Kraimer, Wayne and Jaworski (2001) points out that the success of the international assignment is related whit family adaptability, cohesion and communication. In addition, children’s necessities as school, playgrounds or the help of house keeper should be discussing before the acceptance of the international assignment (Dowling, Festing & Engle, 2013). Normally, the expatriate’s family is one of the most stressful factors, the family support is vital to accept the assignment or adjust the expatriate in the new environment (Kraimer, Wayne & Jaworski, 2001). Failing in the correct balance between work and family would have negative effect on the expatriate’s work satisfaction and performance (Lee & Kartika 2014).
In addition, Individual aptitudes principally emotional intelligence (EQ) and cultural intelligence (CQ) have an impact on the international assignment because affects in the expatriate adjustment and commitment. Emotional Intelligence is related to understand the feelings and emotions about him and other which generate empathy (Lee & Kartika 2014). Earley and Ang (2003) suggest that CQ is the capacity of a person to adapt and understand the cultural settings and be functional in a multicultural situation. The high EQ means that the person can adapt better in the international environment and high CQ means that the person has good cognition about new culture, also is motivated to adapt their behaviour to the new culture and the sensitivity and flexibility to adapt to new cultural surroundings (Lee and Kartika 2014). In the British context, Konx and Nickson (2006) suggest that British managers prefer solve their employee problems one by one, so the Australian Human Resource manager (The expatriate) must have high emotional intelligence quotient to deal with any problems and keep open communication line with employees.

The successful of an expatriate depend in some degree to the personal networks for the expatriate and his family. Lee and Kartika (2014) claims social capital and social networks during international assignments may have great impacts for expatriate’s effectiveness or performance success. The support of the social network enables expatriate and his family to be confortable in any problem that they can face. For this, the allocation should be looking under two scopes, social networks and actual standards of living. For an Australian expatriate may be the best allocation is in a London suburb called Earl’s Court, this part of the city contains the major part of Australian emigrants in the city (Ralph 2013).
The language’s differences not only include the language itself but also accent, slangs and technical or specialized dialect. The Australian and British language is English with minor differences. Indeed, English- speaking countries, such as Australia and the UK, belief that the language skill are unimportant and do not considers this ability in the selection process (Dowling, Festing & Engle, 2013). British are very traditional in the use of correct English. The international manager must speak clear, respectful and properly English.
The different seasonal periods between hemispheres may cause a missing seasons during the expatriate work. In London, the spring is between March and May, summer is between June and August, autumn is between September and November and winter is between December and February. While in Australia, spring is in the British’s autumn, summer is in the British’s winter, autumn is in the British‘s spring and winter is in the British’s summer. This also causes some unbalance in the adjustment for the expatriate and family.
To conclude, there are many factors which can affect the expatriate assignment in an international subsidiary some of them are related with Industrial relations such as trade unions, labour law, employment contract, taxation and labour law, and the others are with international human resource management, such as cultural differences, family, soft skills and social networks. The organisation should find the perfect candidate who has the social and technical skills and the family support to achieve successfully the international assignment.

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