International Expansion (hr Perspective)

MANAGING PEOPLE ACROSS CULTURE HBM- 411

SUPER MARKETS EXPANSION IN TO INDIA

SUBMITTED BY: MOHAMMAD PARVEZ NAIM SUBMITTED TO: PETER CARTON STUDENT ID

: 6565700

DATE

: 5TH MAY 09

Executive summary: The purpose of this report is to identify and evaluate key IHRM issues face by Coles during the set up phase of their expansion in to Indian market by opening 5 supermarkets by the end of 2011. The key issues identified requiring action to be taken includes Recruitment and selection, training and development, performance management and compensation. The key Recommendations of this report are as follows: Recruitment and Selection 1. It is recommended by Awasthappa K (2006) that ethnocentric approach may be appropriate during the early phase of international business because firms at this stage are concerned with transplanting a part of business that has worked in home country. 2. It is recommended by Dowling P (2008) that Coles selection criteria should be based on expatriate’s Technical ability, cross culture suitability, family requirement,

country/culture

requirement,

language

criteria

and

MNC

requirements. 3. It is recommended by Dowling P (2008) Recruiting internal candidate for Indian headquarters is likely to results in better control and coordination of their subsidiaries as PCN is more familiar with home office goals, objectives, policies and practice. Training and development 1.

It is recommended by Mond A Noe (2002) that pre-departure training for Coles Expatriates should be designed to fill the cultural gap between the home country and host country and it should include content like cross culture training, language training, practical training and miniculture training

2.

It is recommended by Munir H.Tayeb (2005) that Coles should give pre departure training to its Key personnel in host nation headquarters. Munir H. Tayeb (2005) further argues that pre departure training conducted in host country with the interaction of host country employees will help the expatriates to understand the local customs, cultural insights and social aspects leads to intercultural communication skills and business performance.

3.

It is recommended by E. Dunbar & A. Katcher (1989) that it is critical that the family should be included in the orientation programs.

Performance management 1. It is recommended by Cadwell M (2000) that Coles should use performance management model for their Indian subsidiaries which is (1) planning performance, (2) monitoring performance, (3) Analysing performance, (4) Improving performance and (5) maintaining performance. 2. It is recommended by Bascal Robert (1999) that Coles should choose one of the following three approaches for evaluating employee performance. They are (1) Rating system (2) Ranking system and (3) appraisal by objective and standards. 3. Lutahns & Doh (2009) argues that, according to the hofstede`s cultural dimension, India is a high collectivism country where promotion is given on the basis of seniority. So, it is recommended for Coles to give promotion on experience basis. Compensation 1. It is recommended by Briscoe & Schuler (2004) that Coles should meet certain objective while developing their international compensation package in order to be effective. These are (1) providing the incentive to leave the home country for foreign assignment; (2) maintaining a given standard of living; (3) should take career and family needs into consideration and (4) Facilitating re-entry into home country at the end of foreign assignment.

2. It is recommended by Dowling et al. as cited in Shen J (2003) that Coles key component for International rewards and compensation should include; •

80% Base salary as a primary component of package of allowances.

•

10% Foreign service inducement or hardship premium

•

5% Allowances (ie.cost of living allowance, housing allowances)

•

5% Benefits (ie. Pension plans, medical services, social security, vacation, special leave)

3. It is recommended by Briscoe & Schuler (2004) that during the set up phase Coles should choose Negotiation/ad hoc approach for compensating its expatriates.

Table of Content

Executive Summary………………………………………………………………. 1.0 Introduction…………………………………………………………………… 1.1 Aims and scope……………………………………………………….. 1.2 Research methodology………………………………………………… 1.3 Limitations……………………………………………………………… 1.4 Assumptions…………………………………………………………….. 1.5 Company background…………………………………………………… 1.6 Why India?................................................................................................. 1.7 Culture comparison………………………………………………………. 2.0 Body of the Report……………………………………………………………….. 2.1 Recruitment and selection………………………………………………… 2.2 Pre-departure, on-going, induction training and development……………. 2.3 Performance management…………………………………………………. 2.4 Compensation………………………………………………………………. 3.0 Conclusion 4.0 Key recommendations………………………………………………………………. 5.0 References……………………………………………………………………………

1.0 Introduction It is the intention of this report to identify and explore the key IHRM issues for the Coles, intending to expand their business in India by opening their retails stores in major cities. The purpose of this report is to analyze the Implementation of key IHRM practice during the set up phase in India. 1.1 Aim and Scope The purpose of this report is to identify the key IHRM issues for the Coles group indents to expand in India. The scope of this report will identify key Issues faced by a multinational company while expanding overseas during the set up phase and will recommend proper actions to be taken. This report will also seek to; •

Propose Recruitment and selection criteria, whether to recruit Indian CEO internally or externally

•

Propose Training and development, whether pre-departure training should be held in Australia or India

•

Propose Performance and management, whether promotions should be on merit basis, experience basis…..(need to write more)

•

Propose compensation, what compensation packages Coles should give to their expats in order to achieve set up targets

1.2 Research Methodology For the purpose of this report secondary data will be used. Secondary data is defined as information already collected or published for purposes unrelated to the research at hand (MaCarthy, etal, 1997, pg 149). The Information will be collected from class textbook, journals, websites, swinburne`s online data bases, academic textbooks, company website, business reports.

1.3 Limitations

1.4 Assumptions •

The Cost benefit analysis estimated that this project would cost $35 million

•

In 2009, it is assumed that Coles will establish it’s headquarter and one super market store in Delhi.

•

In 2010, it is assumed that Coles will establish 2 other supermarket stores in Mumbai

•

In 2011, it is assumed that Coles will establish 5 new supermarket stores, two in Chennai and three stores in Bangalore.

•

It is assumed, during the set up phase Coles projected revenue growth would be $7 million and in second year it would be $15 million.

•

Within first 3 year of operation it is assumed that Coles will achieve break even. 1.5 Company Background

Coles group limited is an Australian company which is engaged in super markets, liquor and convenience stores from the last 89 years. In 1960, the company opened its first supermarket in North Balwyn, Victoria. By 1973, Coles achieved its aim of establishing a supermarket in every Australian capital city. Coles is owned by Wesfarmers ltd. Coles is full service supermarket operating over 760 stores throughout Australia and employing more than 92,000 people. Today Coles is a leader in Australian food retailing with over

11 million customer doing transaction in a week. Coles offers customers convenient shopping that aims to fulfill all of their expectations and requirements under one roof and it is renowned for their daily cheaper prices quality goods. Business proposals: During the set up phase following personnel will be recruited: •

It is proposed that the Chief Executive officer (CEO) will be selected internally (from Australia), successful candidate must possess 8 to 10 year experience in sales and retails management with a strong understanding of host nation business culture.

•

It is proposed that the Chief Financial officer (CFO) will also be selected internally (within Australia), successful candidate must possess 5 to 8 year experience in international Accounting practices and standards. The candidate should have prior experience of practicing during the set up phase in overseas country.

•

It is proposed that the marketing manager should be recruited externally (from India) must possess 10 to 15 years marketing experience in host nation. The candidate should have strong understanding of Indian shopping culture and prior experience of marketing with MNC during the set up phase.

•

It is proposed that the Human resource manager should possess 7 to 10 year experience in recruiting staff and providing on going training and development programme for the retail staff, to be recruited from the host nation. This manager needs to be fluent in English and in Hindi. Also, HR manager must possess excellent skills in writing employment contracts and negotiating compensation and benefits in order to achieve business goals.

•

It is proposed that the Logistic and distribution manager must posses 5 to 8 years experience in transportation, stock control, warehousing, and ensuring structures in place to monitor the flow of goods and materials. This manager should be recruited internally.

•

It is proposed to recruit three business managers for food. Each one for Fresh foods, consumable (package foods) and for Meat. These managers should be selected externally (from India) must possess 10 year work experience in their field.

•

It is proposed that, in each store there will be one store manager, one assistant manager to run stores on weekends, fresh food manager, two back office people for banking and pay roll, 20 personnel in stores for replenishment of the stock on the shelfs, for costumer service desk and general cleaners.

1.6

WHY INDIA?

Indian market has a huge potential for retail sector. Indian retail sector is one of the fastest growing retail sector in the world. Indian shopping culture is changing, now people do more shopping in supermarkets. In India, Coles potential customer are middle class society. In the past few years’ Indian middle class society has grown reasonably and also the income level rises. India is changing and it is a best time for Coles to enter in to Indian market and take advantage of early starters. With the help of effective IHRM strategy Coles can easily penetrate in to the Indian market. 1.7 Cultural comparison (Parent company and Host Company Nation) In the era of Globalization, understanding cultural influence is very important.

With the help of Hofstede cultural dimensions, we can sum up the differences between Australia and India below:

•

Dimensions Power Distance

Australia Low Power Distance (low

•

Individualism/ Collectivism

level

of

inequality

India High Power Distance in (accept that power is distributed

society)

unequally)

Individualism

Collectivism

(individual rights are paramount)

(dependence

on

group

human relations oriented) •

Masculinity

High Masculinity

and

(assertive, competitive business Very High Masculinity culture, stress on equity and (big gap between men’s and competition)

women’s

values,

stress

on

equity and performance) •

Uncertainty Avoidance

Low UA (tolerant of different opinions, Very High UA society try to have as few rules as (strict laws and rules, low possible)

tolerance

of

deviant

resistant to change) •

Short term orientation

Time

Long term orientation Source: Hofstede (1980) & (Chhokar, 2000; Sinha, 1997)

PCN (Australia) Individual work ethic

HCN (India) Dependence on the group

Low regard for rules

Respect for rules

Face-enhancing behavior

Face-saving behavior

Top down management

Bottom up management and teamwork

Strong self-assertion

Weak self-assertion

Exceptional negotiating skills

Poor negotiating skills (respect and save others face)

Concern of self-interest

Concern of harmony

Source: Adapted from Shimizu, N (1995), pp. 50-51 and Hsu (1971)

2.0 Body of the Report

ideas,

2.1 Recruitment and selection It is the intention of this paragraph to analyze the recruitment and selection criteria to be used to recruit CEO for the Indian venture. Also, this paragraph intends to identify whether to recruit CEO for Coles Indian Headquarter internally or externally. Dowling P (2008) argues it is essential to note that recruitment and selection are isolated processes and both processes will operate efficiently only if they are able to do the staffing process effectively. Perlmutter(1969) as cited in P. Dowling (2008) identifies 4 approaches MNC`s adopts for managing and staffing their subsidiaries. These are Ethnocentric, polycentric, geocentric and regiocentric. In Ethnocentric approach all key management positions are held by parent company national. In this approach subsidiaries are managed by staff from home country (PCN). The polycentric staffing approach requires host country national to be hired to manage subsidiaries (HCN) who are seldom promoted to positions at headquarter. Polycentric approach removes the worry of language barriers, expensive training periods, and cross culture adjustment problem of managers and their families. Geocentric approach is about staffing best people for the key jobs throughout the organization, regardless of nationality. Seeking the best person for the job, irrespective of nationality is most consistent with the underlying philosophy of global corporation. The last approach is regiocentric, regiocentric approach reflects the geographic strategy and structure of the MNC. Like the geocentric approach, it utilizes the pool of managers but in a limited way. In regiocentric approach the staff can move outside their country but only with in the particular geographic region. The regional managers in this approach do not promoted to HQ positions but enjoy degree of regional autonomy in decision making. Awasthappa K (2006) argues that ethnocentric approach may be appropriate during the early phase of international business because firms at this stage are concerned with transplanting a part of business that has worked in home country. For example, during the early phase of internationalization companies are more concerned about penetrating in to host country market along with their values, beliefs, policies and procedures which require a candidate who has strong knowledge of companies’ core value system.

Compton (2002) argues that, while establishing selection criteria it is useful to specify the essential and desirable qualities for the job. Future decisions will be easier to justify if these are measurable in some way. For example, it is better to specify the levels of responsibility and accountability and specific competencies required rather than simply ask for relevant experience. Dowling P (2008) identifies selection criteria which Coles should use for expatriate selection. The selection criteria should be based on expatriate’s Technical ability: which refers to person ability to perform the required task, cross culture suitability: refers to adaptability of the person in to the new environment or previous experience of working in a different culture. P. caliguiri (2000) as stated in Dowling P (2008) argues that cross culture attributes should include cultural empathy, adaptability, diplomacy, language ability, positive attitude, emotional stability and maturity, Family requirements: refers to support of family (spouse) for taking foreign assignment and willingness to go abroad, Country/cultural requirement: refers to the host country immigration rules. In some countries it is essential to give reason for using PCN rather than HCN also some immigration rules give visa only to expatriates not to their family and children which may result in rejection of offer by expatriate, language criteria: this refers to capability of expatriate to speak host country language fluently and MNC requirements: which refers to situational factors which often have an influence on selection decisions. For example, MNE may consider the proportion of expatriate to local staff when making selection decisions, mainly as an outcome of its staffing philosophy. However, operations in particular countries may require use of more PCNs and TCNs. Dowling P (2008) argues an advantage for Coles to use internal candidate for Indian headquarters because it likely to results in better control and coordination of their subsidiaries as PCN is more familiar with home office goals, objectives, policies and practice. Whereas, there are certain disadvantage also of using internal candidate. Aswathappa K (2006) argues that key disadvantage of using internal candidate is the excessive cost of selecting, training, and maintaining expatriate manager and their families abroad. In conclusion, it is recommended for Coles to use internal candidate for their Indian headquarter which is likely to result in better control and coordination of their foreign subsidiaries. Moreover selection criteria should be based on expatriate’s

technical ability, cross culture suitability, family requirements, country and cultural requirements, language criteria and MNC requirement. 2.2 Pre-Departure, on site and Induction Training and development The Intention of this paragraph is to explore and identify the type of pre departure training should be given to key personnel (PCN) of Coles and where to give, in home nation or in host nation, as a part of their strategic entry plan in Indian market. Mond A Noe (2002) identifies three phase training programme for foreign assignments which are pre departure phase, on-site phase and repatriation phase. In pre departure training phase employees needs to receive language training and an orientation on the new country’s culture and custom. E. Dunbar & A. Katcher (1989) argues, it is critical that the family be included in the orientation programs. Mond A Noe (2002) further argues that predeparture training for Coles Expatriates should be designed to fill the cultural gap between the home country and host country and it should include content like cross culture training methods range from presentational technique, such as lectures and stimulation that expatriate and their families attends on custom and culture of host nation, Language training and practical training. Practical training seeks to help the expatriate manager and family feel “at home” in host country. In addition, Pre departure training should also include experimental exercise such as miniculture training which allows expatriate and their family to spend some time with the family in the home country from the ethnic group of the host country. For example, the pre departure training should design and given in such a way that Coles key personnel should have a proper understanding of India’s Political, social, legal and business culture, As well as health issues; emergency procedures; day-to-day living; strategies for adapting to an international environment; and ongoing communication with the program and also how to deal with the Indian costumers. For example; Fred Luthans (2005) argues bargaining for goods and services in India is common, in contrast to the western culture, where bargaining might be considered rude or abrasive. Therefore, expatriate should know how to deal with the Indian customers.

Munir H.Tayeb (2005) argues that Coles should give pre departure training to its Key personnel in host nation headquarters. Munir H. Tayeb (2005) further argues that pre departure training conducted in host country with the interaction of host country employees will help the expatriates to understand the local customs, cultural insights and social aspects leads to intercultural communication skills and business performance. Peter T Burgi (1999) argues a mentor who has himself been an expatriate will be more likely to understand the challenges of international mobility, and be able to explain to top level management any problems regarding the expatriate’s performance and what may be expected from him. So, mentorship can be offered to a person with pervious expat experience like CEO of the company. Peter T Burgi (1999) further argues that mentor should be in touch with the expatriate by visiting the expat`s work and living place. The mentor should make the maximum use of technology like emails, newsletters, phone calls, fax etc. for being in touch with expatriate. P.R Harris (1991) as cited in Mond A. Noe (2002) argues, on site training involves continued orientation to the host country. Expatriate and their family may be paired with a mentor who helps them understand the new, unfamiliar work environment and community. Warnich et al. (2005) argues that the Induction program reduces the adjustment problem of new employee by creating a sense of security, confidence and belonging to them. Michael Meighan (2000) argues that it is the responsibility of the HR department to design and provide induction training to the new employee. Warnich et al (2005) argues the number of people like supervisor, manager, mentor, head of department etc are involved in implementation of induction training program. P. Caligiuri et al (2001) defines key advantage of pre-departure training as `intervention which is designed to increase the knowledge and skills of expatriates to help them operate effectively in the unfamiliar host culture. Whereas, Scullian H (2006) argues key disadvantage as pre-departure training sometimes seen as a being too short duration to have a long time effect; also pre-departure stressors may be very different from the reality if the situation. In conclusion it is recommended for Coles to provide pre departure training to their expatriate on India`s Political, social, legal and business culture. In addition, Coles pre departure training should include content like cross culture training, language training and Practical training.

2.3 Performance Management The intention of this paragraph is to analyze the Coles`s performance management system for its international Assignees. Briscoe & Schuler (2004) argues the performance management system used in international arena relates to many IHRM responsibilities, such as evaluating international assignee and foreign manager for pay increase. Briscoe and Schuler (2004) further argues The IPM system also plays an important role in performance feedback, individual job assignments, development planning, and identification of training needs. Brisco & Schuler further argues that the performance evaluation system needs to take account of both international and local-culture of host company standards into account because the performance criteria in the parent country may not be the same as in the foreign environment. Cadwell M (2000) argues Coles should use performance management model for their Indian subsidiaries which is (1) planning performance, (2) monitoring performance, (3) Analysing performance, (4) Improving performance and (5) maintaining performance. For example Coles should first establish expectations, what is expected? Then Coles need to monitor the performance, Are we on right track? Then analyse the performance of the company, if there is any problem take measures to improve it and lastly maintaining the pace of performance. Bascal Robert (1999) argues that Coles can choose one of the three approaches for evaluating employee performance. They are (1) Rating system: this system is very common. Rating systems can be best described as “workplace report cards,” much like the ones teachers in elementary schools use for their students. They consist of two parts: a list of characteristics, areas, or behaviors to be assessed and some scale or other way to indicate the level of performance on each item. (2) Ranking System: Ranking systems involve comparing people against each other and determining whether an employee is better than, the same as, or worse than his or her colleagues on the basis of some set of criteria (e.g., sales totals or management ability and lastly, (3) Appraisal by Objective and standards: This system involve setting targets for each employee. Basal Robert (1999) suggests that using individual targets is the better way to access performance. Shipper, F., Hoffman (2007) suggests that the mentor can play an important role in improving performance of

expatriate in host nation. Shipper, F., Hoffman (2007) argues that, if the mentor will be ex-expatriate than he is more likely to improve the performance of the expat because of his previous experience. Coles should consider culture diversity while giving rewards and promotion to their employee for outstanding work. Hodgetts & luthans (2006) argue that rewards system varies from one culture to another. For example, in some countries, personnel who do outstanding work are given individual rewards in the form of bonus and commission while in other cultural norms require group rewards and individual rewards are frowned on. Luthans & Doh (2009) argues, according to the hofstede`s cultural dimension, India is a high collectivism country where promotion is given on the basis of seniority. So, it is recommended for Coles to give promotion on experience basis. It will help Coles in maintaining harmonious relation between the employees. For example, if Coles gives promotion on the basis of merit than it is likely to results in inharmonious relations and there will be more chances of ego clash between the employees. Aswathappa K (2006) argues that the key advantage of giving promotion on seniority basis is the company can utilize the decade long experience for its benefit and Also, Cooperation between workers is generally not hindered by competition for subjectively determined promotions.Whereas, Harrison A (2000) argues that the key disadvantage of giving promotion on seniority basis is less motivation in employees as compared to merit basis promotion because everyone is motivated by self interest. In conclusion, it is recommended for Coles to use performance model evaluating company’s performance and should use one of the three approaches for evaluating employee’s performance. In addition, it is also recommended for Coles to give promotion on the basis seniority. 2.4 Compensation The intention of this paragraph is to analyze and explore the type of compensation packages and benefits should be given to Coles key personnel in order to achieve set-up targets during the first two years of operation in India. Cynthia D. Fisher, et al as cited in Aswathappa K (2006) argues Financial benefits , along with the career prospects’, motivates an individual to accept a foreign assignments. If these expectations are not met

during the assignments than it is likely to results in decline motivation and expatriate performance can suffers.

Puccino S (2007) argues that expatriates compensation

packages poses unique challenges compared to home country employment, such as preparing expatriates packages that are reasonably cost effective while still attracting and motivating. Briscoe & Schuler (2004) argues that Coles needs to meet certain objective while developing their international compensation package in order to be effective. These are (1) providing the incentive to leave the home country for foreign assignment; (2) maintaining a given standard of living; (3) should take career and family needs into consideration and (4) Facilitating re-entry into home country at the end of foreign assignment. Dowling et al. as cited in Shen J (2003) argues that Coles key component of international rewards and compensation should include; •

80% Base salary as a primary component of package of allowances.

•

10% Foreign service inducement or hardship premium

•

5% Allowances (i.e. cost of living allowance, housing allowances)

•

5% Benefits (i.e. Pension plans, medical services, social security, vacation, special leave)

Briscoe & Schuler (2004) argues that during the set up phase Coles can choose Negotiation/ad hoc approach for compensating its expatriates. Briscoe & Schuler (2004) further argues, when the firm first start sending employee on international assignments and while their number of assignees is relatively low, the common approach for determining pay and benefits of expats is ad hoc or negotiation approach. This approach is quite simple in which compensation packages for each individual considered for an overseas assignment. Harzing (2004) argues Coles should choose balance sheet approach during the second or third year of their expansion in India when they will have more expatriates for managing their Indian subsidiaries. Briscoe & Schuler (2004) argues balance sheet approach is followed by most Multinational when their international business expands to the point where the firms have a large number of expatriates. In addition, balance sheet approach has number of bases to choose from depending on the period of foreign assignment. For Instance, if the international assignment is long (three to five year) and assignee often go from one foreign country assignments to other than International standard will be most appropriate base. For example, during the set up

phase of the company Coles can choose ad hoc approach for compensation which allows company to negotiate individually to the expatriates on the basis of their post, responsibility and tenure of the assignment. And later, Coles can choose balance sheet approach, when they have more expatriates. Briscoe & Schuler (2004) argues that key advantage of adopting Ad hoc compensation approach is that it is simple in nature and goes well during the early days of internationalization whereas, Harzing (2004) argues key disadvantage of using balance sheet approach is that it can create disparities and inequities between parent company nation (PCN) and third country nation (TCN) and also it can be expensive. In conclusion, it is recommended for Coles to compensate their employee well so that they should always motivate towards achieving organizational goals. For achieving set up target goals Coles needs to design effective compensation packages for their expats which should include allowance, benefits as well along with the base salary.

3.0 Recommendations Recruitment and Selection 1. It is recommended by Awasthappa K (2006) that ethnocentric approach may be appropriate during the early phase of international business because firms at this stage are concerned with transplanting a part of business that has worked in home country. 2. It is recommended by Dowling P (2008) that Coles selection criteria should be based on expatriate’s Technical ability, cross culture suitability, family requirement,

country/culture

requirement,

language

criteria

and

MNC

requirements. 3. It is recommended by Dowling P (2008) Recruiting internal candidate for Indian headquarters is likely to results in better control and coordination of their subsidiaries as PCN is more familiar with home office goals, objectives, policies and practice.

Training and development 4.

It is recommended by Mond A Noe (2002) that pre-departure training for Coles Expatriates should be designed to fill the cultural gap between the home country and host country and it should include content like cross culture training, language training, practical training and miniculture training

5.

It is recommended by Munir H.Tayeb (2005) that Coles should give pre departure training to its Key personnel in host nation headquarters. Munir H. Tayeb (2005) further argues that pre departure training conducted in host country with the interaction of host country employees will help the expatriates to understand the local customs, cultural insights and social aspects leads to intercultural communication skills and business performance.

6.

It is recommended by E. Dunbar & A. Katcher (1989) that it is critical that the family should be included in the orientation programs.

Performance management 7.

It is recommended by Cadwell M (2000) that Coles should use performance management model for their Indian subsidiaries which is (1) planning performance, (2) monitoring performance, (3) Analysing performance, (4) Improving performance and (5) maintaining performance.

8.

It is recommended by Bascal Robert (1999) that Coles should choose one of the following three approaches for evaluating employee performance. They are (1) Rating system (2) Ranking system and (3) appraisal by objective and standards.

9.

Lutahns & Doh (2009) argues that, according to the hofstede`s cultural dimension, India is a high collectivism country where promotion is given on the basis of seniority. So, it is recommended for Coles to give promotion on experience basis.

Compensation 10. It is recommended by Briscoe & Schuler (2004) that Coles should meet certain objective while developing their international compensation package in order to be effective. These are (1) providing the incentive to leave the home country for foreign assignment; (2) maintaining a given standard of living; (3) should take career and family needs into consideration and (4) Facilitating re-entry into home country at the end of foreign assignment. 11. It is recommended by Dowling et al. as cited in Shen J (2003) that Coles key component for International rewards and compensation should include; •

80% Base salary as a primary component of package of allowances.

•

10% Foreign service inducement or hardship premium

•

5% Allowances (ie.cost of living allowance, housing allowances)

•

5% Benefits (ie. Pension plans, medical services, social security, vacation, special leave)

12. It is recommended by Briscoe & Schuler (2004) that during the set up phase Coles should choose Negotiation/ad hoc approach for compensating it expatriates 4.0 Conclusion The Key IHRM issues during the expansion of Coles into India are associated with Recruitment and selection, training and development, pre-departure, on going, induction training and development, and Compensation. Firstly, In Recruitment and selection it is recommended for Coles to adopt ethnocentric approach for managing their Indian subsidiary. It is also recommended for Coles to consider Technical ability, cross culture suitability, family requirement, country/culture requirement, language criteria and MNC requirement for selecting expatriates. The above recommendations are likely to result in best person on the job who can be well adjusted into the host nation environment along with his family which finally increases the success rate of foreign assignment. The second problem of Coles is related with pre-departure training and development of

expatriates. For the successful foreign assignments it is recommended to provide effective pre-departure, on going and induction training to the expatriates. It is recommended that content of the pre-departure training should include cross culture training (i.e. Lectures, orientations program, stimulation etc), language training, practical training and miniculture training. Also, after arrival into host country expatriate should get proper on going training and induction training. The adaptation of all above recommendation is likely to results in well trained expatriate who will be aware of India1s social, legal, political and business culture. Also, the above recommendation will help the expatriate in adjusting in to the new culture. Coles third problem is associated with Performance management. It is recommended for Coles to adopt proper performance management system in order to evaluate company’s and employees performances. In addition, it is highly recommended for Coles to give promotion to their employees on the basis of seniority because India is highly collective society, if Coles will give promotion on the basis of merit than it will create inharmonious relation between the employees. The last problem is related with compensation. It is recommended for Coles to design effective compensation packages for their expatriates. It is argued that expatriate is motivated to career prospects along with the financial benefits, if its expectation is not met, it will result in lack of motivation in expats. Furthermore, compensation package should include allowance and benefits along with base salary. These recommendations are likely to results in well motivated expatriate which finally increase the success rate of the foreign assignment. Therefore, above are the four IHRM problems and recommendations to solve those problems.

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