Contribution #14: Tax Rates for High Earners Increasing Around the Globe

Staying in line with Chapter 15, I found an article from the SHRM website that highlighted the intensity of the global tax rate market and the effect it might on offshoring employees. Especially for American companies, it is important for their HR department to keep an eye on the personal income tax rate when trying to relocate employees or giving input to management regarding their expansion to a country overseas. HR managers might have a hard time convincing employees to move to Europe for business when personal income tax rates are roughly 50 percent in the U.K. If the company expects to move operations to the U.K., HR must be able to offer better benefits or a higher salary to compensate for the high tax rates. However, if they wanted to send operations and employees to Denmark, it would be a little easier because they just lowered their top rate by 7 percent. HR might also recommend against moving to Sweden, Japan, or Chile, countries that hold the highest rates in their respective global regions. I find this similar to what is happening in the United States. Even in recent free agent negotiations in sports, teams are making note to players that their state has no state income tax which means they make more money than they would in a state that has a high state income tax. It is just another benefit that the “employer” can offer to its demanding “employee.”

Contribution #13: Education-Human Capital

The role of managing HR globally, including different strategic goals, depends upon the education available to the workforce. HR managers must assess the type of work that makes the most sense to send to foreign countries. Countries that give their citizens more educational opportunities have higher levels of human capital. The amount of human capital that a country offers determines whether companies send their low-skill work offshore because it costs less, due to the lack of education offered in the foreign country. The usually involve jobs that require both low skills and low wages, as previously mentioned, to give the company a competitive advantage in that market. How educated the workforce is affects HRM because they have to know the knowledge, skills, and experiences that have economic value in that country; which directly impacts how much training HR has to do and how much training it might have to give to expatriates to train those employees.

Contribution #12: Managing the Economic Downturn

Chapter 15 is all about managing Human Resources globally. In the brief article I found, I was clueless as to how other countries might perceive their own jobs in society and the implications it has on organizations, especially in India. It talked about the paternalistic nature of the companies and how they are less likely to proceed with layoffs during an economic crisis. This is crucial for businesses from around the world to understand, from an HR point-of-view because if they are looking to expand to India, they must do their homework on the customs and culture of how organizations are run in India. Indian companies resort to HR practices with labor that include: restructuring, slower rates of salary increase, and hiring freezes. In India, the article says that labor issues in an economic crisis are just as much about the social safety net as it is economic. To be laid off in India means that that person was unqualified or incompetent for their job. That puts a lot of pressure on the individual to perform well, and in most cases, that is what leads Indian companies away from the common U.S. human resource practice of layoffs. All in all, HR managers have to be aware of the perception in society of handling the labor force, when looking to expand business operations globally.