Reference no: EM133289985

Closing case

Royal dutch shell is a British multinational oil and gas company founded in 1907 that is headquartered in the Netherlands and incorporated in the united kingdom the company is one of the world largest oil producers with revenues of about $388 billion profit of $24 billion and operation in more than 70 countries the company has some 82.000 employees of which about 7000 employees are at any one time on expatriate assignments outside their home country a crucial task for the shell is to manage this extensive population of expatriate workers to meet its commercial goals and transfer valuable technical and managerial knowledge across operations located in different nations its no easy task

Shells long-term goal is to develop local talent wherever possible thereby leveraging localemployees networks, market knowledge, and language skills while also minimizing cost however there are many cases where deploying foreign nationals makes the most commercial sense first there is often a shortage of skills in certain locations, the shell has found this to be a vital issue in the middle east and North Africa where the company often works with local joint -venture partners or third parties. moving shell employees from other countries to work with partners. and transfer expertise is often a key part of the company strategy. the second shell recognize that the skills of staff and senior leadership are improved by significant exposure to overseas markets in other words in a multinational shell high potential employees need to understand what it is like to live and work in other countries - to get a sense of the conditions on the ground third in many instances, senior shell employees need to be on the management boards of local subsidiaries to effectively monitor and control those operations and keep the head office informed of developments.

A shell has found however moving employees to other countries raise several important challenges it's not always easy to recruit skilled personnel to work in different locations a survey of expatriate personnel at shell found that five issues had the greatest impact on the willingness of employees to accept an international assignment in order of importance these were (1) separation from children during their secondary education (2) harm done to a spouse career and employment (3) failure to recognize and involve a spouse in the relocation decision (4) failure to provide adequate information and assistance regarding relocation and (5) health issue the underlying The message was that the family is the basic unit of expatriation, not the individual, and the shell need to be more to recognize this.

To deal with these issues shell implement several programs designed to address some of these problems to help with the education of children, shell built an elementary school for shell employees where there was a heavy concentration of expatriates as for secondary school education shell worked with a local school (e.g.. often providing grants) to help them upgrade their educational offering it also offered an education supplement to help expatriates send their children to a private school in the host country.

Helping spouse with their career is a more vexing problem according to survey data half the spouse accompanying shell staff on assignment were employed until the transfer when expatriated only 12 percent were able to secure employment while a further 33 percent wished to be employed shell set up a spouse employment center to address the problem the center provides career counseling and assistance in locating employment opportunities both during the company also agreed to reimburse up to 80 percent of the cost of vocational training further education or reaccreditation

Shell set up global information and advise network known as the outpost to provide support for the families facing the challenges of global mobility the outpost has its headquarters in the Hague with about 50 local offices around the world the center recommends school and medical facilities and provides housing advice and up-to-date information on employment study self-employment and volunteer work

Finally there is also issues with expatriate pay. an expatriate basic salary and bonus are linked to what they would receive in their home country additional pay is given to expatriates moving to more locations so they can maintain their standard of living shell also recognize that employees often need additional financial incentives to persuade them to leave family and friends and location premiums to persuade to move less popular expatriate destinations such as Kuwait, the shell also use tax equalization as part of its expatriate pay approach specifically home country taxes are deducted from expatriate pay white host country taxes are paid by the company of course all of these added factors make expatriates and expensive resource that can cost up to three-time as much as a local employee

Question 1: Royal dutch Shell is one of the largest companies in the world and has been for years with sales approaching $ 400 billion and 82 000 employees worldwide, including some 7000 employees on the expatriate assignment the company is large, complex, and powerful compared with retail or consumer companies shell is more narrowly focused and much more technical in orientation. How do you think this narrower focus and technical orientation affects the global human resource management shell?

Question 2. Shell's long-term goal is to develop local talent wherever possible, thereby leveraging local employees' networks, markets knowledge, and language skills while also minimizing cost moving shell employees from other countries to work with partners and transfer expertise to the potential local employees who do not have the educational background in many cases. How would you solve the education skill and knowledge gap if you were a shell c suite leader?

Question 3. Spending significant time (e.g. three years) on an expatriate assignment has significant family and professional implications as can be seen in the shell survey that was mentioned in the case how would you feel if you were given an expatriate assignment today? how would you feel about it if you were 25 years old 35? 50?

Question 4. why do the accounting systems of different countries differ? why do these differences matter

Question 5. why might an accounting-based control system provide headquarters management with biased information about the performance of a foreign subsidiary? how can these biases best be corrected?