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 local employees 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
Questions
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?
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?
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?
why do the accounting systems of different countries differ? why do these differences matter
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?
Solution
Executive summary
This paper will look into the issues that a multinational corporation has when it expands its operations across many countries. Royal Dutch Shell is the corporation in question. It will examine the issues related to human capital management. The examination is broken into five sections, which are as follows:
The first segment will look at how Shell's narrower focus strategy and technical orientation affect its worldwide human resource management.
The second portion looks into how I would address the education skill and knowledge gaps. The final segment will discuss how I might feel if granted an expatriate assignment at different age groups.
The third section will discuss how I might feel if granted an expatriate assignment at different ages.
The fourth segment discusses why various countries' accounting systems differ and why it matters.
The fifth section explores why a headquarters may obtain skewed performance data from an accounting-based control system given by a foreign subsidiary.
The findings were: Human resource management at the global level is influenced by the company's strategy and technological direction, and it reacts by focusing on encouraging individual workers to meet the company's specified objectives, according to the results. As a member of the C suite, I would collaborate with other stakeholders to narrow skills and knowledge gaps, particularly in areas where youth unemployment is prevalent. I would have different feelings and interests if offered an overseas assignment, however, Shell provides wonderful programs that can assist me to adapt to working abroad. Other nations' accounting systems differ according to their cultures, level of development, economic and political relations, and sovereignties, and these differences matter because they influence the capacity to compare financial accounts from different countries. Exchange rates, transfer prices, and the country's economic realities are all reasons why the headquarters may get biased information from an accounting-based control system.
Introduction
The case under examination is for The Royal Dutch Shell, which was formed in 1912 and is one of the most successful international oil and gas businesses with subsidies all over the globe (Priest, 2005). When the investigation is finished, remedies and suggestions for human capital management and financial reporting issues will be presented (Roszkowska, 2020). As a result, the goal of this paper is to discover answers to the obstacles that the Royal Dutch shell corporation faces in dealing with human resource and financial management concerns.
The investigation : Divided Into Five Sections
The first section discusses how Shell's narrower emphasis and technical orientation affect worldwide human resource management. Shell has a restricted approach that focuses on a limited number of operations while passing up other attractive alternatives. Shell's technical orientation refers to the interest in gratification produced by actual understanding of a business's technical aspects. As a result, as a worldwide corporation, Shell is focusing on motivating its workers so that they may effectively boost profitability, which has an impact on Shell's human resource management on a global scale (Durugbo & Amankwah‐Amoah, 2019). Its compensation, training and development, appraisal management, and talent management responsibilities must be tailored to each subsidiary's needs in a specific nation. This is because employee needs vary in each country.
The second section discusses how I would close the education skill and knowledge gap if I were a member of Shell's C suite. If I were in charge, I would devise ways to close skill and knowledge gaps, such as a) offering enough training options for youth, such as going to other countries and obtaining a taste of life abroad (Namaste, 2017). b) Collaborate with other stakeholders such as educational institutions, governments, and businesses to provide the skills required to enter the oil and gas sector (Heim et al., 2019). c) Seeking applicants from under-served populations, such as those with disabilities and older employees, who may have relevant expertise and can help the company's customer outreach.
The third section is about how I would feel if I were given an expatriate assignment when I am 25, 35, or 50 years old: In summary, I expect that my company achieves my goals so that I may successfully assist the company in transferring valuable technical and management skills to other countries. For example, as a 25-year-old, I would encounter problems such as whether it was worthwhile to leave my social and professional network back home, worry of not fitting into a new culture of another nation, loneliness, lack of budgeting experience, and cultural opposition and pressure. At 35, I would encounter fresh obstacles and adjustments in the new banking, investing, and taxes systems, as well as my partner and children adjusting to new places, language issues, and costs involved. As a 50-year-old, I would be concerned about the amount of international health insurance provided, if I would have access to great private treatment, and whether I will be safe and secure. Shell would suit me since it provides additional compensation, financial incentives, and global adaption assistance to entice expatriate employees and their families to stay. Shell offers tax breaks and location bonuses, which will boost my drive to succeed and adapt to foreign conditions.
The fourth section discusses why countries' accounting systems differ and if those variations are relevant. The reasons why accounting systems differ amongst countries are as follows: a) culture of a country - countries have their own accounting standards that they do not want to modify because they believe that any changes will weaken, complicate, and influence people's tolerance for ambiguity (Yanto et al., 2017). b) level of development - each country's accounting system has grown to fulfill distinct accounting demands and information. As a result, the more developed countries have more complex accounting systems than the less developed countries. b) Economic and political links — nations with diverse economic and political interests typically have diverse accounting systems (Dillard & Vinnari, 2019). d) Country sovereignty - Some countries are opposed to a single set of accounting rules that would jeopardize their sovereignty or ability to govern themselves. Accounting standards disparities are significant because a) they impact how financial reports are generated and evaluated, and those variances make cross-country comparisons of financial statements difficult. When financial statements are generated using multiple accounting standards, it is difficult to compare the performance of different firms or their subsidiaries. As a result, a firm like Shell will have a tough time comparing the performance of its subsidiaries. Finally, variations in financial reporting quality among nations have an impact on the quality of financial reporting.
Section five discusses the reasons why accounting-based control systems provide biased information from other countries. These include a) changes in the exchange rate – currencies can depreciate or appreciate, causing the original figures on performance to change (Liu & Lee, 2020). b) transfer prices – subsidiaries can trade under common ownership – for example, Royal Dutch Shell may have subsidiaries selling to each other – and the profitability of these subsidiaries can be distorted by lower transfer prices to minimize expenses and taxes. C) The current state of microeconomic factors and trends in a nation — variables such as inflation, unemployment rate, economic growth, and a country's monetary policy might contribute to inaccurate information being received from subsidiaries in such countries. These biases can be effectively avoided by a global corporation using a single currency rate to examine financial reporting. b) establishing standards and policies that must be adhered to across subsidies to minimize poor profits caused by transfer pricing inefficiencies. b) When it comes to microeconomic factors, a multinational corporation is at the mercy of government interventions and a country's market supply and demand adjustments (Fenna, 2019).
Conclusion
Global human resource management is impacted by the company's strategy and technical direction, and it responds by focusing on encouraging individual employees to reach the company's set objectives, based on the outcomes. As a member of the C-suite, I would work with other stakeholders to close skill and knowledge gaps. If I were offered a foreign assignment, I would have different sentiments and interests; nevertheless, Shell has fantastic programs that can help me adjust to working abroad. Accounting systems in other countries differ based on their cultures, degree of development, economic and political relationships, and sovereignties, and these variations are important because they affect the ability to compare financial statements. Exchange rates, transfer prices, and the country's economic reality are all reasons why an accounting-based control system may provide bias information to headquarters.
References
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