LVMH
... Like the above factor (international talent) LVMH challenge to find the international hiring prospect by emphasis on international profile according to the case LVMH concern international candidate on the ideal candidate is immerse in several cultures, broader traveler and speak at least three languages. It makes LVMH challenge to find the appropriate one to meet their expectation. The selection criteria are not based on ease of integration but depend on a search for people who can bring a new contribution to the company. (Anonymous, 1993, p.7) Thirdly, International transfer department, the main activity for this department is to support to the group’s company. LVMH must make sure that all of their subsidiaries will equity. The department provides and explains the internal mobility policy. Company should perform this department well. It is also monitoring the international mobility data. It’s challenger to perform and control this department well. Fourthly, Culture, when they using international mobility LVMH may face with the problem of culture which different in every country. The person who faces this problem is the manager who transfers to the different country, they must adapt and try to understand more on those country. Fifthly, Cost, LVHM trains manager to be global manager by assign the global assignment. It may lead to higher cost for training the global manager. Question 2: why did LVMH draw up its “International Transfer Policy” charter? LVMH draw up its “International Transfer Policy” charter because LVMH need to develop their international motivation. Therefore, “International Transfer Policy” charter is the guide line for all subsidies’ human resource to following below the same standard which contain all features of international mobility. LVMH needs to provide the same equity of a priority between both country and employees. For protect their expatriate, LVMH utilizes “International Transfer Policy” charter for all subsidies around the world. The reason is expatriate will face many problems when they accept an international assignment for instance taxes and social contribution of the host country. The different country must have the different cost of living some countries is cheaper than another country because the currency rate of each country is different. Following the cost of living allowances problem, LVMH applies “International Transfer Policy” charter for protect their expatriate from losing money when they move to a country with a higher cost of living. Thus, the cost of living allowances (COLA) is set at the time of departure by calculate based on the assumption of all employees, regardless of their family situation, and also save 30 percent of their home-based net salary. However, a Foreign Service premium is calculated in four sectors that are the environment (health facilities, pollution and climate), personal security, social amenities and the everyday quality of life. For instance, for an expatriate from France, the premium is null when move to work in the European Zone or the USA but it will achieve maximum, 30 percent for a host country such as India. According from this instance, it can be seen that different country has a different cost of living or extra cost of expatriation. It depends on an expatriate’s requirement because every expatriates must have their own needs, For example paid education for children, paid home-leaves or temporary housing for up to 30 days etc. However, sometimes the company cannot response all of their requirements because some of them are over amount of the compensation package at the company level. The best way to solve this problem is negotiation with expatriates. The company’s human resource staff has to explain to them and find the best outcome for the problem that benefit for both expatriates and company because some of allowances can avoid or reduce such as car allowances or club membership allowances. Thus, the company and expatriate have to negotiate to find the best solution for both maximized benefits. However, the company has to be careful before making decision about the expatriate package because it can relate to the motivation of expatriate. Consequently, LVMH draw up its “International Transfer Policy” charter for develop their international motivation by utilizing the same standard in all subsidies for protect their expatriates when work aboard. Was such a policy inevitable? Why? No, International Transfer Policy charter was not inevitable for LVMH. The reason is LVMH is an international company which has many subsidies around the world, thus LVMH has to develop their employees by send them to work aboard for improve their international experience and discover the new skills. Expatriation is very necessary and helpful for international company because understanding other cultures and developing good intercultural skills should help employees to work effectively in other cultures and with other people in multinational teams. (Lane, 2003, p.187) Hence, in order to become a leading of the global luxury brand, the international skills and experience of their employees is very important LVMH. The another reason is LVMH has many subsidies in different country around the world, it must be difficult to control if there is a difference policy such as each country utilize their own policy. According to Schneider, pay compensation and reward should be based on contribution to the bottom line or equity rather than belonging to the group or equality. (1997, p. 142) From this above, it can be seen that if the company has the same standard policy that is utilized in all country, thus all of expatriates will feel equity with their company and it can reduce a discrepancy between company and their subsidies as well. Question 3: How does LVMH manage the issue of international adjustment? LVMH manages the issue of international adjustment in the part of the expatriate package. For expatriate package, LVMH is striving for cost efficiency except attract their expatriates through high compensation levels. Thus the principle of the basic balance sheet approach for compensation package is that “expatriates should neither lose nor gain from their move”. It means expatriates should not lose their money from work aboard or should not gain cost of compensation too much, thus it should be suited for both expatriates and company. For the expatriate package, LVMH is adding the cost of living allowance (COLA) that is including taxes and social contribution of the host country based on the home-based gross salary in home county currency. However, first compensation follows the balance sheet approach but then demonstrates a mixture approach in order to combine cost of living, exchange rate, housing and labour market conditions. Another part is security benefits that the expatriates will have access of security benefits equivalent to those they receives in their home country. However, many countries have their own social history and unique retirement plans, thus the security benefits must different belong to each country. For example the situation between France and Japan, when no agreement exist between the French social security system and the Japan security system (the host country), thus a double contribution has to be paid because the Japanese system does not recognize the French one. Moreover, LVMH is also attentive to their employees’ health benefits. Generally, 95 percent of the group’s expatriates are covered by health benefits. LVMH considers that life insurance and disability protection is very important for expatriates because LVMH ensures that the level of protection has enough high-quality for them before the move. How is its international transfer policy different from other multinational organizations? LVMH utilizes international transfer policy purpose is for apply in all subsidiaries in every country to make them understand the policy in the same direction and try to complement to be global human workforce. The international transfer policy seems to be the solution of inequity problem for staff who earning less than other colleagues. The international transfer policy covers all the main aspect of the international mobility and lets each company follow the policy. It seems to be a standard of international mobility in each group. On the other hand, for the other multinational organization, it is a decentralize organization. The company proceeds according to their internal transfer policy. Each company in the same group also has different international transfer policy. So the different between LVMH international transfer policy and...