Insight into opening foreign offices. A sample of five countries' standards in the workplace.
Some of the knottiest problems companies face when they open a foreign office are right inside that office. Few U.S. companies are prepared for how different the workplace "rules" abroad can be from U.S. norms -- and how they differ from one country to another. Knowing some of those customs in advance can make a huge difference in your ability to successfully manage a foreign operation, and in its profitability.
Few perquisites and compensation levels are mandated. The benefits offered by companies are typically a blend of what's legally required and what's voluntary. Here are the work-force highlights from five countries, gathered from consulate offices and owners of U.S. companies:
? Perks: As elsewhere in Europe, a car and a cellular phone for managers and salespeople. Discretionary use of an expense account. ? Benefits: Health care and social security are required by law; these amount to 33% of gross salary. Even a secretary signs a contract when hired, and cannot be fired just like that. Severance provisions are much higher than in the United States. After 10 years, a middle manager could expect severance pay of one to two years' salary. ? Compensation: Almost every employee participates in a bonus plan. Employees also get aseparate bonus, equal to three weeks' salary, when they take their vacation. Cost of a good electronic engineer: $35,000. ? Vacation: Four weeks, by law. ? Holidays: Twelve days. ? Language: English is all that's necessary. ? U.S. Workers: Relatively easy to bring in. ? Other: Dated attitudes toward woman employees and minorities prevail here and throughout Europe, but upcoming legislation should force attitudes to change.
? Perks: Managers and salespeople expect company cars, often with cellular phones. High tax rates have made objects, rather than cash, preferred by employees. ? Benefits: Private medical insurance to complement national health care. Pension plans are not as common as in the United States. ? Compensation: It's difficult to find people to work for straight commission. A Christmas bonus is expected by all. Cost of a good electronic engineer: $25,000. ? Vacation: Three to five weeks typically, but not mandated by law. ? Holidays: Eight legal holidays; most companies offer 12. ? Language: English. ? U.S. Workers: It's not easy, but the Brits are cooperative if you want to bring in U.S. citizens to seed a company. ? Other: The buying cycle is much longer. What takes two visits to sell here, might take five there.
? Perks: Company car for managers and salespeople. Pay in hard currency. Travel abroad is prized. ? Benefits: Healthcare coverage is legally required and costs plenty -- some 40% of wages. But wage rates are low. Many companies also make home-construction loans and provide lunch, commuting, and day-care allowances. There's a heavy penalty for trying to reduce benefits to employees. ? Compensation: High tax rates make bonuses not very rewarding, so they aren't expected. Cost of a good electronic engineer: $10,000. ? Vacation: Fifteen days required by law; companies typically add one to nine days for every three years of service. ? Holidays: Eight days. ? Language: Most Hungarians speak German or Russian as a second language. ? U.S. Workers: Laws recently became more restrictive, but there's little problem for managers or technical employees. ? Other: Buying a Hungarian property is complicated because of the privatization process, but overhead is easily lowered. Office space is scarce and expensive. Never toast a contract with beer mugs -- it recalls the conquest of Hungary; use slivovitz instead.
? Perks: Company car for executives. Add a chauffeur for the president, vice-presidents, and perhaps managing director of a U.S. company's office. ? Benefits: National health-care and social-security costs are split 50-50 by employer and employee. Companies also pay for workers' compensation insurance, unemployment insurance, and pension costs. Transportation allowance (four-hour daily train commutes aren't unusual), lunch allowance. Expense budgets can run very high; a middle manager might entertain clients five nights a week. ? Compensation: Bonuses for individual performance are unpopular. Employees prefer straight salary. All receive New Year's bonus based on company's performance: 1.2 times a month's salary in a good year, half a month's salary in a bad year. Cost of a good electronic engineer: $30,000. ? Vacation: Two weeks, by law; usually taken a day or two at a time. ? Holidays: Twenty legally mandated days, including New Year's and August holidays, during which the whole country shuts down. ? Language: English fluency is very rare. Many Japanese understand English, but they are taught to write rather than speak it. Outside the cities, no English. ? U.S. Workers: Not difficult; U.S. limitations pose more difficulty than Japanese rules do. ? Other: There's a tremendous shortage of people for management positions, and head-hunting is not accepted. Communication problems can be awesome. There is no effective, acceptable way to say no in Japanese, so you often don't know where you stand.
? Perks: Pick-up by a car pool, graduating to a company car and driver. For a vice-president, a golf-club membership and lessons. For any salesperson, a generous lump-sum expense account, which employee may keep if he or she does not spend it all. ? Benefits: Law requires companies with more than 10 employees to pay for one medical examination each year and set aside one month's salary per year, per employee, as severance. Many companies offer low-or no-interest car and housing loans; some build their own apartment buildings and offer cheap leases to key employees. ? Compensation: Employees respond well to commission only. Spring, fall, and New Year's bonuses are expected; size of bonuses reflects company performance. Cost of a good engineer: $19,000. ? Vacation: Law requires three vacation days. ? Holidays: Nineteen days. ? U.S. Workers: Company must prove no Korean could do the job, but criteria for this are not rigorous. ? Language: It's easy to find people who speak English, though not as easy among production people. ? Other: South Koreans hold the United States in high esteem.