Compare and contrast how the two MNC’s

Comparison between Two Multi-National Corporations

Executive Summary

As companies expand their geographical presence globally, the demand for employees required to undertake overseas assignments also rises. Total and Royal Dutch Shell are among firms that have been expanding their geographical presence over the past few years, and dispatching some of their employees to undertake international assignments. An analysis of the two firms’ international operations reveal that they both provide training programs to employees before dispatching them overseas. However, unlike Royal Dutch Shell, which provides leadership development programs, Total’s courses are limited to trainings aimed at equipping employees with basic and personal skills required to undertake jobs effectively in their fields of expertise. Further analysis of available information regarding the two multinationals also reveal that compared to Total, Royal Dutch Shell is highly involved in ensuring that the needs of its expatriates are met. For instance, the firm provides help regarding family relocation, funding educational programs for expatriates’ children, and providing mentorship programs to help dual-career spouses secure jobs in the new environment.

Further analyses of the two multinational companies reveal that they both rely on a workforce comprising home and host-country nationals. Based on existing research, it is likely that the firms prefer expats since they have adequate knowledge about the firms’ operations and exhibit higher commitment to fulfil their tasks. In addition, the need to maintain the “foreign identity” also drives the corporations to staff their operations with home country nationals. Additionally, the organizations also utilize host-country nationals since they are familiar with the cultural environment and require minimum acculturation to undertake their assignments. Overall, the research shows that compared to Total, Royal Dutch Shell is highly involved in providing training programs and helping expats through the expatriation and repatriation processes.

Introduction

Total and Royal Dutch Shell are among the largest multinational companies operating in the oil and gas industry. Total’s operations are headquartered in Paris, France, and the firm has more than ten subsidiaries across the world. On the other hand, Royal Dutch Shell is headquartered in Netherlands and has more than twenty subsidiaries globally. The two firms utilize different approaches in hiring and posting employees to their subsidiary firms. Although both companies train their employees prior to dispatching them for overseas assignments, compared to Total, Royal Dutch Shell is highly involved in helping expats through the expatriation and repatriation process.

Training Similarities between Total and Royal Dutch Shell

One of the elements that Total and Royal Dutch Shell have in common is provision of training programs before dispatching employees overseas. As is evident from Royal Dutch Shell’s sustainability report, the firm invests heavily in developing its employees’ skills. Notably, it is estimated that the venture invested over $342 million in training and development programs for its workers in 2014 (“Our People”, 2014). Being a company that deals mainly in technical and mechanical fields, Royal Dutch Shell ventures in training programs to equip its workforce with the skills required to undertake overseas assignments.

Similarly, Total trains its workforce before deploying it for overseas tasks. Based on information from the company’s 2018 annual report, the firm’s mission is based on promoting functional and geographic mobility, and training employees to enhance each person’s skills (“Total”, 2018). Some of the segments in which the company provides training include; exploration and production, gas and renewable power, refining and chemicals, trading and shipping, marketing and services, as well as the corporate unit. By 2018, it is estimated that 76% of employees in Total, within the scope of the WHRS, had taken at least one on-site training course (“Total”, 2018). The trainings are mainly conducted to familiarize workers with the new environment and to enhance their skills in preparation to undertake overseas assignments.

Training Differences between Total and Royal Dutch Shell

Despite both companies investing in training, their activities vary greatly in terms of type of the specific programs offered to expats. For instance, Royal Dutch Shell offers both technical and leadership development programs. The corporation’s sustainability report indicates that more than 4,000 employees are trained in leadership skills (“Our People”, 2014). Acquisition of such skills enable employees to make rational decisions in the course of undertaking their overseas assignments. On the other hand, Total’s training programs are limited to development of personal skills required to accomplish tasks. Notably, analysis of the company’s annual report reveals that some of the training programs are voluntary. For instance, Total’s management encourages its workforce to build on their expertise and competencies by accessing various trainings (“Total S.A.”, 2018). Consequently, some basic trainings required by expatriates are optional and depend highly on a worker’s expertise. Based on this information, it is evident that unlike Total, Royal Dutch Shell offers mandatory leadership development programs to its employees before dispatching them for overseas assignments.

Limited information is available regarding Total’s initiative to help with family relocation in instances where an employee is assigned overseas assignments. Nonetheless, considerable data reveals that Royal Dutch Shell invests heavily in helping expatriates’ families to relocate and find jobs. For instance, during an interview with New York Times, one of the expatriate spouses in Oman mentioned that Royal Dutch Shell has initiatives put in place to ensure that spouses are advised about relocations six months before departure to other countries cite. The initiatives enable families to prepare adequately for the planned transition to a new cultural environment.

Apart from supporting expatriates’ families to relocate, studies also reveal that Royal Dutch Shell helps two-career folks in securing jobs. In this context, dual-career couples refer to spouses who have different careers. Unlike dual-earner couples, dual career families express concern with the development of their careers rather than financial rewards (Berlato & Correa, 2017). Therefore, dispatching spouses to overseas assignment greatly affects their partner’s career aspirations. Erogul and Rahman (2017) observe that Royal Dutch Shell “sets up job placement centers for expatriates’ spouses to provide career counselling and to find employment” in order to support such families, (p. 14). Although the company does not offer direct jobs for spouses, it ensures that they are provided with essential support required to help secure jobs in the host country.

Furthermore, considerable evidence points to the fact that Royal Dutch Shell greatly supports educational growth of expatriates’ families. Such initiatives by the company are mainly put in place since some of the employees are assigned tasks of permanent cadre (Briscoe, 2004). In such assignments, workers may be required to spend their entire career lives on foreign land, or relocate from one nation to another. As such, Royal Dutch Shell ensures that the educational needs of the expatriates are catered for during their stay away from home. Literature indicates that Royal Dutch Shell has schools built for the children of their expatriates in nations where the capacity of expatriates is high (Erogul & Rahman, 2017). Building schools and offering financial help to support expatriates in paying their children’s fee in host countries is one of the many ways in which Royal Dutch Shell ensures that the needs of employees dispatched overseas are met.

After completing overseas assignments, employees working on a temporary cadre often return to their home country. The repatriation process can be challenging, especially due to reoccurrence of cultural shock. On one hand, there lacks substantial information regarding Total’s repatriation initiatives. This challenge could mainly result from the existing perspective that repatriation is less problematic and a non-issue in comparison to expatriation (Chiang, Esch, Birtch & Shaffer, 2017). On the other hand, literature shows that Royal Dutch Shell has for years strived to develop a strategic plan to help employees with repatriation. Paul Miliken, the vice president for human resources at Shell international, states that as a multinational company with approximately 7,000 expats spread across the world at any one-time, Royal Dutch Shell tries to ensure that the repatriation process is managed closely on an individual level (Donovan, 2014). Miliken also adds that expats are constantly linked to global mobility programs to keep them updated about future jobs (Donovan, 2014). Royal Dutch Shell’s repatriation process enables employees to easily fit in the domestic community after completing their overseas assignments.

Benefits of the Repatriation Process to the Company

Although there lacks a clear record of the benefits that Royal Dutch Shell derives from implementing repatriation programs for their employees, literature suggests that there are numerous advantages attributed to such initiatives. For instance, Chiang et al (2017) states that repatriates whose expectations are met often report higher levels of adjustment and job performance. Unrefutably, expatriates often have several expectations, both financial and non-financial, upon returning to the headquarters. If such expectations are met, expatriates may feel highly valued and develop the willingness to enhance their work performance. Similarly, it is likely that Royal Dutch Shell enjoys higher productivity from its expats for adopting repatriation initiatives.

Apart from exhibiting high level of job performance, studies also reveal that repatriation programs reduce the rate of employee turnover upon return from overseas assignments. As observed by Chiang et al (2017) and Cox, Khan and Armani (2013) fulfillment of expatriates’ expectations increases their levels of commitment. Employees who exhibit high levels of commitment are more likely to remain in an organization compared to their counterparts. Indeed, Royal Dutch Shell’s repatriation program enables the firm to retain the most competent workforce and lower its rate of employee turnover rate.

Benefits of Repatriation Programs to Expatriates

Apart from benefitting employers, repatriation programs also help them to overcome multiple challenges associated with moving from foreign countries. For instance, Alsop (2014) observes that cultural shock ranks as the top most issue that employees face during repatriation. Unrefutably, working in foreign countries exposes workers to new cultures. Therefore, as the employees travel back to their headquarters, they may experience challenges in adapting back to their normal culture. Therefore, when companies such as Royal Dutch Shell offer repatriate programs to overseas employees, they equip the latter with the required help to re-orient back home and fit into the social, economic, cultural, and technological environment.

Staffing Employees

Based on analysis of Total and Royal Dutch Shell’s operations, it is evident that the two firms prefer to staff their overseas operations with both home and host country nationals. This may explain why Total has over 150 nationals represented in its global workforce (“Total S.A.”, 2018). Similarly, studies reveal that Royal Dutch Shell has 6,000 to 7,000 expats across the world at every one-time (“Our People”, 2014). As a result of increasing presence in foreign jurisdictions, the number of international assignments has been growing, compelling multinational firms such as Total and Royal Dutch Shell to send some of their workforce abroad (Chiang et al., 2017). Apart from dispatching some of its workforce to international assignments, the two multinational companies also staff their subsidiary firms with host-country nationals. The aspect is evidenced by existence of career portals in the companies’ website, which are used to advertise job openings in both local and foreign firms. Besides, the companies also utilize their career portals to advertise undergraduate internship programs that offer training to graduates, to equip them with skills required to enhance their employability.

Rationale of Utilizing Home and Host Country Nationals

Home Country Nationals

Total and Royal Dutch prefer to staff their overseas operations with home-country nationals since the latter has adequate knowledge about the companies. As observed by Ahlstrom and Bruton (2009), having worked for the company in their home country, expatriates are familiar with firm’s resources, processes, and culture. Consequently, the multinationals can experience consistency in work productivity by utilizing the expats in overseas assignments. Ahlstrom and Bruton (2009) also add that expatriates have detailed knowledge of a firm’s policies, procedures, and corporate culture. The absorption relieves employers the expenditure required to offer orientation programs to new local hires. In addition, expatriates can easily transfer their knowledge of the firm to local hires, reducing the costs associated with training new recruits. Therefore, it is likely that Total and Royal Dutch Shell prefer staffing their overseas operations with home-country nationals since they have adequate knowledge about the multinational’s policies, procedures, and corporate culture, which translates to reduction in costs associated with training new recruits.

The need to enhance legitimacy is also a potential reason why Total and Royal Dutch Shell prefer to staff their overseas operations by home-country nationals. Ahlstrom and Bruton (2009) state that expatriates “enable companies to maintain a “foreign image” in the host country, which enhances its legitimacy” (pg.377). For instance, Royal Dutch Shell has subsidiary firms in South Africa, a country that hosts a large number of oil and gas companies such as Petroleum, Oil Corporation of South Africa (PetroSA). By dispatching expats in South Africa, Royal Dutch Shell creates the perception that its workforce, especially those working in the field of exploration, production, and refining chemicals, have extra expertise and experience relative to new local hires. Such a perception creates a marketing advantage for the company, which boosts its revenue generation on foreign land.

The third reason why Total and Royal Dutch Shell prefer home over host country nationals is existence of allegiance and commitment among the former category of employees. According to Ahlstrom and Bruton (2009), expatriates are often loyal to their employers compared to new local hires. Therefore, dispatching expats to overseas assignments creates some level of assurance to the two multinational companies about completion of the planned tasks. Based on this information, it is likely that Total and Royal Dutch Shell prefer to staff their overseas operations with home-country nationals to use the aspect of legitimacy as a strategy to penetrate more markets and gain higher market-share on foreign land.

Although there are numerous advantages associated with utilization of expatriates in overseas’ assignments, literature suggests that the practice can be quite costly to multinational corporations. For instance, Araci (2015) observes that the level of failure of expatriates has been increasing over the past few years. The abortion mainly results from cultural shock, miscommunication with local staff, and language differences, which compel expatriates to return home prior to completing their assignments. The cumulative costs associated with failure rates can be too high for Total and Royal Dutch Shell in the long run.

Apart from high costs attributed to failure rates, staffing overseas operations with home-country nationals can also be costly due to the nature of the expatriation process. For instance, organizations that rely on expatriates invest significantly in training programs to help employees adapt to the new work environment (Ahlstrom & Bruton, 2009). In addition, employers incur high costs associated with relocation packages, visa sponsorships and insurance to expatriates. Therefore, although Total and Royal Dutch Shell benefit highly from maintaining a wide pool of expatriates in overseas firms, the two companies incur heavy costs in financing the stay of the employees in foreign land and training them to adapt to the new cultural environment.

Host Country Nationals

In addition to dispatching expatriates, Total and Royal Dutch Shell prefer to support their overseas operations through host country nationals for a number of reasons, including the need to build companies’ corporate image. According to Ahlstrom and Bruton (2009), hiring locals, particularly in management positions, can enhance a firms’ image in the host country and increase its bargaining power with local governments. With regard to this information, it is likely that Total and Royal Dutch Shell prefer to hire locals in some management positions in subsidiary firms to create a corporate image and market their products and services in the host country.

Second, it is likely that the two multinationals prefer hiring host-country nationals due to the latter’s familiarity with the cultural environment, which translate to valuable input in the organization. As noted by Ahlstrom and Bruton (2009), host-country locals are often familiar with the supply chain, such as areas from which to purchase materials and the manner in which to get things done as per government’s requirement. Having a pool of such employees who are well-oriented with operations in the host country acts as a competitive advantage that Total and Royal Dutch Shell cannot forego.

Furthermore, the two multinational businesses opt to hire locals to cutback their spending on training programs. According Ahlstrom and Bruton (2009), host-country nationals are particularly familiar with the local language, culture, and customs; thus, they require less training in language proficiency and acculturation. Some employee segments in Total and Royal Dutch Shell, such as marketing and services are less demanding in terms of expertise, thus locals can be hired to fill the positions. This enables the firms to cut spending on less demanding employee segments and focus more on organizational units that require expatriate expertise.

While it is likely that Total and Royal Dutch Shell prefer a mix of host-country nationals to build on corporate image and reduce training expenditures, the practice may have major drawbacks on their overseas operations. For instance, literature suggests that sometimes it can be difficult for firms to find qualified people (Ahlstrom & Bruton, 2009). The practice of hiring and retrenching employees in attempts to find the most competent workforce can impose high cumulative costs on the multinationals. The authors also add that new local hires may lack proper understanding of the companies’ culture and process and act contrary to the set expectations (Ahlstrom & Bruton, 2009). In such instances, employees’ actions may have detrimental effects on the company’s image or financial performance. Therefore, like expatriates, utilizing host-country nationals for overseas assignment can have some major drawbacks to multinationals.

Conclusion

Findings from the above research reveal that despite Total and Royal Dutch Shell operating in the same industry, they have a different approaches of hiring, training, dispatching, and repatriating employees assigned to overseas tasks. While both multinationals train their employees prior to posting them to foreign lands, Royal Dutch Shell ensures that the training programs are broad enough to provide workers with leadership skills required to complete their tasks. Findings from the research also show that Royal Dutch Shell is highly involved in helping expatriates’ families in relocating to the host country, and offering dual-career families with mentorship programs to support them in finding new jobs. Additionally, the firm builds schools for expatriates’ children in nations where the rate of expats is high.

The study also reveal that Total and Royal Dutch Shell prefer a mix of home and host-country nationals due to the multiple benefits associated with such a pool of employees. Nonetheless, the research also shows that dispatching expatriates to overseas assignments can be costly to the multinationals due to multiple costs associated with the process. Similarly, host-country nationals can easily compromise operations as they lack adequate knowledge regarding the policies, procedures, and culture of the firms. Although the research provides substantial information regarding the hiring process utilized by Total and Royal Dutch Shell, there is limited data regarding Total’s involvement in helping expatriates and their families fit in a new environment. As such, further research should be conducted to determine whether or not Total helps with family relocations and providing jobs for spouses.  

References

“Our people” (2014). Shell. Retrieved from https://reports.shell.com/sustainability-report/2014/our-performance/social/our-people.html

“Total S.A.” (2018). Total. Retrieved from https://www.total.com/sites/default/files/atoms/files/2018-form-20-f-web.pdf

Ahlstrom, D., & Bruton, G. (2009). International management: Strategy and culture in the emerging world. San Francisco: CA, Cengage Learning.

Alsop, R. (2014, January 16). When expats return home, what’s next? BBC. Retrieved from https://www.bbc.com/worklife/article/20140115-returning-expat-discontent

Araci, M. (2015). The barriers to increasing the productivity in expatriate management: Examples in the world and Turkey. Procedia: Social and Behavioral Sciences, 195(2015), 993-1002. DOI: 10.1016/j.sbspro.2015.06.326

Berlato, H., & Correa, K. (2017). A reformulation of the dual career conceptual model for analysis in an organizational scope: Revealing new aspects. Brazilian Business Review, 14(2), 225-246. https://doi.org/10.15728/bbr.2017.14.2.5 

Briscoe, D. (2004). International human resource management (2nd ed.). Australia: Melbourne, Routledge.

Chiang, F., Esch, E., Birtch, T., & Shaffer, M. (2017). Repatriation: What do we know and where do we go from here. The International Journal of Human Resource Management, 29(1), 188-226. https://doi.org/10.1080/09585192.2017.1380065

Cox, P., Khan, R., & Armani, K. (2013). Repatriate adjustment and turnover: The role of expectations and perceptions. Review of Business and Finance Studies, 4(1), 1-16. Retrieved from https://www.researchgate.net/profile/Blanca_Garcia-rivera/publication/265551884_competitividad_y_gestion_de_las_pymes/links/5411dde00cf2bb7347dad9ac.pdf#page=457

Erogul, M., & Rahman, A. (2017). The impact of family adjustment in expatriate success. Journal of International Business and Economy, 18(1), 1-23. Retrieved from https://www.researchgate.net/profile/Murat_Erogul2/publication/318901116_THE_IMPACT_OF_FAMILY_ADJUSTMENT_IN_EXPATRIATE_SUCCESS/links/5b34ce574585150d23dca0c6/THE-IMPACT-OF-FAMILY-ADJUSTMENT-IN-EXPATRIATE-SUCCESS.pdf