Question

The Problem: The Case of the Harmonizing Vacations

Your CEO is exploring partnering with a European company which is located in Belgium. You know that this conversation is currently to negotiate a joint venture, looking toward your company acquiring the European company. At this point in negotiations, the negotiating team has asked the HR team to make proposals as to how the two companies would harmonize various employee benefits. As companies begin having businesses in many countries, the question arises as to when one should follow the customs of the home country and when the policies should be harmonized across all divisions of the company. This case has an interesting twist because the American benefits are lower than those in Europe.

One particularly thorny problem is vacation benefits. Your company has a policy that vacation accrues during the first year of employment at the equivalent of 10 days per year. For each additional year, an employee will receive one more day of vacation up to a maximum of 20 days. Employees can carry over vacation into the following year and will continue to accrue up to 20 days (160 hours).

The company with which you are considering merging has a much more generous policy. For all employees vacation accrues during the first year of employment at the equivalent of 20 days per year, which is required by law. For each additional year, an employee will receive 2 more days of vacation up to a maximum of 60 days. Employees may not carry vacation over into the following year; if the vacation is not used it will be lost.

The expectation is that a team of employees from G-BioSport will spend three to five years in Belgium and Belgic employees will also have a three to five year rotation in the US.

Which is the correct option and why?

1. Each person receives the customary vacations in the country where they are working.
   
2. American workers are given the same vacations as their European counterparts.
   
3. To the extent permitted by law, European workers are given the same vacations as their American counterparts.
   
4. Split the difference between the two countries.

Answer 1

The Correct option is :Each person receives the customary vacations in the country where they are working.

Any merger of companies if very cumbersome process and harmonizing mindsets is the key for success that too when the merger is trans continental.

the work culture /social habits and employee benefits are vastly different in Europe than in america as most of the european countries are socialists.There will be other benefits given by government like healthcare and education so the effective tax rate will always be higher in europe than america.Whist merging with a company in europe the management needs to be sensitive to the same and rationalising everything will not work.As respects to the vacation the policy for Belgium should continue for those working there. Any changes to salary,benefits when acquired in different country needs to be thought through as to what effects will change bring in. To retain best of talent and attract best and have great team the benefits should be same or enhanced.