MHRM 6751 Week 10 Closed Overseas Office Case Study Example

"Market Conditions Changed": Reconstructing From Payroll Dates, Client Letters and Interviews Why Ostrander's First Overseas Office Closed Within Three Years, and the HR Story the Board Minutes Never Recorded

Student Name

Walden University

MHRM 6751: Global and Cultural Effectiveness

Instructor Name

Month Day, Year

"Market Conditions Changed": Reconstructing From Payroll Dates, Client Letters and Interviews Why Ostrander's First Overseas Office Closed Within Three Years, and the HR Story the Board Minutes Never Recorded

The Official Account

About a decade before opening its current design office, Ostrander Engineering opened a smaller office in a different composite country to serve a transit client there. The office closed within three years. The board minutes record one sentence: "The office was closed as market conditions changed." This case study tests that account against three sources the minutes did not use: payroll records showing every hire and departure, the firm's correspondence with its main client in that country and interviews with four people who worked in or with the office.

What the Records Show

The client's work continued throughout. Its letters do not mention reduced demand; they complain about delays and turnover. Market conditions, in the sense of demand, did not change. The office's capacity to meet demand did.

Table 1

Timeline Reconstructed From Payroll and Correspondence

Composite organization.

The HR Story

Four failures account for the decline.

First, pay was set by converting US salary grades at the exchange rate rather than by studying the local market. Interviews indicate that this placed experienced engineers below local rates and graduates above them, so the office attracted juniors and lost seniors.

Second, the office depended on one expatriate for control and knowledge, with no succession plan. Harzing (2001) described expatriates as playing different roles in controlling subsidiaries, from direct supervision to building informal networks; this office relied on its lead for all of them, so when the lead left, control and relationships left too.

Third, no local engineer held a license to stamp drawings, so every deliverable needed an outside engineer's stamp. Headquarters had not asked whether its own credentials would be recognized.

Fourth, the departure of the local deputy with two engineers in month fifteen was the turning point. Hom et al. (2017) describe research showing that one departure can prompt others, especially among colleagues closely tied to the person who leaves. Exit interviews were not held, so the firm did not learn why.

What the Interviews Added

The four interviews, with the second expatriate lead, a former local engineer, the client's project manager and a Pittsburgh reviewer, filled in what the records could not. The former local engineer said the deputy left after asking twice for a pay review and hearing nothing for three months, because pay decisions went to Pittsburgh and no one there owned them. The client's project manager said the firm's work was technically strong but that every change of lead meant explaining the project again. The second expatriate lead said the office was given eighteen months to recover after arriving and was closed at month thirty-one, before the replacement team had finished its first full project. The Pittsburgh reviewer recalled that headquarters saw the office mainly through its delayed deliverables and rarely heard from the local engineers directly. Together, the interviews describe an office managed from a distance, by people who did not see the problems until they appeared as late drawings.

Why the Minutes Said Otherwise

"Market conditions changed" was not false so much as incomplete. It described the outcome, an office that could no longer serve its market, without its causes. Kostova and Roth (2002) found that headquarters often transfers practices to subsidiaries without adapting them to local institutions, and that the result can look like local failure when it began at the center. The minutes' account protected the decisions made at headquarters from scrutiny.

Lessons Already Applied, and Not Yet Applied

The current design office has applied two lessons: pay is set from the local engineering chamber's published bands, and the firm supports engineers' licensing. Two are not yet applied: Candidate A's posting has no named successor, and the office holds no exit interviews. Both should be addressed this year.

Limits

Interviews with four people, ten years later, rely on memory. The payroll and client records are more reliable, and the main findings rest on them.

References

Harzing, A.-W. (2001). Of bears, bumble-bees, and spiders: The role of expatriates in controlling foreign subsidiaries. Journal of World Business, 36(4), 366-379. https://doi.org/10.1016/S1090-9516(01)00061-X

Hom, P. W., Lee, T. W., Shaw, J. D., & Hausknecht, J. P. (2017). One hundred years of employee turnover theory and research. Journal of Applied Psychology, 102(3), 530-545. https://doi.org/10.1037/apl0000103

Kostova, T., & Roth, K. (2002). Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45(1), 215-233. https://doi.org/10.5465/3069293