1. BUSM 4497 Global HR Management
Global Compensation

2. Poor remuneration practices cause problems
I get paid $120k for this job, but I’ve been here for 4 years
$100K for the same job. This is unfair. I am not appreciated so I should look elsewhere

3. Strategic Management of Global Compensation
16/02/2019
Strategic Management of Global Compensation
Avoids inefficiency and inequity in compensation
Use compensation to align people to strategy
Attracts people to roles
Contributes to an employee’s job satisfaction, commitment, and performance
Adds to an organisation’s credibility and success
Can be different for different sized organisations and for different locations
Challenges caused by inflation and fluctuating exchange rates

4. Payment for performance
Payment for performance correlates with greater shareholder value
How do a country’s socio-political and historical trends impact on compensation? e.g. Individual vs. group performance schemes
Profit and gain sharing schemes = long term commitment
Cumulative vs non-cumulative reward
Executive pay – tied to both company and individual performance. Scrutinized by the public

5. Culture
Local culture and societal expectations can impact on the perception of equity and fairness in remuneration
Subcultures can impact performance
Different compensation for collective and individualistic societies
Vance & Paik (2015)

6. Total Reward systems
Takes into account financial and non financial benefits
Total rewards can be an important tool to motivate employees
Involve employees in the development of total rewards programs

7. Global management efficiencies vs local responsiveness
TOTAL REMUNERATION/REWARD
CORE REWARDS (ENCOURAGING COMMON COMPANY ALIGNMENT)
Competitive cash rewards
Company profit sharing
Share or options issues
Performance-based rewards
Flexible employability
Development work opportunities
Common company benefits
CRAFTED SET OF REWARDS (LEGALLY MANDATED. SOCIALLY PREFERRED OR CONTEXT SPECIFIC)
Individual versus group bonuses
Focus on development
Pension or superannuation contributions
Medical benefits
Provision of motor vehicles
Security support
CHOICE SET OF REWARDS (SELECTED BY INDIVIDUAL EMPLOYEES)
Additional company shares
Different levels of healthcare
Discounted insurance
Elective training opportunities
Salary sacrifice for superannuation
Salary sacrifice for cars
Additional leave purchase
Should be governed by contextual factors AND alignment
Consider as core, crafted and choice
Derived from Vance & Paik (2015) p 369

8. Expatriate pay is different
The difference between expatriate, host country local and third country national employees’ compensation models
3 types of models – each with their own challenges
Headquarters based model
Home based balance sheet model
Host country or local market model