BUSM 4497 Global HR Management Global Compensation

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

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

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

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)

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

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

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