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CHAPTER 16: INTERNATIONAL PAY SYSTEMS (NATIONAL SYSTEMS: COMPARATIVE MIND…
CHAPTER 16:
INTERNATIONAL PAY SYSTEMS
THE GLOBAL CONTEXT
THE SOCIAL CONTRACT
centralized or decentralized pay-setting
regulation
the country differences in wage flexibility relate not only to degree of bargaining, but also to regulatory restrictions such as max hours of work
COMPARING SYSTEMS
Relate to variations in: - economic pressures - sociopolitical institutions - diversity of organizations an employees
The Total Pay Model: Strategic Choices - objective of pay systems - external competitiveness - internal alignment - employee contributions - management
NATIONAL SYSTEMS: COMPARATIVE MIND SET
Base Pay
career
years of service
skills and performance
bonuses
allowances/benefits
EXPATRIATE PAY
employees temporarily working and living in a foreign country are called expatriates or "expats"
elements of expatriate
salary
taxes
housing
allowances and premiums
The balance sheet approach
alternatives to balance sheet approach
employee preferences
objective
ensure mobility of people to global assignments as cost-effectively as feasible
ensure that expatriates neither gain nor lose financially
minimize adjustments required of expatriates and their dependants
STRATEGIC MARKET MIND-SET
localizer: "think global, act local"
localizer operate independantly of the corporate headquarters
exporter: "headquarters knows best"
exporters design a total pay system at HQ an exports it worldwide for implementation at all locations
globalizer: "think and act globally and locally"
HQ and the operating units are heavily networked to share ideas and knowledge.
COMPARING COSTS ( AND PRODUCTIVITY)
Labor costs and productivity
substantial differences in (average) labor costs do exist and companies may find that it makes sense to move or grow employment in lower cost countries
Cost of living and purchasing power
Several types of relevant data - earning (based on multiple occupations) - price level (cost of living etc.) - purchasing power
the objective is to maintain the same level of purchasing power
CULTURE
Is national culture a major constraint on compensation?
how well employees accept pay for performance
how national culture influences the effectiveness of compensation and other human resources practices in different countries has been overstated?
TRADE UNIONS AND EMPLOYEE INVOLVEMENT
in some countries, workers' pay is set by collective agreement even though the workers may not be union members
OWNERSHIP AND FINANCIAL MARKETS
Recent tax law changes in many countries have made stock options more attractive, but limited ownership of many companies remain the rule
