Deck 10: Compensation for a Global Workforce

Question 1

Which of the following ultimately determines whether an employee will want to continue his or her level and quality of effort?

A)Current compensation survey results about the external labor market
B)General benefits provided
C)Employee perceptions of rewards
D)Health of the economy

Answer 1

Employee perceptions of rewards

Question 2

Compensation ultimately involves an individual determination of __________ in exchange for work effort.

A)pay
B)benefits
C)satisfaction
D)value

Answer 2

value

Question 3

A coordinated, strategic approach to managing global compensation should be addressed at two levels: the strategic management of the compensation function itself and the

A)awareness of worldwide compensation practices.
B)link with organization strategy.
C)assessment of local reward preferences and expectations.
D)cooperation among managers across all international and domestic units of an organization.

Answer 3

link with organization strategy.

Question 4

Many new and small firms are finding success in attracting and retaining strong talent to drive innovation and company growth through providing

A)direct financial rewards.
B)bonuses.
C)generous benefits above the national average.
D)company stock or share ownership.

Question 5

Which of the following objectives should be part of an effective overall compensation strategy for managing a global workforce?

A)Facilitate international transfers
B)Utilize current technologies for optimal compensation administration
C)Provide the most generous benefits in the industry
D)Emphasize team rather than individual rewards to encourage cooperation across all international operations

Question 6

Which of the following objectives of an effective overall competitive strategy for managing a global workforce relates most closely to external equity?

A)Establish and maintain reasonable financial equity for all employees, both at home and abroad.
B)Be competitive in relation to the practices of leading competitors.
C)Ensure transparency and clear understanding of compensation plans.
D)Take cost-saving advantage of economies of scale, delivering rewards in the most cost-efficient manner.

Question 7

The practice of __________ involves making at least part of an employee's compensation contingent on achieving individual, group, or organization work objectives.

A)equity pay
B)performance parity
C)pay for performance
D)contingent reward allocation

Question 8

Individual performance-pay approaches tend to emphasize the importance of individual

A)teamwork and cooperation.
B)accountability and responsibility.
C)skill and competence.
D)helpfulness within work units leading to enhanced unit and organizational productivity.

Question 9

In this organization-based compensation approach, employees tend to be rewarded on a regular basis according to an established performance measure, such as monthly level of work unit productivity.

A)Gain Sharing
B)Profit Sharing
C)Merit Pay
D)Individual Incentive Pay

Question 10

The use of targeted performance-dependent or "at risk" pay is:

A)increasing globally.
B)decreasing globally.
C)increasing primarily in developing countries.
D)increasing primarily in industrialized countries.

Question 11

In most cases, __________ rewards are becoming an increasing focus in performance-based pay.

A)individual-based
B)group-based
C)organization-based
D)regionally-based

Question 12

These employees will likely continue to have their total compensation based on organizational performance to a greater extent than for other employees:

A)Top executives
B)Middle managers
C)Professional and technical employees
D)Lower-level employees

Question 13

Which employee group tends to have the lowest proportion of total direct financial compensation at risk with individual, group, and organizational incentives?

A)Top executives
B)Middle managers
C)Professional and technical employees
D)Lower-level employees

Question 14

Notwithstanding the increased interest and use of employee incentives, there remains a virtually universal interest, based on employee expectations and demands, for the total compensation package to

A)use employee stock ownership plans (esops).
B)use profit sharing plans.
C)retain basic benefits.
D)involve maintaining a meaningful and satisfying work environment.

Question 15

To fit country cultures that are relatively high in power distance, such as in __________, compensation practices might employ pay and rewards that reinforce status distinctions, with little or no employee participation in reward determination and distribution decisions.

A)Sweden
B)The United States
C)New Zealand
D)Indonesia

Question 16

To fit country cultures that are relatively high in individualism, such as in __________, effective compensation practices might emphasize rewards based on individual performance.

A)China
B)Kuwait
C)Canada
D)India

Question 17

To fit country cultures that tend to be high in the cultural dimension of femininity (e.g., low masculinity), such as in __________, reward plans might appropriately reflect a strong emphasis in the total compensation package on social benefits, quality of work life, work/life balance, and job security.

A)The United States
B)Denmark
C)Mexico
D)Japan

Question 18

A comprehensive, total reward system perspective likely would include these major forms of compensation: direct and indirect financial, job-related, and

A)bonuses.
B)legally required.
C)voluntary benefits (e.g., child care).
D)work environment.

Question 19

__________ to fit individual employee needs is increasingly recognized as one of the most commonly described forms of rewards for all levels of employees throughout the world.

A)Work flexibility
B)Health-care benefits
C)Challenge and meaningful work
D)Ongoing training

Question 20

Individual managers tend to have greatest control over this general form of employee reward, which also can be highly motivating:

A)Direct financial
B)Indirect financial
C)Work-related
D)Work environment (internal and external)

Question 21

There is an increasingly strong push to manage reward systems globally for at least three reasons: achieving economies of scale, building unique firm capability, and

A)gaining workforce alignment
B)gaining cost savings
C)developing key competencies
D)establishing a strong company image worldwide

Question 22

Four variable contextual factors for determining the appropriate degree of emphasis on a global versus local perspective in designing compensation systems include heterogeneity, pervasiveness, strength of enforcement, and

A)regulatory enforcement.
B)demographic composition.
C)formalization.
D)divergence.

Question 23

Milkovich and Bloom's strategic flexibility model includes the following compensation sets:

A)Core, Crafted, and Reward
B)Strategic, Crafted, and Choice
C)Core, Crafted, and Choice
D)Core, Assistance, and Optional

Question 24

The use of this expatriate compensation model may lead to repatriation problems for TCNs and inpatriates from lower-salary countries who find that a return to their home country salary structure means a significant decrease in pay.

A)Headquarters-Based Model
B)Modified Home-Country Model
C)International Citizen Model
D)Lump-Sum Model

Question 25

This is by far the most common expatriate compensation model used by U.S. and European MNCs:

A)Headquarters-Based Model
B)Modified Home-Country Model
C)International Citizen Model
D)Lump-Sum Model

Question 26

The purpose of the __________ approach is to help expatriates avoid personal sacrifice in standard of living or financial loss due to the expatriate assignment, as well as provide an attractive incentive for accepting the assignment.

A)Flex-Rate
B)Earning Stability
C)Procurement Parity
D)Balance Sheet

Question 27

For expatriates needing tax adjustments, in most cases the __________ method is used where MNCs deduct income taxes from the expatriate's salary at the rate that would normally be paid in the home country, and then pay any additional tax owed due to the higher local tax rates in the host country.

A)Tax Equalization
B)Tax Contingency
C)Tax Customization
D)Tax Protection

Question 28

That which can effectively reward and motivate employee performance is not limited to direct financial compensation.

Question 29

An employee's perceptions of the total set of rewards, incentives, and disincentives constituting his or her overall compensation and rewards picture are all that ultimately matters in motivating employee performance.

Question 30

Employee compensation focuses on motivating individual performance, not on organizational objectives like company-wide commitment and alignment.

Question 31

Since compensation has such a potentially powerful influence on individuals at the local level, this particular HR function is unable to contribute much to integration, coordination, and cooperation at the global level.

Question 32

The strategic management of global compensation should be coordinated and integrated with other company HR functions and practices to effectively carry out strategic objectives.

Question 33

The practice of "pay-for-performance" focuses on financial incentives to motivate individual work performance, not group or organizational performance.

Question 34

Especially used as a form of incentive compensation for groups or larger distinct working units, profit sharing tends to be rewarded on a regular basis according to an established performance measure, such as monthly levels of work unit productivity or cost savings.

Question 35

The individual is becoming an increasing focus in performance-based pay, away from group- and organization-based rewards, and even despite traditional customs of collectivism in some countries.

Question 36

Compared to non-accumulating pay schemes, accumulating pay schemes in general are seen to produce a higher average level of employee performance at a lower cost to the organization.

Question 37

Individual performance-based pay in the form of bonuses or even less tangible benefits also can be a vital tool in retaining top talent and keeping employees engaged and focused during tough economic times.

Question 38

Senior executives, whose individual leadership performance is often associated with organizational performance, will likely continue to have their pay based more on organizational performance targets, such as stock price.

Question 39

Despite increasing interest across the globe in performance-based pay, there also is nearly universal agreement that incentives should constitute a limited portion of the compensation package.

Question 40

There is a general trend that the higher the employee level, the less of one's total direct financial compensation is at risk with individual, group, and organizational incentives.

Question 41

National culture can have a significant impact on employee perceptions, preferences, and emotional reactions associated with employee compensation and rewards.

Question 42

Compensation practices in countries and subcultures registering high in femininity (such as those in Italy, Switzerland, Mexico, USA, and Germany) may emphasize individual and group competition in pay, promotions, and recognition, with a clear emphasis on performance-based pay.

Question 43

Work flexibility to fit individual employee personal needs is increasingly recognized as one of the most commonly desired forms of workplace rewards for all levels of employees throughout the world.

Question 44

A total reward system perspective also considers possible negative factors and disincentives faced by employees.

Question 45

Managers should work to eliminate all disincentives faced by employees in the overall reward system since, as disincentives, they serve to block desired job performance.

Question 46

When planning for employee compensation, managers should consider, within a total reward system perspective, the entire spectrum of rewards, incentives, and disincentives, including financial and non-financial, formal and informal.

Question 47

It has been found that an increase in MNC-wide knowledge sharing is associated with global manager bonuses that are based on the MNC's overall performance.

Question 48

According to the Milkovich and Bloom model of global reward system design, the crafted set of rewards provides clear encouragement for a common company mind-set and support of identified priorities for success, and which underlie and reinforce a common MNC global culture.

Question 49

According to the Milkovich and Bloom model of global reward system design, the core set of compensation components involves the selection by employees themselves of elements of compensation that they perceive are of greatest value to their individual situations.

Question 50

Tax law for expatriates around the world is fairly standard, making tax-related compensation planning relatively simple.

Question 51

Despite recent developments in more standardized models of expatriate compensation, it is recommended that companies maintain flexibility in considering each expatriate's unique needs and situation and fine-tune the actual compensation arrangements through open discussion and negotiation.

Question 52

Although direct financial compensation for the same level of employees can differ dramatically from one country to another, the preferred forms of employee benefits tend to be fairly standard throughout the world.

Question 53

Since HCN inpatriates and third-country nationals (TCNs) also represent forms of expatriates as employees assigned to work away from their home countries, they require little if any differing approaches to expatriate compensation from those presently used for traditional PCN expatriates.

Question 54

The practice of "pay for performance" represents one of the most significant and rapidly growing trends in compensation practices at all employment levels across globally managed MNCs. Please explain the main characteristics of this approach. What do you think are the limitations of this approach?

Question 55

Compensation for a global workforce is faced with the dynamic tension of the duality challenge, i.e., global integration vs. local responsiveness. Explain how to begin to address this challenge by structuring employee total compensation according to Milkovich and Bloom's three-level model of strategic flexibility.

Question 56

What are key factors that need to be considered in determining the compensations of expatriates? How different are these factors when MNCs are using hot county nationals (HCNs) or third country nationals (TCNs)?