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Human Resource Management 15th Edition by Robert Mathis,John Jackson,Sean Valentine ,Patricia Meglich
Edition 15ISBN: 978-1305500709Human Resource Management 15th Edition by Robert Mathis,John Jackson,Sean Valentine ,Patricia Meglich
Edition 15ISBN: 978-1305500709 Exercise 2
Variable Pay around the World
In the past, many global corporations built their variable pay plans around individual goals in a management by objectives (MBO) format. The trend in recent years, however, has been a move to a bottom-line results performance metric for incentive pay determination. Over 85% of global corporations have at least one variable pay plan, but plans are not identical across all countries in which a firm operates.
Variations in incentive plans are due to cultural differences as well as legal requirements. The following highlights some of the variances in different countries:
• France, Italy, Spain, Portugal, and Greece are very risk-averse nations; therefore, employees strongly prefer fixed to variable compensation. There are only small differences in payouts among employees.
• Japan and Korea emphasize team awards and have very minor differences in payouts among employees. Discussing performance is not culturally accepted or welcomed.
• China and India utilize variable pay to retain rather than reward employees. Rewards are based on effort rather than results.
• Argentina, Brazil, and Mexico have historically required profit sharing for all employees. High performers are singled out for particularly rich incentive payouts.
• Bahrain, Saudi Arabia, and the United Arab Emirates are relative newcomers to incentive pay plans. Performance targets are not rigorous, and payouts are seen as an entitlement rather than earned rewards.
Managers attempting to find rewards to motivate discretionary effort in operations around the world clearly face challenges, as you can see by the information just presented. A one-size-fits-all approach might be unsuccessful without an extended transition period and significant training and coaching of employees and managers. Further, when transferring employees to operations outside of their home country, special consideration should be given to how rewards will translate.
Companies might work toward increasing the global focus on corporate results to drive all operations toward the common bottom line. Finding ways to improve employees' line of sight to the organization's outcomes will enhance the effectiveness of any global variable pay plan. Respond to these questions about global pay:
What rewards would be most successful for intra-company transfers who relocate to various countries of operation?
In the past, many global corporations built their variable pay plans around individual goals in a management by objectives (MBO) format. The trend in recent years, however, has been a move to a bottom-line results performance metric for incentive pay determination. Over 85% of global corporations have at least one variable pay plan, but plans are not identical across all countries in which a firm operates.
Variations in incentive plans are due to cultural differences as well as legal requirements. The following highlights some of the variances in different countries:
• France, Italy, Spain, Portugal, and Greece are very risk-averse nations; therefore, employees strongly prefer fixed to variable compensation. There are only small differences in payouts among employees.
• Japan and Korea emphasize team awards and have very minor differences in payouts among employees. Discussing performance is not culturally accepted or welcomed.
• China and India utilize variable pay to retain rather than reward employees. Rewards are based on effort rather than results.
• Argentina, Brazil, and Mexico have historically required profit sharing for all employees. High performers are singled out for particularly rich incentive payouts.
• Bahrain, Saudi Arabia, and the United Arab Emirates are relative newcomers to incentive pay plans. Performance targets are not rigorous, and payouts are seen as an entitlement rather than earned rewards.
Managers attempting to find rewards to motivate discretionary effort in operations around the world clearly face challenges, as you can see by the information just presented. A one-size-fits-all approach might be unsuccessful without an extended transition period and significant training and coaching of employees and managers. Further, when transferring employees to operations outside of their home country, special consideration should be given to how rewards will translate.
Companies might work toward increasing the global focus on corporate results to drive all operations toward the common bottom line. Finding ways to improve employees' line of sight to the organization's outcomes will enhance the effectiveness of any global variable pay plan. Respond to these questions about global pay:
What rewards would be most successful for intra-company transfers who relocate to various countries of operation?
Explanation
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The different kinds of rewards and the v...
Human Resource Management 15th Edition by Robert Mathis,John Jackson,Sean Valentine ,Patricia Meglich
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