“Best Practices” means “what most experienced large multinationals have been doing”—that doesn’t mean those practices best for your organization. You have to decide that for yourself, says Fisher, principal at Chicago-based consultant Laurus Strategies.
Fisher was joined by colleague Patrick Gallagher for his presentation at SHRM’s Annual Conference and Exhibition, held recently in Atlanta, Georgia.
Here’s Gallager and Fisher’s breakdown of compensation for an HR manager as it would typically be set forth in three different countries. The table clearly shows why one-size-fits-all won’t work for global compensation.
Head of HR—Local Practice-competitive salary above median
| Mexico |
India |
UK |
|
Base Pay |
Base Pay |
Base Pay |
|
Bonus 25% to 30% |
Bonus 15% to 20% |
Bonus 30% to 40% |
|
Fixed cash allowances 10% to 15% |
Allowances 60% to 100% |
|
|
Supplemental medical coverage |
Supplemental medical coverage |
Supplemental medical coverage |
|
Life insurance 2 to 3 times pay |
Life insurance 3 to 4 times pay |
Life insurance 4 to 5 times pay |
|
Defined contribution 4% to 6% |
Provident fund 12% to 15% of pay |
Defined contribution 3# to 4% |
|
Company Car |
Company car |
Company car |
|
|
Housing |
|
Global job leveling (using the same salary structure and grades around the world) sounds great; however, if the organization is not transferring from one country to another, and not doing crosstraining, it doesn’t make sense, says fisher. Always think why you are doing it.
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Managing Global Rewards Strategies
Which mode are you in? asks Fisher. Cost containment? Process improvements? Growth? It affects how you set up your compensation program:
|
COST CONTAINMENT MODE |
PROCESS IMPROVEMENTS MODE |
GROWTH & RETENTION MODE |
|
Maintain/reduce fixed cash compensation (unless mandated) |
Eliminate time-consuming low-impact programs, e.g., merit pay |
Optimize variable pay programs particularly sales compensation |
|
Eliminate or reduce perquisites (unless mandated) |
Collapse insurance and service vendors, negotiate better terms, reporting |
Implement retention plans for key skills and talent |
|
Close/freeze pension plan (unless mandated) |
Improve efficiency in processes via tools and technology, external or internal |
Ensure market competitiveness for critical talent |
|
Review global benefits, consider multinational pooling |
Employee rewards for productivity enhancements and client satisfaction |
Attention to hiring and on-boarding in key markets |
|
Calibrate international assignment policies |
|
If entering a new market, may have to hire from more established competitors. |
In summary, says Fisher:
- Define critical markets and groups (.g., engineering, sales, research and development, certain individuals).
- Perform data collection and analysis, external and internal—you have to have information about compensation, and mandates.
- Revamp/recalibrate in an on-going process.
Finally, says Fisher, regardless of what common practice is, always ask, what is best practice for my company?
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