Global Rewards Best Practices? Don’t Follow Them!

“Best practices” tend to be what the big multi-nationals do, and that’s often not right for your company, says Fisher, principal at Chicago-based consultant Laurus Strategies.  Along with colleague Patrick Gallagher, he offered his tips at SHRM’s Annual Conference and Exhibition, held recently in Atlanta, Georgia.

The first step in developing a global rewards strategy, says Gallagher, is to take a look at current trends:

1. There are economic pressures around the world.
2. Many companies now see a need for global presence.
3. The U.S. and the West are no longer the main economic base, and no longer dictate practices globally.
4. Markets with the potential for growth are located overseas.
5. Competition for people is increasing.
6. Ethics conflicts with local customs and business practices abound.
7. Home country business practices may not favor other cultures and may not be able to be implemented
8. A long relationship is seen as evidence of staying power and is critical to get business.
9. Cost of expatriates is very high; many organizations are turning to local talent to reduce the cost.
10. Talent hired outside home country is increasingly difficult to manage. For example, you must cope with complex issues of cultural and political constraints on work permits, labor markets, and employment relations.

Bottom line, says Gallagher, there are a lot of variables that affect how we do business globally, how we treat employees, and how we move employees, and how we compensate employees.

Compensation.BLR.com, now thoroughly revamped with easier navigation and more complete compensation information, will tell you what’s being paid right in your state—or even metropolitan area—for hundreds of jobs. Try it at no cost and get a complimentary special report. Read more.

No Global Solution

Keep in mind that there’s no best practice or benchmark that works for every company, everywhere, says Fisher. Some companies are still cutting costs, others are turning to growth, so it is crucial to analyze your own situation.

Fisher says that the chart shows clearly why it is not realistic to say “3% worldwide.”

Projected salary increases for 2012 in percentages for several countries:

Key components of the total rewards program differ globally, says Gallagher.
For example, the U.S. is the only country that calculates hourly pay. Many countries calculate pay on a daily basis.

Other countries often mandate certain elements of compensation. Take, for example, allowances. There is a huge difference between the U.S. and the rest of the world. There is a significant number of allowances that are routine and expected or required in other countries, Gallagher says.

The US-centric perspective will be to try to simplify, forget all the extras, and just pay a bigger salary, but that doesn’t work. First of all, the components may be dictated by law, and second, they are expected and highly appreciated. In general, you have to follow local norms, says Gallagher.

You need to figure out what you have to do and what you can control. The good news is that cash compensation is manageable.

An interesting trend, says Gallagher, is that medical coverage is coming out of statutory. Mandated privatization of medical care is being aggressively pursued across the Middle East.

Take a close look at company cars, says Fisher. That’s a significant chunk of money. However, when entering new market and trying to attract key talent, the company car may be a significant component of the offer.

Try BLR’s all-in-one compensation website, Compensation.BLR.com, and get a complimentary special report, Top 100 FLSA Overtime Q&As, no matter what you decide. Find out more.

Typical perks to consider:

1. Housing
2. Company car
3. Transportation
4. Meals/Cafeteria
5. Welfare
6. Medical
7. Fitness
8. Work/Life
9. Career Growth
10. Telecommute
11. Dress Code

Be ready to accept the different ways that employees approach work, Gallagher says. For example, in Germany not only do they get more paid time off than U.S. employees do, they take it all.

Often statutory programs aren’t enough and it’s expected that the company will go beyond and supplement required coverage with a co-sponsored plan. For example, in several countries, it’s mandatory to provide medical coverage, but you need to supplement to provide an acceptable level of access to care.

Be aware of “acquired rights.” In many countries, once you start a program, you cannot cut it back or scale it back easily.

Employment at will is practically unknown in other countries, and a significant severance is often required at termination.

Talent scarcity is a concern for most every employer. You need to gauge the scarcity of the people you need. People in certain critical fields are very mobile around the world, Gallagher says, and you will need to build special programs to attract and retain them.

In tomorrow’s Advisor, HR Manager’s pay in three countries, plus an introduction to the all-compensation-in-one website, Compensation.BLR.com.