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International pay systems

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Welcome to the presentation
On
International Pay Systems
We are………..
Presented To
Hafijulla
ID: 2018-21-000-5013
Md. Abu Bakar Siddique
Adjunct Faculty
MBA (Friday Program)
Southeast university
Introduction
Technology has greatly assisted the globalization of pay systems
although there are many differences that still require a broad
approach, says David Shonfield. We live and work in a global
economy but what globalization actually involves is far less
obvious, especially for the management of pay and reward.
Companies operating in different cultures and economic
environments used to leave most things to be determined at
local level.
That has changed quite significantly over the past few years,
especially in the last 18 months. There is now a strong tendency
towards centralization and the harmonization of policies and
practice in large firms.
What is international paysystems?
We live and work in a global economy but what
globalization actually involves is far less obvious,
especially for the management of pay and reward.
Companies operating in different cultures and economic
environments used to leave most things to be
determined at local level.
Managing Variations
How people get paid around the world depends on
differences (and similarities) in the following
general factors
 Economic
 Institutional
 Organizational
 Employee
The Global Guide
The Social Contract
Individu
als
Organizatio
ns
Employment
Relationship
Governm
ent
Organizations
• Individual
Employers
• Employer
Consortium
Individuals
• Unions
• Union
Federations
Social
Contract
Social Contracts and PaySetting
SOCIAL CONTRACT
Highly
Centralized
Localized
Argentin
a Brazil
Canada
France
Hong
Kong
Mexico
Singapor
e U.K.
U.S.A.
Local
Systems
Czech
Republic
Germany
India
Israel
Japan
Korea
Slovak
ia
Sloven
ia
Sector/Industrywide Systems
PAY SETTING SYSTEMS
Austri
a
Belgiu
m
Cuba
Hunga
ry
Poland
Swede
n
Nationwide
Systems
Culture
Culture is defined as shared mental programming
which is rooted in the values, beliefs,
and
assumption in common by a group of people and
which influences how information is processed. The
assumption pay system must be designed to fit
different national cultures is based on the belief that
most of inhabitants share a national character.
Characteristics of Culture
 Often defined as shared mental programming.
 Involves acquiring knowledge that people use to
interpret experience and generate social behavior.
 Rooted in values, beliefs, and assumptions shared in
common by a group of people.
 Influences how information is processed.
Trade Unions and Employee
Involvement
Europe remains highly unionized. Asia is less heavily
unionized. In some countries, workers pay is set by
collective agreements even through the workers may
not be union members. In addition to having higher
rates of unionization, Belgium and Germany require
the establishment of worker councils that must be
involved in any changes to a pay plan.
Trade Unions and Employee
Involvement (Continued)
Union
Density
Union Density
Ownership and Financial Markets
Ownership and financing of companies differ widely
around the world. These differences are important to
international pay.
Types:
Stock Options
Government Owned
Bank Owned
Multilevel ownership
Managerial Autonomy
Level of Centralization
Regulations
Corporate Policy
Comparing Costs
Comparing costs can be very misleading even if wage rates
appear the same expenses for health care, living costs and
other employer provided allowances. Outside the U.S. many
nations offer some form of national health care organization
may pay for it indirectly.
Include:
 Labor Costs and Productivity
 Standard of living costs
 Cost of Living and Purchasing Power
Comparing Systems
We have made the points that pay systems differ
around the globe and that the differences relate
to various in economic pressures, sociopolitical
institutions, and the diversity of organizations
and employees. The caution about stereotyping
raised earlier applied as well. Even in nations
described by some as homogeneous, pay systems
differ from business to business.
National Systems : Comparative Mindset
A national system mindset assumes that most
employers in a country adopt similar pay.
Understanding
and
managing
international
compensation then consists mainly of comparing
the Japan to the German to the U.S. or other
national systems. This method may be useful in
nations with approaches. Some even apply it to
regional systems, as in the “European Way”, the
“Japanese way”, or the “North American Way”.
Strategic Market Mind-Set
Localizer: “Think Global, Act Local”
 Designs pay systems to be consistent with local
conditions.
 Business strategy is to seek competitive
advantage by providing products and services
tailored to local customers.
 Operate
independently
headquarters.
of
corporate
Strategic Market Mind-Set (continued)
Exporter: “One Size Fits All”
 Basic total pay system designed at headquarters
and is “exported” world-wide for implementation
at all locations.
 Exporting a basic system makes it easier to move
managers and professionals among locations.
 One plan from headquarters gives all managers
around the world a common vocabulary and a
clear message what the leadership values.
Strategic Market Mind-Set (continued)
Globalizer: “Think and Act Globally and Locally”
 Seek a common system to be used as part of
“glue” to support consistency across all global
locations.
 Headquarters and operating units are heavily
networked to shared ideas and knowledge.
 Performance is measured where it makes sense
for the business.
 Pay structures are designed to support business.
Expatriates Pay
Expats - Individuals whose citizenship is that of
employer’s base country.
Third country nationals (TCNs) - Individuals whose
citizenship is neither employer’s base country nor
location of subsidiary.
Local country nationals (LCNs) - Individuals who are
citizens of country in which subsidiary is located.
Elements of Expatriate Compensation
Salary
Housing
Taxes
Allowances and
Premiums
Common Allowances in Expatriate Pay
Financial Allowances
FSocial Adjustment
Assistance amily
Borderless World - Borderless Pay?

Corporations attempting to become “globally integrated
enterprises,” are creating cadres of globalists:
– Managers who operate anywhere in the world in a
borderless manner

To support a global flow of ideas and people, companies
are also designing borderless, or at least regionalized, pay
systems
– Testing ground for this approach - European Union
Conclusion
Studying employee compensation only in your neighborhood,
city, or country is like being a horse with blinders. Removing the
blinders by adopting an international perspective deepens your
understanding of local issues. Anyone interested in compensation
must adopt a worldwide perspective. The globalization of
businesses, financial markets, trade agreements, and even labor
markets is affecting every workplace and every employment
relationship. And employee compensation, so central to the
workplace, is embedded in the different political-socio-economic
arrangements found around the world.
Thank You
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