Multinational contexts for employee reward management

1
Multinational contexts for employee reward
management

• Under globalisation, revenue streams from
  manufacturing and/or trading across the
  multinational once limited compared with
  domestic country operations have taken on a
  strategic importance.
• Multinationals face other giant-sized
  multinational corporations in head-to-head
  competition for profitable revenues, and have
  been encouraged to migrate from HQ-led to what
  Ghoshal and Bartlett (1998) term a trasnational
  organisation structure.
• Thus efforts are directed including managing
  fit-for-purpose rewards towards mobilising
  knowledge and skills to where they are the most
  profitable, reflecting a strategic shift from
  just exploiting cheap labour overseen by
  corporate expatriates.

2
Global reward consequences

• Shifting multinational human resource strategy
  from one of exploiting cheap labour sources to
  developing unique competitive strategies based on
  securing insider knowledge of local markets
  (Harvey et al, 2002 285) means that reward
  management choices must avoid consequences
  workforces perceive as unfair, undermining
  multi-headed team structures working to a common
  set of aims.
• The position is consistent with Kesslers (2007)
  argument that reward designs should not be
  informed by business strategy in isolation from
  considerations of internal and external equity. A
  requirement for purposeful, coordinated and
  context-sensitive employee reward management is a
  logical consequence of counting the people to be
  employed and managed internationally as
  strategic resources, demanding top corporate
  management attention.

3
Rewarding expatriation
Example of an expatriate salary build-up or
balance sheet plan
Source Festing and Perkin (2008)
4
Strategy, dominant logic, and opportunism

• While highlighting its strategic potential,
  Vernon (2006) counsels that unthinking
  ethnocentric application of Western normative
  reward management principles is to be avoided.
  Factors applicable across multi-local settings at
  least need to be systematically appraised and
  managed before applying universalistic reward
  solutions.
• Bloom et al (2003) argue that the dominant logic
  for managing the reward system adopted by
  multinationals may vary across a number of
  recognisable types, reflecting competing
  pressures for consistency of approach in pursuit
  of global alignment with organisational aims and
  local conformance pressures.
• At one level, survey data implies a reactive
  approach to international reward management. But
  more in-depth interviews indicate less reading
  off a common template and more a sense of efforts
  towards increasing co-ordination where policies
  have legs (Perkins, 2006).

5
Summary

• Reward management for the international workforce
  requires attention to the nuances of expatriate
  compensation administration. But that is not the
  whole story, as earlier implied by the emphasis
  in international reward literature.
• Policy design is encouraged to be mindful not
  only of the interaction between expatriates and
  locals but local-local comparisons too (Chen et
  al, 2002) .
• And a reported accent on standardisation to
  support a transnationally networked performance
  orientation implies that reward architects in the
  multinational also need to draw on theoretical
  and empirical knowledge of practices detailed in
  the generic reward literature, which commentators
  suggest multinational managers are reflecting on
  rather than reading off a reward template.
  Strategic attention, accounting for in-country
  as well as transnational enablers, and
  constraints to best practice have also been
  recorded in recent empirical research in the
  field of inquiry (eg Lowe et al, 2002 Bloom et
  al, 2003 Perkins, 2006 Brown and Perkins, 2007).