Professional Documents
Culture Documents
INERNATIONAL SCENE
The international scene is composed of international and multinational firms working in the context of globalization.
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The growing economic interdependence of countries worldwide through increasing vo,ume and variety of cross border transactions in goods and services , free international capital flow and more rapid and widespread diffusion of technology. Globalization is concerned with reduction in international trade barriers. Achievement of global/local balance has become more strategic and challenging issue.
Integration:
Convergence or divergence:
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An issue facing all international firms is the extent to which their HR policies, including reward, should either converge worldwide to be basically the same in all locations, or diverge to be differentiated in response to local requirements.
An explicit recognition by the parent organization that its own peculiar ways of managing human resources reflect some of the assumptions and values of its home culture. An explicit recognition by the parent organization that its peculiar ways are neither universly better or worse than others but are different and likely to exhibit strengths and weaknesses, particularly abroad. An explicit recognition by the parent organization that its foreign subsidiaries may have other preferred ways of managing people that are neither intrinsically better nor worse but could possibly be more effective locally. An explicit recognition by the parent organization that its foreign subsidiaries may have other preferred ways of managing people that are neither intrinsically better nor worse but could possibly be more effective locally. A willingness from headquarters not only to acknowledge cultural differences, but also to take active steps in order to make them discussable and therefore useable.
Guiding principles for international reward: o the importance attached to a total rewards approach; o the use of job evaluation to provide for internal equity; o the relationship between levels of pay in the local company and local market rates; o the degree of flexibility present in grade and pay structures; o the scope for pay progression; o the importance attached to paying for contribution; o the use of variable pay short-term, medium-term and long-term incentives; o the use of forms of recognition other than pay; o the use of flexible benefits; o the basis upon which expatriates and third country nationals should be paid.
International reward strategy may cover the areas included in the guiding principles, namely: total reward, job evaluation, marketpricing grade and pay structures, contingent pay, benefits and remuneration of expatriates and third country nationals.
Account should be taken of the need to maintain equity as far as possible in remuneration between expatriates, some of whom will be from different countries. Account also has to be taken of the problems that may arise when expatriates are paid more than nationals in the country in which they are working who are in similar jobs. The package should be cost effective, ie the contribution made by expatriates should justify the total cost of maintaining them abroad assignment costs can total three or four times the equivalent package in the home country.
Allowances: o Companies add a number of allowances, such as a cost-of-living, incentive premium, hardship allowances,separation and clothing allowance,Relocation allowance, housing to the expatriates salary to calculate the total expatriate remuneration package. o They are designed to compensate for disruption and to make the assignment attractive to the employee.
Choice of approach
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Method
Home-based
Ensures that expatriates do not lose out by working abroad. Easy to communicate to expatriates. Easier to slot back into home country salary on return Particularly appropriate for shorter assignments after which the employee will return home.
Expatriates may be paid significantly more than local nationals doing the same jobs, thereby causing dissatisfaction and possible friction In effect there will be two reward systems in the same country, which can cause confusion.
Host-based
Avoids the possible dissatisfaction and friction which can arise when expatriates are paid significantly more than local nationals doing the same jobs. Enables one coherent pay system to be maintained.
Expatriates might lose out, making it more difficult to persuade people to work abroad. May be harder to assimilate expatriates back into their own countrys pay systems.