mcgraw-hill © 2005 the mcgraw-hill companies, inc. all rights reserved. 16-1 international pay...
TRANSCRIPT
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-1
InternationalPay Systems
Chapter
16
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-2
Exh. 16.3: Social ContractsExh. 16.3: Social Contractsand Pay Settingand Pay Setting
Localized
Highly Centralized
SO
CIA
L
CO
NTR
AC
T
Local System
s
Nationwide Systems
Sector/Industry-wide
Systems
Argentina Brazil Canada France Hong Kong Mexico Singapore U.K. U.S.A.
Czech Republic Germany India Israel Japan Korea Slovakia Slovenia
PAY SETTING SYSTEMS
Austria Belgium Cuba Hungary Poland Sweden
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-3
Hofstede’s Cultural Dimensions
Power Distance
Uncertainty Avoidance
Individualism – Collectivism
Masculinity – Femininity
Long-term – Short-term
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-4
Exhibit 16.5: Union Density
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-5Exhibit 16.6: Employment Practices Differ Among Nations: The Cost of
an Employee
14.8%$2.00$13.47Britain $15.47
17.3%$2.85$16.52Japan $19.37
27.2%$3.90$14.34United States $18.24
35.1%$7.34$20.94Germany $28.28
45.4%$5.61$12.36France $17.97
What those extra costs are as a percentage of salary.
. . . and what an employer pays in social insurance and labor taxes.
. . . is made up from the salary paid directly to the worker before deductions . . .
The hourly cost of a production worker in manufacturing . . .
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-6Exhibit 16.11: Strategic Similarities and Differences: An Illustrated
Comparison
Japan United States Germany
Objectives Long-term focusHigh commitmentEgalitarian – internal fairnessFlexible workforceControl cash flow with bonuses
Short / intermediate focusHigh commitmentPerformance – market – meritocraticFlexible workforceCost control; varies with performance
Long termHigh commitmentEgalitarian – fairness
Highly trainedCost control through tariff negotiations
Internal
Alignment
Person based: age, ability, performance determines base payMany levelsSmall pay differences
Work based: jobs, skills, accountabilities
Fewer levelsLarger pay differences
Work based: jobs and experience
Many levelsSmall pay differences
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-7
Japan United States Germany
External
Competitiveness
Monitor age – pay chartsConsistent with competitors
Market determined
Compare on variable and performance-based pay
Tariff based
Same as competitors
Employee Contribution
Bonuses vary with performance only at higher levels in organizationPerformance appraisal influences promotions and small portion of pay increases
Bonuses an increasing percentage of total pay
Increases based on individual, unit, and corporate performance
Tariff negotiated bonuses
Smaller performance bonuses for managers
Exhibit 16.11: Strategic Similarities and Differences: An Illustrated
Comparison
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-8
Japan United States Germany
Advantages Supports commitment and securityGreater predictability for companies and employeesFlexibility – person based
Supports performance – competitor focusCosts vary with performance
Focus on short-term payoffs (speed to market)
Supports commitment and securityGreater predictability for companies and employeesCompanies do not compete with pay
Disadvantages High cost of aging work forceDiscourages unique contributorsDiscourages women and younger employees
Skeptical workers, less securityFosters “What’s in it for me?”No reward for investing in long-term projects
Inflexible; bureaucratic
High social and benefit costsNot a strategic tool
Exhibit 16.11: Strategic Similarities and Differences: An Illustrated
Comparison
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-9
Shift in Strategic Global Focus
Focus of strategic global approaches – Avoid matching national systems
Involves aligning the total pay system with the global business strategy
ChallengesManagers must rethink international
compensation in the face of global competition
Align global pay with the way business is aligned
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-10
Objectives of Compensationand Benefits for Expatriates
Attract and retain employees who are qualified for foreign assignments
Provide an incentive to leave the home country for a foreign assignment
Maintain a given standard of living
Take into consideration expatriates’ career and family needs
Facilitate reentry into the home country at the end of a foreign assignment
McGraw-Hill © 2005 The McGraw-Hill Companies, Inc. All rights reserved.
16-11
Bas
e-co
untr
y cu
rren
cy
Reserve
$1,000Reserve
Goods and Services
$2,000
Goods and Services
$700
Housing
Housing $2,000
$1,000
Taxes
Taxes $2,000
$1,500
Relocation Bonus
Allowances paid by company
Base-country salary $7,000
Equivalent salary and allowances, host country
$10,200
Exhibit 16.14: Balance Sheet Exhibit 16.14: Balance Sheet ApproachApproach