Question

Companies with worldwide operations need to develop compensation plans for employees that are in line with their global business strategy. Companies that articulate a clear global pay philosophy and develop corresponding compensation programs are best positioned to effectively execute their strategy. An effective global compensation strategy creates consistency in pay management and facilitates global employee mobility.

Answer the following Questions:  

1- Explain the general compensation strategies used by companies with worldwide operations.

2- Support your answer by presenting briefly the case of one of the worldwide operations companies managing successfully its compensation strategies.

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Note: Please do not copy from internet plagiarism is strictly prohibited i need unique answer

Answer 1

(1): Companies with worldwide operations have a standardized compensation strategy so as to create uniformity among the different places of operations of the company. While the compensation strategy is standardized and uniform the compensation amount will not be the same as the amount will vary depending on factors like purchasing power parity, exchange rates, states of the economy, minimum wage rate prevailing in a country, overtime rules and regulations in a country etc. The main compensation items will remain standardized and will include components like base pay, housing allowance, etc. Expatriates will be provided additional payments like cost of living adjustments, home leave etc. The policy and the components will be uniform and standardized it’s just the quantum will vary depending on the location.

(2): A company that I will discuss now is PepsiCo. The company has its operations present in several different countries across the globe and is successfully managing its compensation strategy at all the locations in which it is present. The company uses a mix of home country based approach and host country based approach. The home country based approach seeks to equalize the employees to a standard of living enjoyed by the employee if the employee was based in his/her home country. Thus PepsiCo makes adjustments if any employee is assigned to an overseas assignment or post. In case of the host country approach PepsiCo bases its compensation based on the local national rates. Thus the compensation of a marketing manager in Brazil and a marketing manager in China will have the similar components but the amount of compensation will differ based on factors like local rates, local regulations and other relevant economic factors.