More multinationals taking global approach to reward
Global pay practices are extending beyond the executive level to managers and professionals, according to research by Mercer.
Although multinational organisations are striving to globalise their reward practices, less than half have predominantly global programmes. In fact, just 45% of participating organisations take an almost exclusively global approach to compensation design; the majority continue to opt for a local (39%) or regional approach (16%).
For Mercer, the development of global compensation programmes starts with an overall global compensation strategy. While the vast majority of responding organisations (84%) have established a global compensation strategy for their executive-level employees, much fewer have done the same for other employer groups, continuing to define their compensation strategies at the local or regional level.
Slightly more than half of the organisations (53%) have specific global compensation strategies in place for their managers.
Less than a third (30%) have global strategies for professionals.
The figure for sales employees is 26%.
US vs Europe
The Mercer survey found that more than half of survey respondents have global strategies for managers, however nearly a third more US companies have them compared with their European counterparts.
“It’s clear that the biggest difference between US and European organisations with regard to global pay programmes is at the management level,” said Philip van Elsdingen, principal with Mercer’s human capital consulting business in Amsterdam. “European companies are less likely than US companies to develop global strategies below the executive level because of a greater sensitivity to the potential barriers associated with implementing a common approach.”
Global compensation continuum
Defining a global compensation strategy is just the first step in developing an effective global compensation programme. The next step involves restructuring the human resource function so that the compensation programmes can be administered in a more centralised way.
Mercer’s survey shows just 36% of responding organisations have centralised administration of their global compensation programmes.
The survey also