International human resource management - Chapter 6 ppt

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning © Peter Dowling and Denice Welch

Chapter 6

Compensation

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning © Peter Dowling and Denice Welch

Chapter objectives

In the introductory chapter we described IHR managers as

grappling with complex issues. International managers must

(1) manage more activities from a broader perspective, (2) be

more involved in the lives of their far-flung employees, (3)

balance the needs of PCNs, HCNs and TCNs, (4) control

exposure to financial and political risks and (5) be

increasingly aware of and responsive to host-country and

regional influences. All of these issues and concerns are

brought out in a discussion of compensation issues. In this

chapter we:

(cont.)

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning © Peter Dowling and Denice Welch

Chapter objectives (cont.)

• Examine the complexities that arise when firms move from compensation at the domestic level to

compensation in an International context.

• Detail the key components of an international compensation program.

• Outline the two main approaches to international compensation and the advantages and disadvantages of

each approach.

• Examine the special problem areas of taxation, valid international living cost data and the problem of

managing TCN compensation.

• Examine the recent developments and global compensation issues.

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning © Peter Dowling and Denice Welch

Introduction

• Global compensation managers (that is, everyone involved

at any level in pay-related decisions) increasingly deal with

two areas of focus. They must manage highly complex and

turbulent local details while concurrently building and

maintaining a unified, strategic pattern of compensation

policies, practices and values.

(cont.)

Use with International Human Resource Management ISBN 1-84480013-X

Published by Thomson Learning © Peter Dowling and Denice Welch

Introduction (cont.)

• For multinationals successfully to manage compensation

and benefits requires knowledge of employment and

taxation law, customs, environment and employment

practices of many foreign countries, familiarity with

currency fluctuations and the effect of inflation on

compensation and an understanding of why and when

special allowances must be supplied and which allowances

are necessary in what countries – all within the context of

shifting political, economic and social conditions.