11 - Rewards in a Global Marketplace Flashcards
Understanding international compensation begins with recognizing variations or differences and similarities and guring out how best to manage them. Four factors in the global outline determine how people get paid around the world. These four factors are
The factors and subfactors in the global guide serve as tools in a management kit to gain an understanding of the differences and similarities in international pay. Variations in five of these subfactors that are particularly salient are
- (1) _____ contracts,
- (2) ______,
- (3) ______ unions,
- (4) _______ and financial markets, and
- (5) managers’ _____.
- economic
- employee
- organizational
- institutional
- social
- cultures
- trade
- ownership
- autonomy
Employees believe that certain actions are expected of them in exchange for which they expect to receive certain returns or total value of their employment. Expanding this to the level of all stakeholders and institutions in a society, the relationship then includes the government; all enterprise owners, sometimes acting individually and sometimes collectively through ownership associations; and all employees, sometimes acting individually and sometimes as members of trade unions. The relationships and expectations of these parties form the __________
social contract
Culture is often defined as shared __________. it is rooted in the values, beliefs and assumptions shared in common by a group of people, and it influences how information is processed.
How critical is culture in managing international pay? ________, according to some. the assumption that pay systems must be designed to fit different national cultures is based on the belief that most of a country’s inhabitants share a national character. therefore, the job of the global manager is to search for national characteristics whose influence is assumed to be critical in managing international pay systems.
mental programming
Very important
The idea that culture is uniquely national overlooks the variations or diversity among subgroups and regions within nations. The issue to resolve is not what are the cultural differences among nations, but the question is, which culture _______? Any group of people may exhibit a culture, a shared set of values.
One has to ask the question of how useful is the notion of a national culture? National culture can be thought of as an “_____.” It provides some information about what kinds of pay attitudes and beliefs one is likely to nd in an area. But, national and regional culture generalizations can be misleading. Considerable diversity among companies and people within any country exists. The interplay among economic, institutional, organizational and individual conditions within each nation or region forms distinct approaches to total comparisons. Understanding these factors in the global guide is useful for managing employee compensation. However, do not assume ______ within a country.
matters
“average”
uniformity
National cultural attributes have been classified as ______ distance, ______-collectivism, ______ avoidance and masculinity-femininity.
Following this view, some state that “it is crucial that companies adjust their compensation practices to the cultural speci cs of a particular host country.” Accordingly, in nations where the culture emphasizes respect for status and hierarchy, more hierarchical pay structures are appropriate. In “low power distance” nations, more egalitarianism is called for. Advice can get even more specific. Companies operating in nations with “collectivistic” cultures should use ________ pay structures or small differences between levels of work, equal pay increases and group-based rather than individual-based performance incentives. Employers in the more “individualistic” national cultures prefer individual-based pay and performance-based increases
power
individualism
uncertainty
egalitarian
Europe is highly unionized. In Sweden, 71% of the workforce belongs to unions; in the United Kingdom, 28%; and in Italy, 33%. Asia is less heavily unionized. Japan’s unionization rate is 18% and South Korea’s almost 10%. You might conclude that union power is ______ in Europe, but caution is in order. In many countries, workers’ pay is set by collective agreements, even though they may not be union members. In France, for example, 90% of workers are covered by collective agreements, even though fewer than 10% are members of unions.
In addition to higher rates of unionization, workers in countries like _______ have the right to establish works councils. While the exact rules may vary among nations, works councils and unions signi cantly affect any proposed changes in pay.
declining
Germany
managerial _______, an organizational factor in the global guide, refers to the degree of discretion managers have to make choices that make total compensation a strategic tool. it is inversely related to the degree of centralization. thus, most U.s.- and U.k.-based operations have relatively greater _______ to change employee pay practices than in most european companies.
but not only institutions such as governments and trade unions limit this. Corporate policies often do as well. compensation decisions made in the home country corporate offices and exported to subunits around the world may align with the corporate strategy but discount local economic and social conditions.
autonomy
freedom
similar to obtaining accurate information on what competitors pay in domestic markets, comparisons of total compensation among nations can be very _______. even if wage rates appear to be the same, expenses for health care, living costs and other employer-provided allowances for such expenses as housing and commuting all complicate the picture. Health care and benefits are examples. outside the United states, most nations offer some form of national ______. An organization may indirectly pay for it through payroll taxes, but its value as part of total compensation is diminished, since all people in a nation may share similar coverage. consequently, comparing data in global and local markets around the world is a major challenge. comparisons between a specific U.s. firm and a specific foreign competitor may be even more misleading.
misleading
health care
If comparing total compensation is difficult, comparing living costs and standards is even more complex. One approach uses a ______ of goods based on European consumer habits, which includes the prices for 122 items from clothing to transportation to personal care.
Another approach is to estimate the amount of work time it takes to buy three different “_______:” a Big Mac, a kilogram of bread and a kilogram of rice. These standard-of-living data permit adjustments for international employees who transfer among countries to maintain purchasing power parity.
uniform basket
“staples”
Comparing pay systems in international compensation is extremely difficult. The pay systems differ around the globe and that differences relate to variations in _______ pressures, ________ institutions, and the diversity of organizations and employees. In addition, the national or regional mindset (European Way, Asian Way) overlooks variations among organizations within each nation. Thus, the national systems discussed in subsequent questions are referred to as the “traditional” systems to emphasize that this is one country model in each, but not the only one.
economic
sociopolitical
The traditional three pillars of Japan’s employment relationship are:
(1) _______ security within the company;
(2) _____-based pay and ______ systems; and
(3) enterprise ______ or decentralized ______ that represent workers within a single company.
Japanese traditional pay systems tend to emphasize the _____ rather than the job. Seniority and skills possessed are emphasized rather than the job or work performed. Promotions based upon supervisory evaluation of trainability, skill/ability levels and performance rather than on performance alone are emphasized. Internal alignment over competitors’ market rates is also emphasized. Employment security based on the performance of the organization and the individual, formerly lifetime security, is also part of this system.
lifetime
seniority / promotion
unions / unions
person
It is convenient to describe Japanese traditional pay systems in terms of three basic components. These three basic components are:
base pay
bonuses
allowances/benefits.
the social contract in which traditional German pay systems are imbedded is marked by a generous _______, created through the social partnership between business, labor and government. pay decisions are highly _______. there are over 90 different laws that apply. different tariff agreements or pay rates and structures are negotiated for each industrial sector by the major employers and unions. methods for job evaluation and career progression are included in the tariff agreements. However, these tariff agreements do not apply to _______ jobs
nanny state
regulated
managerial
Total compensation in Germany consists of base pay, bonuses, allowances and benefits. Base pay accounts for __-___% of employees’ total compensation depending on their job level. Base pay is based on job descriptions, job evaluations and employee age.
While there is a trend to increase the variable performance-based bonuses, it has not been part of a traditional German pay system for unionized workers. In contrast, _______ pay does include performance bonuses. Performance bonuses for managerial positions not included in tariffs are based on company earnings and other company objectives. Until recently, _______ were not legal in Germany. Currently, only about one-third of top executives receive them.
Germany’s social contract includes generous social bene ts. These nationally mandated bene ts, paid for through taxes on employers and employees, include liberal social security, unemployment protection, health care, nursing care and other programs. Employer and employee contributions to the social security system can add up to more than a third of wages. Additionally, companies commonly provide additional bene ts and services such as pension plans, savings plans, building loans and life insurance. Company cars also are popular. The model and make of the car are viewed as signs of status in an organization. German workers also receive 30 days of vacation plus about 13 national holidays annually, compared to an average of 11 days in the United States.
70-80%
managerial
stock options
what are the trends regarding total compensation in germany?
Germany today is not all traditional manufacturing, machine tools and BMW. It has over half of the top ________ companies in Europe. And nearly one in _____ German adults owns stock, double the rate in the late 1990s. As in most developed economies, global competitive pressures and technological changes are forcing many of these changes. High _________ expenses and other costly benefits are problematic. A rethinking of the traditional German social contract as well as the resulting total compensation systems is occurring. Companies are asking for greater flexibility in tariff agreements to better reflect each company’s economic conditions, use of performance in total compensation in addition to seniority and qualification and ways to link job security to company performance.
Internet
five
social security
