Lecture 5: Compensation and benefit + key take aways from the literature

Question 1

processes in benefit

Answer 1

1) level (how much we pay)
2) STRUCTURE (how do people move up, develop?)
3) Basis (seniority? performance? profit?)
4) benefits?
5) Administration ( how do we communicate pay, who makes decisions)

Question 2

budget system approach

Answer 2

aims to assess the costs incurred at home and in host country combined
-suitable for short term assignments

Question 3

Market rate approach

Answer 3

• the company pays the market rate for nationals in the host country
• long term assignments

Question 4

Balance sheet approach

Answer 4

• the difference between the countries is assessed so the employee has the same purchasing rate as at home
• most common one

Question 5

Culture differences in pay (US/Germany)

Answer 5

US more individualistic - grater pay innequality due to this
Germany- more long term oriented–> pay more closely linked to the length of service
Germany - more uncertanity avoidance- more steps in a career lader

Question 6

what factors influence if someone prefers transparency

Answer 6

• tolerance for inequality

Question 7

when should pay be transparent?

Answer 7

• when openness is integrated into company’s culture
• managers are trained to have an honest performance conversation
• when it’s aligned with employees preference

Question 8

Chiang & Birtch

Reward type preference based on culture

Answer 8

• irrespective of a culture intrinsic rewards (challenge, fairness, life-work balance) were found the most preferred
• some countries, however, had more preference for financial reward ( HK, counter to the expectation based on collectivistic culture)

Question 9

Chiang & Birtch

Reward system preference based on culture

Answer 9

• again common pattern despite cultural diff.

- most prefered are performance and skill-based pay, leas prefered seniority

Question 10

Chiang & Birtch

Reward criteria based on culture

Answer 10

• all acknowledged that person, job and economic criteria were most important

Question 11

Cable and Judge main findings

Answer 11

• everyone shows the same pattern of pay preference
• pay-level, flexible benefits, ind-based, fixed base and job-based pay were the most prefered
• when pay level is equal between the companies flexible benefits, ind-based, fixed base and job-based pay were considered to be most attractive