Week 6 - International Performance & Reward Management

Question 1

What are the key components of performance management?

Answer 1

All align to make sure HRM policies are aligned

1) Goal setting and performance standards (behavioural and measurable)
2) Feedback (employees use this to make themselves better & managers must be trained in how to give it)
3) Evaluation process guidelines (need to establish who’s involved)
4) Training
5) Purpose of appraisal (needs to be clear - underpins the whole design of appraisal performance management)
6) Rewards system

Question 2

Explain the impact of culture

Answer 2

National culture can have a significant impact on how performance is evaluated and managed

e. g.:
- team-based rewards in collectivist cultures
- downward supervisor feedback in cultures with high power distance (i.e. where people value seniority, status and authority)

Question 3

What are Hofstede’s (1980) 5 dimensions on culture?

Answer 3

• Power distance
• Collectivism vs individualism
• Masculinity vs femininity (e.g. work-life balance initiatives)
• Uncertainty avoidance (different across cultures)
• Long-term vs short-term orientation (can related to rewards e.g. ST bonus scheme)
• Criticised but useful as a guide

Question 4

Explain performance management for expatriates

Answer 4

• Expatriate evaluation mechanisms should be tailored to the context and unique circumstances of the international assignment

They need to take into account:

• the expat’s specific job objectives
• host country environment factors (e.g. culture, laws, HCNs’ assumptions and expectations)

Question 5

What are international total rewards?

Answer 5

A mechanism through which IHR managers can perform a number of critical activities:

• Combining MNC local & global data in order to develop appropriate compensation packages for a global workforce
• Using centralised or decentralised rewards systems to maintain financial control over compensation and benefits programmes that span multiple geographic locations
• Linking global financial outcomes with geographically dispersed costs

Question 6

What are the challenges for IHR managers in terms of international total rewards?

Answer 6

• Vast cultural differences
• Balancing performance metrics (differing commitment from employees)
• Varying compensation laws in different countries
• Mandatory salary increases

Question 7

What are the international total rewards objectives for the MNC?

Answer 7

• Consistency with business strategy
• To improve recruitment and retention
• Cost-effectiveness (resource allocation)
• Fairness

Question 8

What are the international total rewards objectives for the employee? (In an ideal world, these would align with overall business objectives)

Answer 8

• Financial protection
• Financial growth and career advancement
• To ease repatriation (try and address/meet expectations)
• Fairness

Question 9

What are the key components of international reward compensation?

Answer 9

Base salary
- comparable pay that expats would receive for performing the same job in their home country

Foreign service inducements

• foreign service bonus (like a signing bonus)
• mobility premiums
• danger pay (politically unstable countries)

Allowances

• cost-of-living allowance
• exchange rate protection
• housing allowance
• home leave allowance
• education allowance for expats’ children
• relocation

Benefits

• social security benefits
• pension plans & savings plans

Question 10

What is the ‘going-rate’ approach to international compensation?

Answer 10

Based on typical market values in the host-country

Question 11

What is the ‘balance sheet’ approach to international compensation?

Answer 11

Based on typical market values in the home country

- more companies tend to use this approach (less of a ‘headache’ but more expensive)

Question 12

What are the current challenges for MNCs relating to international performance and reward management?

Answer 12

• Difficulty in obtaining up-to-date and accurate international cost-of-living data
• Re-adjusting the rewards package upon repatriation in order to maintain motivation levels & avoid perceptions of inequity (remuneration can be quite different)
• Revisiting the total rewards mindset: simply a new name for traditional compensation/benefits packages?

Question 13

What are the key messages for international performance and reward management?

Answer 13

• International performance & rewards systems need to be tailored to the specific needs of the assignment
• Conflicts often arise from the differences between organisational and individual objectives
• Culture is important, but additional challenges include:
• differences in compensation laws in different countries
• balancing performance metrics
• repatriation