Understanding the Factors that Affect Global Compensation and Benefits by HannaGlobalSolutions


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									             Understanding the Factors that Affect Global Compensation and Benefits

To level the field with multiple country responsibilities, most of the countries with global operations tend to keep
up with the global compensation structure. Compensation provides the point at which organizational and
individual priorities and goals meet, making it the motivating influence for effectively attracting needed human
talent, retaining that talent and encouraging the talent for consistent and improved performance.

There are numerous factors that are not present in a domestic environment, which must be considered while
developing the global compensation and benefit composition. There may be unique challenges that global HR
practitioners may face while developing suitable compensation policies to meet organizational strategies. These
challenges include dealing with diverse standards and costs of living, inflation or deflation rates, tax systems, tax
rates, etc. For HR professionals developing strategies to effectively pay employees across the globe there could be
difficulties in dealing with a diverse collection of economies, cultures and competitive pressures.

To effectively strike a balance HR professional must understand all the factors that affect global compensation and
benefits. These factors are

        Economy

It is almost impossible to offer the same percentage of salary increase when country-specific inflation rates that
range from flat to 20 percent plus. There are a number of other economic factors that vary from country from
county like distribution of wealth across country’s population and the influence of politics and power. In such cases
it is always good to conduct a risk analysis of economic factors and their consequences and make allowances for
local inflation or deflation or currency fluctuations.

        Culture

A benefit may be exceedingly appreciated in one country and can be comparatively insignificant in another
country. Most often the variations are rooted in beliefs, attitudes and values. In some areas of the world, job and
income security needs command principal interest. It is in the best interest of the company to involve local
contacts to be familiar with usual and traditional compensation and benefits practices.

        Competition

In most global organizations the compensation and benefits required to magnetize and sustain talent are
determined by the aggressive demand for that talent. As the nature of the competition for talent usually varies
across countries and regions, it is advisable to employ people with similar skills when industry-specific expertise is
in short supply or competition is high.

        Laws and Regulations

There are a number of regulations that influence the remuneration of employees in many areas like Work hours
and compulsory time-off, minimum wage structure, acquired rights, compulsory bonuses, etc. By involving experts
in local compensation and benefits laws and regulations, it becomes possible to recognize the differences and
similarities in each market and identify the benefits that are government-provided, mandated by the government
or chosen by the employee.

When companies are companies are expanding into new markets they have to deal with multiple compensation
processes in numerous countries. And in such cases effective planning and management of compensation can
become a demanding task. With the help of a global consultant it is easy to utilize the services of a partner in
various countries and procure the right programs global compensation benefits or employee health care benefits
that best suit the organization.

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