HR APPLICATIONS Variable Pay around the World in the past, many global corporations built their variable pay plans around individual goals in a Bahrain, Saudi Arabia, and the United Arab Emirates are relative newcomers to incen- management by objectives (MBO) format. The tive pay plons Performance targets are not trend in recent years, however, has been a move to a bottom-line results performance metric for rigorous, and payouts are seen as an entitle- ment rather than earned rewards incentive pay determination. Over 85 percent of global corporations have at least one variable Managers attempting to find rewards to pay plan, but plans are not identical across all motivate discretionary effort in operations around the world clearly face challenges, as countries in which firms operate. Variations in incentive plans are due to cul- evidenced by the information just presented. A tural differences, as well as legal requirements. one-size-fits-all approach might be unsuccessful The following points highlight some of the vari- without an extended transition period and sig- ances in different countries: nificant training and coaching of employees and managers. Further, when transferring employ- France, Italy, Spain, Portugal, and Greece ees to operations outside of their home country. are very risk-averse nations; therefore, special consideration should be given to how employees strongly prefer fixed to variable rewards will translate compensation. There are only small Companies might work toward increasing differences in payouts among employees. the global focus on corporate results to drive Japan and Korea emphasize team awards all operations toward the common bottom line. and have very minor differences in pay Finding ways to improve employees' line of sight outs among employees. Discussing per to the organization's outcomes will enhance the formance is not culturally accepted or effectiveness of any global variable pay plan 16 welcomed. Respond to these questions about global pay: China and India utilize variable pay to retain 1. How can a MNE design country-specific rather than reward employees. Rewards are rewards that emphasize overall corporate based on effort rather than results. performance rather than local operational Argentina, Brazil, and Mexico have performance? historically required profit sharing for all 2. What rewards would be most successful employees. High performers are singled for intra-company transfers who relocate to out for particularly rich incentive payouts. various countries of operation? KEY COMPETENCIES: Global and Cultural Effectiveness: HR Expertise: People/Total Rewards, Workplace/HR in the Global Context