Study the HR Competencies and Applications case entitled Variable Pay around the World, on page 585 of our textbooks. Then, answer the following questions: A. How can a multinational enterprise (MNE) design country-specific rewards that emphasize overall corporate performance rather than local operational performance? B. What rewards would be the most successful to intra-company transfers who relocate to various countries of operation?

CHAPTER 16 Global Human Resource Management 585 Variable Pay around the World In the past, many global corporations built their - Bahrain, Saudi Arabia, and the United Arab variable pay plans around individual goals in a Emirates are relative newcomers to incenmanagement by objectives (MBO) format. The tive pay plans. Performance targets are not trend in recent years, however, has been a move rigorous, and payouts are seen as an entitleto a bottom-line results performance metric for ment rather than earned rewards. incentive pay determination. Over 85 percent Managers attempting to find rewards to of global corporations have at least one variable motivate discretionary effort in operations pay plan, but plans are not identical across all 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 significant training and coaching of employees and ances in different countries: - France, Italy, Spain, Portugal, and Greece managers. Further, when transferring employare 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. 46 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. - Argentina, Brazil, and Mexico have performance rather than local operational historically required profit sharing for all performance? 2. What rewards would be most successful employees. High performers are singled out for particularly rich incentive payouts. for intra-company transfers who relocate to various countries of operation? KEY COMPETENCIES: Global and Cultural Effectiveness; HR Expertise: People/Total Rewards, Workplace/HR in the Global Context Host-country-based The host-country-based approach compensates the expatriate at the same level as workers approach from the host country. The company might continue to cover the employee in its retirement plan Compensates the and also provide a housing allowance. If the cost of living is substantially lower in the host country expatriate at the same than in the home country, this approach might make sense because the expatriate can live comfortlevel as workers from the ably while on assignment and can more effectively acclimate to the culture of the host country. host country 16-4d Employee Benefits around the World National customs and laws play a major role in the benefits provided to workers in each country. Most developed nations have implemented a retirement program similar to the social security system in the United States. Many of these programs are funded by shared contributions from workers