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Global Pay

Analyzing special considerations in global pay systems. Describe how the following considerations impact global pay systems:
1) Compensation parity
2) Expatriate employees
3) Host country employees
4) Third country employees
5) Geographical pay differentials
6) Compensation for repatriated employees

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1) Compensation parity:
In general there are several companies that have faced staffing crisis because they have on been able to compensate their employee adequately. In other words it is important to create a compensation system similar to the systems in place in other companies.
From the perspective of Glenview Plastic Systems, Sinclair has always followed a policy of paying his employees a little more than what they would get elsewhere. He keeps a close watch on the salaries that are paid in the area of Minnesota. He never tries to get cross border employees or attempts to recruit persons distant from his factory. For example, his plastic strapping line employees get a salary in the range of $50,000 - $70,000. If these employees try to find a job elsewhere near Minneapolis they will get only about $40,000. Sinclair has selected them in this manner. In fact, this is one factor that worked wonders for Glenview, Sinclair has earned a reputation as a good paymaster and so no worker related disputes are taken to him. He is too valuable to the local society to be 'pestered with minor problems'. The theories of motivation give importance to different factors, but at Glenview this one factor has worked wonders.
In the global context the employees need to be paid the opportunity cost of labor. Because of globalization and the mobility of labor, the wages in the poorest areas tend to be equal to the 'market rates'. For example, in UK several BPO companies opened call centers in areas that were known to be 'poor', it was expected that salaries would be low in these areas. However, it was a matter of time before the salaries started increasing in these areas also.

2) Expatriate employees:
In the global context expatriate employees have special needs. They have to be compensated extra for working abroad, they must feel secure and they must be able to repatriate their earnings home.
This is taken from "Finding the right benefits plan for expatriate employees is an entirely different ball game from domestic benefits package options. Luckily for employers, a good expatriate plan will make it seem as though it is the very same thing. In reality, it would be virtually impossible for an employer to go at it alone, given the endless procedural complexities in dealing with foreign countries and their respective health care systems, as well as their different policies regarding insurance plans and laws concerning coverage for life, vision, dental etc. On top of this, there is the question of who to cover. Not only are there the domestic employees who are sent oversees to work, but there are the employees who are neither citizens of the home country nor of the target country. Then, ...

Solution Summary

Global Pay is discussed in great detail in this solution.