TM - August 2008 - (Page 31)

Figure 3: Remuneration Programs Compared to Market 800,000 XYZ Company — Brazil Total Remuneration ■ Total Benefits ■ LTI ■ Max Variable ■ Business Plan Variable ■ Actual Variable ■ Base 700,000 631,103 600,000 501,634 500,000 157,543 157,543 157,543 171,645 544,154 501,932 190,657 529,905 400,000 300,000 200,000 264,523 264,523 264,523 278,745 249,205 100,000 0 Position: Country Human Resources Mgr Current Base Salary: 264,523 Current Total Cash: 344,091 Current Benefits: 157,543 Total Remuneration: 501,634 Country Human Resources Mgr (Actual Variable) Country Country Human Human Resources Resources Mgr Mgr (Business (Max Variable) Plan Variable) General Industry P75 General Industry P50 competitive values — such as dollar equivalents — for the designs of the programs and the beneﬁts provided on a common global methodology basis. Pure costs do not provide a realistic comparison across countries. Consider long-term incentive plans. Some organizations take the home-country LTI program and implement it globally before answering: • Will this produce the same return on investment seen in the parent country? • Does the country culture allow for a clear understanding of the operation, including pluses and minuses of various remuneration programs? • Are payout targets in line with local-country pay structures, or will they result in signiﬁcant overpayments? There are consequences when these issues are not considered. For example, if payouts are too large, entire executive teams could leave or retire after the initial payments are made. Or when the country culture does not support these types of programs, there may not be a sufﬁcient incentive for the executive team to perform at above-average levels, thus wasting effort in that country. Every global organization should: • Have a global total remuneration philosophy and strategy that is more than a mission statement (e.g., attract, retain and motivate) and has clarity around non-negotiable areas. • Explain the global philosophy to all local countries and test it to identify in advance any unintended consequences that may exist due to local culture, tax or employment practices. • Translate the global philosophy into local implementation plans and begin the transition process. • Develop communications to all employees that clearly spell out the rationale for the programs. • Finally, continually measure and test results on an employee satisfaction basis, as well as ongoing market competitive-position audits for each country against local markets to maintain global results. Clearly deﬁne the corporate business strategy and combine it with the right total remuneration philosophy. Then implement that philosophy successfully in all local countries. The rewards are huge. The ﬁrm will be seen by all global employees as a single ﬁrm with clear strategies supported and aligned by existing pay and beneﬁt programs. This occurs even if there are beneﬁt and pay differences among the countries because the marketplace is truly local, and that is the level of comparison the local country employees need to see and understand. Further, the global organization will have no real concerns about internal equity because this is resolved through the planning and implementation process. Outcome success should be seen in overall ﬁrm performance and employee perceptions that the company has a global organization and remuneration strategy that respects local realities, thus creating success for all. Marie R. Dufresne, CCP CBP GRP is a senior consultant at Hay , , , Group. She can be reached at editor@talentmgt.com. August 2008 talent management magazine www.talentmgt.com 31 http://www.talentmgt.com

Table of Contents Feed for the Digital Edition of TM - August 2008

TM - August 2008 Editor's Letter Contents Human Performance Leading Edge Foundations Global Background Screening Does Global Assessment Work? Global Total Renumeration: Creat One Organization Border Insecurity: Immigration Reform and Talent Management The Global Workforce: Communication Across Cultures Around the World in How Many Days? Insight: Exelon: Performance Under Pressure Special Report: Perspectives on Managing People Application: Reinventing Sales Rewards at Motorola Dashboard: Mideast Meets West Dashboard: Mergers and Acquisitions 2008 - Don’t Leave Employees Behind Editorial Resources Advertisers' Index Full Potential

TM - August 2008

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