Ensuring competitive and equitable remuneration without breaking budgets
Global mobility management presents a salary quandary for hiring HR as sound remuneration comparisons are multifold. According to ECA International, as mobile workforces become increasingly diverse in terms of the nationalities and levels of seniority involved, there is an increasing trend towards using more than one approach to calculating appropriate compensation packages. They have released the National Salary Comparison which provides a snapshot of pay levels in 55 countries to see at a glance whether an individual’s spending power would be protected if they moved to work in another country and were paid a local salary to do a similar job.
Peer and expat pressure
There is of course a need to achieve equity among multinational workforces in the most cost−effective way, whether that means equity with employees’ colleagues at home, their peers in the country where they are on assignment or other expatriates. While a local salary approach ensures equity among local peers in the host country, it may not always provide sufficient incentive for an employee to take up a posting to a different country.
Simple comparisons of gross salaries can be very misleading –an employee may or may not be better off depending on how far that salary stretches in the host location once factors such as tax, social security and cost of living are taken into account.
Lee Quane, Regional Director, Asia, ECA International advised, "In an environment of intense competition for suitably skilled staff, companies need to have all the information to hand to determine the most suitable pay approach for their international assignee workforce."
Rank and reward
The report also reveals how relative wealth comparisons can change from country to country according to seniority. While European countries dominate at the lower end of the management scale in terms of purchasing power, at the higher end a shortage of suitably qualified staff has contributed to pushing up salaries for senior employees in many less developed nations.
Long-term policy awareness
Another issue highlighted is the need for companies to bear in mind future scenarios such as repatriation or consecutive assignments when choosing their salary approach. For example, middle managers in Hong Kong and Singapore command significantly higher salaries than their contemporaries in many other Asian countries and enjoy considerably higher buying power. An assignment from either of these countries to elsewhere in the region on a local salary basis is unlikely to be considered competitive unless additional benefits are provided on top. However, moves in the reverse direction on local terms could be so attractive that the company will have trouble motivating their assignee to return to their home location—should that be the aim of their global mobility policy.
It is wise to be further mindful that the reward landscape is a changing one. Salaries in developing countries such as China are, as we know, increasing at a faster rate those in Europe and the US, for example. HR should keep abreast of the varying factors to stay competitive and attractive without paying unnecessary rates well above-the-odds.
Paul Arkwright
Publisher
