We’ve discussed the intricacies of building a global compensation and benefits plan. To put it bluntly, there is a lot to consider to remain competitive and a great deal more to remain compliant. Two of the top compensation concerns of HR personnel is scaling local benefits to meet multiple markets (47%) and communicating the value of “total rewards” compensation (43%).
 

Can you guess two of the top compensation concerns for HR personnel? Read it here: 

 

Global rewards strategies as they’re being called, can play pivotal roles in motivating employees. There’s no doubt that one of the biggest fears in expanding beyond your headquarters is the potential to fail at penetrating a new market. Finding and maintaining a relationship with the right employees is pretty difficult without providing compensation, perks and benefits that resonate within their lifestyles. It’s this knowledge that incites fear in HR and causes problems for planning.

The best offense is a good defense, so we’re exploring a few of the most common obstacles multinational organizations encounter when stepping into the world of global compensation.

Obstacle 1: Undefined Payers & Providers

When an organization expands their reach, there’s a lot of talk about budget and how the company will afford the means to employ people and cover overhead. However, budget is only one piece of the complicated compensation puzzle. If your organization has the funding to pursue expansion, further inquiry into the market’s regulations is needed.

Internally, your company will need to know what entity is best suited, both legally and financially, to tender payroll, provide benefits and so on. Everything from currency to tax withholdings can be detrimental to remaining compliant.

In some countries, relying on corporate headquarters to administer payroll and other benefits details can leave the organization at risk for joint liability. On that same token, some countries provide certain advantages for multinationals that work through headquarters funding instead of local affiliates.

Obstacle 2: Total Compensation Oversight

Total compensation packages, or total rewards compensation, is a way of looking at compensation as it reflects to the sum of the parts. For example, compensation is everything from base pay to bonuses and health benefits to development perks. Anything that falls within the business’ strategy to develop and maintain positive relationships with employees are a part of a total rewards compensation model.

With that in mind, directly moving your compensation model, no matter how “complete” to another market might lead to troublesome outcomes. Multinational companies need to understand the intricacies of the nation wherein they work. Shortcuts like redefining established benefits or creating clauses that work around accurate plan payouts and calculations are predictable problems for local regulations.

Instead, create compensation plans for each market individually. Clearly define each benefit to make sure it aligns with local terminology. Something as simple as employee status definitions can vary across borders. Working closely with a subject matter expert or local consultant early on can save a great deal of headaches and funds later.

Obstacle 3: Ignoring the National Language Laws

Did you know that the United States doesn’t have an official language? While English is the most prominent and probably the one spoken in official and legal business correspondence, it isn’t necessarily required. However, some countries have specific laws around employee communications being presented in specific language. In fact, even if your organization claims English as the official company language, the local laws will override. That means any compensation and benefits packets, pamphlets, etc. are required to be translated. If your organization provides presentations, websites or videos, those must adhere.

Obstacle 4: Overlooking Data Ownership

The world of talent acquisition and management is reeling with the idea of data-backed strategies and decisions right now. At PeopleTicker, we see data as an empowering tool organizations need to be using to inform important compensation decisions. Data-backed compensation decisions means the right pay and benefits for your workforce and efficient offerings for your budget.

When establishing or adjusting compensation plans, we highly recommend doing research on the market as well as regulations that come with. However, in many countries, cross-border data sharing requires specific consents or processes in order to remain compliant and lawful. Just because those employees work for your multinational organization doesn’t mean their data is explicitly yours. This can be especially difficult with stock and equity plans, elements of many compensation plans.

Obstacle 5: Making Adjustment without Proper Course

When your organization wants to roll out a new compensation plan or adjust a detail of the established plan, do you know what needs to be done for it to be lawful? Every nation has a strict set of guidelines to which companies have to adhere, so even after painstakingly researching and writing a plan that’s perfect for your new workforce, the process isn’t over.

Local guidelines are not something you can ignore even if most of your operations take place elsewhere. Think of it this way: maybe your organization isn’t part of a union in the country where it originated, however, one of your affiliates is required to be a part of one. Obviously, there will be new hoops to scale and rules to follow. What works for your headquarters simply won’t for your affiliate in that location, even when future adjustments are necessary.

Building compensation for a multinational organization is filled with obstacles and challenges. That’s one of the many reasons PeopleTicker was developed. We want to encourage our clients’ growth and productivity by providing them with the most accurate, real-time international compensation data.

Summary:

In the end, having the right compensation package helps you to attract and retain the right talent for your company. When we talk to HR and hiring folks they know all too well… pay too low and new employees are looking for their next job before they start... pay too high and you are hurting your business.

'Right pricing" will help you source easily and keep folks motivated. Stay current on your industry compensation fluctuations with PeopleTicker and you can offer raises that are in line with market and virtually eliminate turnover with right pricing. A recent SkillsVillage survey shows that employees leaving jobs are underpaid 80% of the time. So let's admit, pay counts most when it comes to employment.