Challenges in International Benefits and Compensation Systems of Multinational Corporation

The African Economic and Business Review, Vol. 3, No. 1, Spring 2002
1
Challenges in International Benefits and Compensation Systems of Multinational Corporation
Semere Haile
Grambling State University
Abstract
The aim of this paper is to examine developments on the type and amount of compensation necessary to attract technically and culturally qualified international managers and technical professionals to the three nationals or country categories involved international human resource management activities from which employees are selected whether the people are PNCs, TCNs or HCNs. This paper will draw on research, which has been completed over the last ten years with the growth of international business and workforce. Since the principal problem of salary levels for the same jobs differ among the three primary labor pools nationals, this papers also examines and sees if any progress has been made toward restructuring compensation and reward systems among the three types of employees of an MNC who perform the same job in the same subsidiary. MNCs’ HR managers have a special role in ensuring that international compensation policies deal fairly among the three types of employee’s managers who perform the same job. Such fairness may maximize international employees’ performance. In particular, we are interested in how international compensation is practiced among the three types of labor pools of all managers regardless of nationality in an
MNC.
The African Economic and Business Review, Vol. 3, No. 1, Spring 2002
2
Introduction
A multinational corporation (MNC) is usually defined as a company with operations in more than one country (Porter, 1990). This means that an MNC has significant assets in terms of plants and/or offices in one or more foreign nations and derives some of its profits from these operations (French, 1998). The growth of the global economy has increasingly pushed MNCs into all corners of the world. The impact of

References: Anders Edstrom, J. G. (1994). Alternative policies for international transfers of managers Bartlett, C., and Ghoshal, S. (1992). Transnational management: Text, cases and readings in cross border management Bartlett, C. (1981). Multinational structural change: Evolution vs. Reorganization. Bernardin, H. J., and Russell, J. E. A. (1998). Human resource management: An experiential approach, 2nd ed Briscoe, D. (1997). International human resource management. Englewood Cliffs. Borstorff, P. C., Harris, S. G., Field, H. S., and William F. Giles, W. F. (1997). Copeland, L., and Griggs, L. (1985). Going International. New York: Random House. Desatnic, R. L., and Bennett, M. L. (1978). Human resource management in the multinational company Dessler, G. (1997). Human resource management, 7th ed. Prentice-Hall. French, W. L. 1998. Human resources management (4th ed.). Houghton Mifflin Company. Fisher, C. D., Schoenfeldt, L. F., and Shaw, J. B. (1999). Human resource management, 4th ed Fuchsberg, G. (1992). As cost of overseas assignments climb, firms select expatriates more carefully Gomez-Mejia, L. R., and Balkin, D.B. (1991). Compensation strategies, business policy, and firm performance Gomez-Mejia, L. R., and Wilbourne, T. (1991). Compensation strategies in a global context Gould, C. (1997). What’s the latest in global compensation? Global Workforce, 17-21. Harvey, M. (1995). The Impact of dual-career families on international relocations Harvey, M. (1993). Empirical evidence of recurring international compensation problems Harvey, M. (1982). The other side of foreign assignments: Dealing with the repatriation dilemma Hodgetts, R., and Luthans, F. (1993). U. S. Multinationals’ expatriate compensation strategies Klein, R. (1991). Compensating your overseas executives: Part three. Exporting U.S Latta, G. W. (1998). Expatriate incentives: Beyond tradition. HR Focus, 75: 53. Melvin, S., and Sylvester, K. (1997). Shipping out. The Chinese Business Review, 30-34. McNally, K. A. (1992). Compensation as a strategic tool. Human Resource Magazine, 59-66. Melvin, S., and Sylvester, K. (1997). Shipping out. The China Business Review, 30-34. Mendenhall, M. E., and Gary Oddou, G. (1995). International assignment reconsidered Mendenhall, M. E., Dunbar, E., and Oddou, G. R. (1987). Expatriate selection, training and career pathing: A review and critique Moorhead, G., and Griffin. R. W. (1998). Organizational behavior: managing people and organization, 5th ed Nakiye A. Boyacigiller, N. A. (1995). International assignment reconsidered. Oddou, G. R., and Mendenhall, M. E. (1991). Succession planning for the 21st century: How well are we grooming our future business leaders? Business Pinder, C. C. (1981). The role of transfers and mobility experiences in employee motivation and control Porter, E. M. (1990). The competitive advantage of nations. New York: The Free Press, 18. Pucik, V. (1997). Human resources in the future: An obstacle or a champion of Globalization? Human Resource Management, 36: 163-167. Reynolds, C. (1997). Expatriate compensation in historical perspective. Journal of World Business, 32: 118-132. Reynolds, C. (1995). Compensating globally-mobile employees. Scottsdale, AZ: American Compensation Association. Solomon, C. M. (1995). Global compensation: Learn the ABCs, Personnel Journal, 70-76. Swaak, R. A. (1995). Expatriate Failures: Too many, too much cost, too little planning Wederspabn, G. M. (1991). Costing failures in expatriate human resources management Rodrigues, C. (1996). International management: A Cultural approach. West Publishing Company. Sherman, A., Bohlander, G., and Snell, S. (1998). Managing human resources, 11th ed The Stateless Corporation. (1990). Business Week, 98-105. Welch, D. (1994). Determinants of international human resource management approaches and activities: A Suggested framework Wetlaufer, S. (1996). Foreign subsidiaries: Determining executive compensation.