Chap 7 Compensation Management2
International Human Resource Management:
Chapter – 6:
COMPENSATION MANAGEMENT
Introduction: One of the key components of IHRM is the compensation administration in MNCs. Today, compensation and employee benefits contribute to
40-50% of the total costs. Compensation is strategically reported and monitored at the broad – levels and with the investors to assess the health of the organization. What is compensation management? Effective and efficient process of managing the earnings
– financial and non financial rewards of the employees in an organization based on their performance towards organizational goal is called compensation management.
International Compensation is an internal rate of return (monetary or non monetary rewards / package) including base salary, benefits, perquisites and long term & short term incentives that valued by employee’s in accordance with their relative contributions to performance towards achieving the desired goal of an organization.
It influences:
•
•
•
Organizational culture
Recruitment and selection of competent employees
Motivation and performance
Objectives of compensation:
Compensation decisions are strategic decisions and play a key role in achieving performance and sustainable competitive advantages for national as well as international firms. Therefore the key objectives are:
•
•
•
•
•
Attract employees who are qualified , experienced and interested in international assignments.
Facilitate the movement of expatriate’s from one subsidiary to another, from home to subsidiary, and back from subsidiary to home.
Provide a consistent and reasonable relationship between the pay levels of employees at headquarters, domestic affiliates and foreign subsidiaries.
Be cost effective by reducing unnecessary expenses.
Should be easily understood and easy to administer.
Components of Compensation: components of international compensation comprises the base salary, incentives, benefits, allowances, foreign service inducement/ hardship
Chapter – 6:
COMPENSATION MANAGEMENT
Introduction: One of the key components of IHRM is the compensation administration in MNCs. Today, compensation and employee benefits contribute to
40-50% of the total costs. Compensation is strategically reported and monitored at the broad – levels and with the investors to assess the health of the organization. What is compensation management? Effective and efficient process of managing the earnings
– financial and non financial rewards of the employees in an organization based on their performance towards organizational goal is called compensation management.
International Compensation is an internal rate of return (monetary or non monetary rewards / package) including base salary, benefits, perquisites and long term & short term incentives that valued by employee’s in accordance with their relative contributions to performance towards achieving the desired goal of an organization.
It influences:
•
•
•
Organizational culture
Recruitment and selection of competent employees
Motivation and performance
Objectives of compensation:
Compensation decisions are strategic decisions and play a key role in achieving performance and sustainable competitive advantages for national as well as international firms. Therefore the key objectives are:
•
•
•
•
•
Attract employees who are qualified , experienced and interested in international assignments.
Facilitate the movement of expatriate’s from one subsidiary to another, from home to subsidiary, and back from subsidiary to home.
Provide a consistent and reasonable relationship between the pay levels of employees at headquarters, domestic affiliates and foreign subsidiaries.
Be cost effective by reducing unnecessary expenses.
Should be easily understood and easy to administer.
Components of Compensation: components of international compensation comprises the base salary, incentives, benefits, allowances, foreign service inducement/ hardship