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International Pay Systems

Explore international pay systems and strategic similarities and differences among nations. Learn about social contracts, pay setting systems, and the challenges of aligning global pay with business strategies.

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International Pay Systems

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  1. Chapter 16 InternationalPay Systems

  2. Exh. 16.3: Social Contractsand Pay Setting Highly Centralized Austria Belgium Cuba Hungary Poland Sweden Czech Republic Germany India Israel Japan Korea Slovakia Slovenia Argentina Brazil Canada France Hong Kong Mexico Singapore U.K. U.S.A. SOCIAL CONTRACT Localized Local Systems Sector/Industry-wide Systems Nationwide Systems PAY SETTING SYSTEMS

  3. Hofstede’s Cultural Dimensions • Power Distance • Uncertainty Avoidance • Individualism – Collectivism • Masculinity – Femininity • Long-term – Short-term

  4. Exhibit 16.5: Union Density

  5. The hourly cost of a production worker in manufacturing . . . . . . is made up from the salary paid directly to the worker before deductions . . . . . . and what an employer pays in social insurance and labor taxes. What those extra costs are as a percentage of salary. France $17.97 $12.36 $5.61 45.4% Germany $28.28 $20.94 $7.34 35.1% United States $18.24 $14.34 $3.90 27.2% Japan $19.37 $16.52 $2.85 17.3% Britain $15.47 $13.47 $2.00 14.8% Exhibit 16.6: Employment Practices Differ Among Nations: The Cost of an Employee

  6. Exhibit 16.11: Strategic Similarities and Differences: An Illustrated Comparison

  7. Exhibit 16.11: Strategic Similarities and Differences: An Illustrated Comparison

  8. Exhibit 16.11: Strategic Similarities and Differences: An Illustrated Comparison

  9. Shift in Strategic Global Focus • Focus of strategic global approaches – Avoid matching national systems • Involves aligning the total pay system with the global business strategy • Challenges • Managers must rethink international compensation in the face of global competition • Align global pay with the way business is aligned

  10. Objectives of Compensationand Benefits for Expatriates • Attract and retain employees who are qualified for foreign assignments • Provide an incentive to leave the home country for a foreign assignment • Maintain a given standard of living • Take into consideration expatriates’ career and family needs • Facilitate reentry into the home country at the end of a foreign assignment

  11. Exhibit 16.14: Balance Sheet Approach Equivalent salary and allowances, host country$10,200 Relocation Bonus $1,500 Taxes Base-country salary $7,000 Allowances paid by company $1,000 Base-country currency Taxes $2,000 Housing Housing $2,000 $700 Goods and Services $2,000 Goods and Services Reserve $1,000 Reserve

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