Think Globally, Pay Locally: Finding the Right Mix

Abstract

Globalization is sweeping the world, spurred on by increasingly open markets, information technology that makes it easier and more efficient to maintain global business operations, and a booming global economy that has created a host of cash-rich companies eager to go global. Thanks to this unprecedented energy and excitement surrounding globalization, companies are working to find ways to align all their structures and processes, including the pay program, to support their increasingly global enterprises. In general, companies will find that they have three compensation options for their global operations-(1) Support Locality by using a set of common worldwide principles to guide the design of pay programs, while yielding the actual design, application, and administration to local operations; (2) Emphasize Commonality by using a common set of design principles, as well as a standardized design, application and administration process for the entire the organization; (3) Balance Commonality and Locality by using a common set of principles and a common design while allowing for local application and administration. This article will help companies choose the option that is right for them while also identifying programs that are necessary to support the pay program, as well as potential problems that can derail that program.