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Global compensation tools |
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| Written by Gary Howes and WorldatWork | |
| Friday, 21 November 2008 | |
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The WorldatWork survey results provide a global look at compensation and remuneration practices over the past year.
Employee compensation and rewards play a critical role in the ability for large and complex global organisations to attract, motivate and retain the talent they need to be successful. When planned strategically and done well, rewards can be used to differentiate a company from its competitors, drive cultural and operational consistency or emphasise key cultural and operational differences within a company and/or from country-to-country.Global Compensation Structure and Strategy The results of the 2008 update to the WorldatWork Global Compensation Practices survey reveal that large, U.S. multinational companies remain fairly evenly split with regard to how they approach their global compensation structure: centralized (53%) and decentralised (47%). In a follow-up question, 49% of all respondents see more momentum toward greater centralisation of their organization’s comp structure in the next two years, while 42% do not anticipate any shift — either toward greater or less centralisation. Only 9% see more decentralisation occurring. As in 2004, the 2008 respondents who self-reported a globally centralised compensation structure for their company said that the primary objectives for having this type of structure are: 1) to establish a consistent link between rewards and results, 2) to have a consistent position vis-à-vis market and 3) for internal equity purposes. Among those self-reporting a decentralised global compensation structure, the most common unit of compensation organization is country-specific, followed by a region and a combination of business unit and country-specific. Less common structures for those with a decentralised compensation structure is local (city or sub-country), or business-unit only. Nearly half (47%) of those with a decentralised global compensation structure give it a mixed review in terms of effectiveness, but an additional 42% say it is either a “mostly” or “very” effective structure. While 53% of respondents characterise their company’s global compensation structure as “centralised,” a slightly larger percent (59%) said that their organisation has a “global compensation strategy” — that is, policies and strategies that are applied uniformly in all operations around the world unless individual country compliance dictates otherwise. Global Compensation Tools: Three out of five (60%) respondents indicated that their organization uses a global leveling approach, such as whole job slotting, while 40% said they do not perform global leveling. When cross-tabbed by whether the organisation had a centralised or decentralised global compensation structure, centralized organisations were far more likely to perform global leveling (75%), versus decentralised organizations (43%). A 56% majority of respondents indicated that their organisation uses either global grades, or global bands, or both. All told, 31% of organisations use global grades but not global bands, 14% use global bands but not global grades, and 11% use both global grades and global bands. While only 38% of respondents have global benchmark companies (14% were unsure), a 54% majority report that their organisation has a human-resource information system (HRIS) system that covers operations globally. Sixty-six percent of organizations with a “centralised” compensation structure have a global HRIS, while only 41% of companies that are “decentralised” have a global HRIS system. Global Compensation Targets and Vehicles Similar to the 2004 survey, a strong majority of respondents in 2008 say their organisation’s global base-salary target and total cash compensation target is the 50th percentile. For both questions, the next most common answer after 50th percentile was “it varies by country.” Similar to results from the 2004 survey, most organizations use only two market survey sources per country (34%), while an additional 33% said that the number of surveys used per country varies. Among organisations that have equity vehicles, stock options and restricted shares are reported globally by 72% and 69% of organisations, respectively. Slightly less than half of the organisations in the survey reported offering performance share plans or employee stock purchase plans to their employees on a global basis. Other Global Compensation Issues While nearly half (48%) of organisations report that they issue total rewards statements to at least some employees, only 13% issue them to all employees on a global basis. Sixty-seven percent of all companies in the survey indicate they have a global performancem management system. Companies who report a centralised compensation structure are far more likely to have a global performance management system (86%) than those who are decentralised in their structure About WorldatWork WorldatWork is a global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork provides a network of more than 30,000 members and professionals in 75 countries with training, certification, research, conferences and community. It has offices in Scottsdale, Arizona, and Washington, D.C.
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