EFFECTIVENESS OF EXPATRIATE REMUNERATION

Effectiveness of Expatriate Remuneration

Effectiveness of Expatriate Remuneration

Introduction

With the advent of globalisation and the increasing demand for skilled labour, changes in remuneration practices worldwide is inevitable. Increasingly, more companies are trying to further reinforce the pay and performance relationship through variable pay plans (Hewitt Associates 2007). Workers are recognised and competitively rewarded for their performance--not just through base pay, but through a variable pay plan, a share programme and other benefits. According to the 8th Annual Asia Pacific Salary Increase Survey, companies reported variable payouts of 14.5 per cent of their payroll in 2007 (Hewitt Associates 2007).

Organisations that maintain effective remuneration policies are likely to have a sustained competitive advantage, as key employees are effectively locked into their careers and employment costs are minimised. Thus, remuneration plays an important role in today's organisations and will continue to evolve and expand. Lam, Zhang and Baum (2001) found that a relatively large percentage of Hong Kong workers, when compared to their American and Japanese counterparts, listed monetary rewards as their primary goals. What remuneration policies then are most desired by company employees? Past research show that many companies are moving towards performance based pay and an emphasis on incentives. Incentive payment offers the greatest productive benefit (Locke, Feren, McCaleb, Shaw & Denny 1980) while other research supports the role of incentives in raising productivity (Kaufman 1992, Banker, et al. 1996). Incentive pay has the potential to increase worker productivity if properly designed and maintained. Individual incentive plans offer the clearest link between a worker's effort and the reward (Billikopf 2006). The right strategy should include an incentive compensation plan that is directly linked to the goals of the company for that period (Sarvadi 2005).

Research Aims And Objectives

A review of executives' remuneration is another trend in human resources. Companies and their boards are likely to reevaluate, cut back, or eliminate components of their executive pay programmes though regular rank and file employees may expect more spot bonuses, pay for performance incentive plans, and merit salary increases. Some employers may cut back on executive perks perk eliminate executive severance packages/golden parachutes, and reevaluate supplemental executive retirement plans (SERPs). Furthermore, it is also anticipated that the number of openings for expatriates and the attractiveness of expatriate packages are on the decline. Now, many employers are either refraining from giving expatriates any special treatment at all or converting expatriate packages to local remuneration. Also, many companies may prefer to hire younger or older candidates whose financial commitments are probably lower. In addition, many foreign firms are no longer paying for the children of their expatriate employees to go to the most expensive local schools (Gross & Thadani 1999).

Limitation of the Research

The main Limitation that have been encountered during the study are:

The identification of a sufficient number of multinational companies that were willing to participate and which complied with the characteristics given in the Terms of Reference.

The collection of data and information from some of the reference organisations, especially form the ...