9

ASSIGNMENT
INTERNATIONAL HUMAN RESOURCE MANAGEMENT (HRM630)
Due Date: 22-01-2020
Marks: 10

Topic: Global Compensation: Emerging Issues

Scenario:
Due to Globalization, Multinational Companies have to manage their employees across
countries with varied needs, wants and motivation levels. It is a challenging task for the HR
teams to keep the motivation of their employees intact with their compensation plans.
There are two different views about providing compensation to employees in different
countries. One view advocates adopting uniform plans for all employees, regardless of their
geographical location while the other view emphasizes implementing different plans for
different countries.
Both the views have their own pros and cons, but recently, it has been observed that the
multinational companies are going for different compensation plans for different regions and
countries.

Requirement:
Being a Manager of a multinational company, what are the issues you will face in
implementing different compensation plans across counties?

SOLUTION:
For implementing different compensation plans for different countries, following are the
issues a manager can face:

 It is very time consuming for the Human Resource Managers to implement different
pension programs for each country as all countries have their own culture, rules and
policies vary from country to country regarding pension schemes for employees.
 It is very difficult to collect up to date information of each country for calculating cost
of living of multinational employees.
 Multinational company can face high risk of loss at any time due to daily stock market
changes which may include currency crash just like now a days Pakistan is facing
against the high rate of US dollars in inter-bank market.
 Designing different pay systems will be more complex with changing business
conditions.
 Social security benefits and medical coverage will be very difficult to normalize.
 Wide discrepancies will be seen in income tax rates of each country as company have
to pay tax return for host country as well as parent country to employees.
 It will be very complex to administer different compensation plans for all countries.
 The inflation in countries will readily affect the compensation plans that are already
processed.
 It will be problematic to apply various kinds of allowances to each country differently.
 To allocate compensation plans, company have to cater all three categories of
employees in every country i.e HCN, TCN and PCNs.