Differential pay, or the practice of paying different amounts to employees based on their

location or other factors, can be a contentious issue, especially if it is perceived as unfair or not
adequately justified. In the context of the COVID-19 pandemic and the shift towards remote
work, differential pay may be more relevant than ever, as the cost of living and other expenses
can vary significantly depending on an employee's location.

In the case of Cleancare, it seems that the company is following a uniform compensation policy
with a fixed and variable component. However, it is not clear from the given information
whether Cleancare has a differential pay policy in place, or if the issue at hand is related to the
overall structure of the company's compensation practices.

As an expert in compensation and human resource management, Dr. Ahalya Varma will need
to gather more information about Cleancare's policies and practices, as well as the concerns
and needs of the employees, in order to develop a recommendation that is fair and aligned
with the company's objectives. This may involve conducting a review of the company's current
policies, gathering data on the cost of living and other relevant factors in different locations,
and consulting with stakeholders including employees, management, and the HR department.

Cleancare, a surgical equipment manufacturing company, with operations in nine countries, has emerged as a major player
globally within ten years. Once an organisation reaches such size and spread, it becomes very challenging to sustain and grow.
Shrikant, the Founder and CEO of the company, strongly believes in an ethnocentric approach and a uniform compensation
policy wherein 75% should be fixed, while 25% would be variable components on the basis of performance.

It is obvious for Ahalya to be upset when Rajeev chose to narrate the principles of compensation policy in an academic way.
She wanted to know the model adopted by the organisation with an area of focus so that she can suggest a suitable intervention
to make it more meaningful.

When Ahalya started drilling Rajeev, stating that she has nothing to offer if everything was hunky-dory, he opened a Pandora’s
box by revealing that a different compensation policy was practised for senior executives and managerial employees. This
emerged to be a contentious issue that pushed the management as also Rajeev when notices were received at the London
factory by the corporate governance body and also from the Malaysian workers’ union.

If an organisation aspires to grow beyond a point, it must spread its wings outside its domestic boundaries, and this is how
Cleancare managed to make a footprint at the global level. Companies normally choose the production facility with several
considerations, but two major factors are market globalisation and reduction of production cost. Relocating the production units
is not always feasible from countries where the cost of labour is low. Hence, the management adopts the strategy of hiring local
labour i.e. the country in operation and balancing with the parent country, for instance, India, as expatriates. This was a smart
way to reduce manpower cost. In general, compensation policy is always based on local policies and practices, and there
cannot be two different principles or models.
 

Over a period of time, people have become more aware of their rights, benefits and entitlement. We have witnessed unrests in
many countries against differential compensation plans and practices and employment of expatriates. Herein, the bone of
contention is wages, which is not based on equity as a universal practice in principles. Now the company must focus on the
compensation policy on equity, basis the governance of the third country. The cost advantage for the organisation is to derive
more towards other factors such as supply chain, availability of raw materials, infrastructure availability, consistency in economic
policy and political stability. As against playing with the advantage of compensation on their side, Rajeev should focus more on
automation, artificial intelligence and machine learning to reduce the headcount and increase productivity, yield and a fool-proof
quality specification.

Many a time, one has observed that managers do not use their analytical minds to come out with new and fair practices.
Instead, they adopt an astuteness and device short cut means. Ahalya is thinking in the right direction of focusing on a fair
policy and practice on compensation for a peaceful work environment and let people be motivated so that they can contribute
for the best interests of the organisation. Minor savings on the part of compensation with foul pay will not only spoil the image of
the company but poses a huge risk for its operation and long-term sustenance. The company should plan towards reducing the
expatriates and engage more local people and follow the norms, practices, and culture of counties in operation.