Editor's Note: Jacque Vilet shares some Classic pointers on the challenges of competitive positioning across multiple countries.
Many companies that have global operations believe they should replicate their headquarters’ compensation policies worldwide. After all, that’s what it means to be global isn’t it?
Compared to Benefits which are heavily mandated in each country, Compensation seems to be an area where companies have more latitude in setting policy. Top management in your company long ago decided that base salary, as part of its overall Compensation philosophy, would be at the 50th %ile of market. This has worked well, as your company has had no problems either hiring or retaining employees at that market position in the headquarters’ country.
Now, however, your company is going “global” and opening operations in three other countries. Top management sees no reason not to position base salaries at the 50th %ile in these countries as well They are pleased that this is one area where they can have a standard policy.
Then come the problems. Country Managers in all 3 countries complain they can’t hire anyone at such low salaries. Critical positions are being left unfilled which is making them miss deadlines for setting up shop. These are small operations, and they need to hire senior level employees who can “hit the ground running” instead of less experienced employees.
Even headhunters in each country agree that the salary levels are too low to attract the kind of experienced talent needed.
What can you do? Here are some things you might want to check into for each location:
- Does your company have a recognizable “presence” or name brand? Because of your company’s small size, do potential employees even know it exists?
- What is the competitive market like? Are there many companies like yours all competing for the same talent? Or are you located in a remote area where your company is just about the “only game in town”?
- What is the unemployment rate for the senior talent you’re looking for? Is it 15%, or more like 2%?
- Look at trends. Is the government giving incentives for your competitors to set up operations there? Is your fiercest competitor moving there in the next six months/a year?
- If companies are willing to share, what has the turnover rate been in the past couple of years?
- Although your operation may not have the luxury of hiring university graduates currently, are there plenty of universities in these locations that long term will help you attract talent when you are ready to hire more inexperienced employees?
Once the research is done, you now have data to show top management. After seeing the facts for each location they might understand what market positions in base salary need to be.
The fact is, market position for both base salary and even total compensation may need to be different for a variety of reasons that have little to do with market surveys. Use surveys as guides, but keep in mind that decisions should be made based on what is best for your company. That’s what “best practice” really means.
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Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, Texas Instruments and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expatriate twice during her career. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology plus an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque has been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.
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