IHRM Compensation

Answer

IHRM Compensation

Part 1

In their study, Kang & Shen (2015), compares how multinational enterprises in South Korea balance home and host based approaches when determining international remuneration for the home and expatriates employees.  In their findings, equality to those in similar position in home country is given precedent. To avoid disparities, most companies pay more remuneration, than standard in local market to curtail high turnover rates. From the study, human resource managers can appreciate the dynamics of entities in international markets. This study helps to appreciate the benefit of different compensation plans in every market.

Odunlami & Oludele (2014) found significant relationship between good welfare services to employee performance. They as well argue that better compensation management are closely linked to productivity. Furthermore, they established positive relationship between compensation management and employee performance. This study shows the close link between productivity and the compensation modalities. It therefore, brings out the close link between better remuneration and productivity.

Heywood & Jirjahn (2014) study findings help confirm their previous hypothesis and theories. Many foreign firms are more likely to utilise compensation schemes such as employee shares and profit sharing compared to local German firms.  Using such schemes, more local firms have higher propensity to succeed because of the interventions by the ‘Works Council’, which help to foster effective employee participation between firms and management. Through such arrangement, trust is built that make employees supportive and receptive to alternative compensation schemes. Foreign firms in Germany have no work council and this makes them to make decisions unilaterally without involving employees hence,  causing friction as they try to adapt and modify their human resource processes. The case presents a scenario of complexity of international compensation. Therefore, understanding the culture and embracing communication in international organisation can help manage compensation challenges and pitfalls, well helping resolve disputes and create trust.

According to Mishra, Punam & Shulagna (20120, culture acts as a base in formulating compensation strategies when operating on international level. There is close correlation between culture and pay system across nations that may influence how the organisation is managed. Some organizations give precedent to their compensation plan on factors such as social, economic and psychological needs of employees. For instance, some countries such as Britain prefer to give cars to managers, US prefer health care benefits, while China prefer housing, meal transportation and clothing. This study indicates the importance of understanding different cultures when making a decision to work as an expatriate.  Good compensation system will definitely impact on the level of motivation, competition, and efficiency and organisation performance. Human resource management have to appreciate the impact of culture in their compensation schemes to impact their productivity.

In their study Alexander, Jana, Steffen & Michael (2014), they established that regardless of the fact that disclosure requirements complemented pay for performance, stronger shareholder protection substituted pay for performance. The firms in the areas of study, tends to offer executive compensation factoring the stakes of the shareholders. Those that meet the interest and performance desired by the shareholders get the opportunity and are also expected to disclose. Furthermore, the researchers found out that stronger shareholder protection complemented the effects of concentrated ownership of pay for performance while on the other hand; disclosure requirement substituted the effects of ownership concentration. Therefore, it is apparent that formal institutions in US and Europe institutions play a key role in determining the level of executive compensation contracts. There is also complexity to integrate institutions and internal governance mechanisms. These findings espouse on the current knowledge on global compensation strategies. Firms will want to link the performance of the managers to the cost hence, priority is given to shareholders. The study has contributed on the broad knowledge by helping us to appreciate the interest of shareholders when it comes to compensation of executives. 

Part 2

Research article provided relates to the topic my study. Articles focus on compensation schemes in different countries across the world.  The compensation schemes and strategies that different countries tend to vary and this affects the level of productivity and many other issues. Culture differs across countries and this as well affects the compensation schemes.