Reward Mechanisms for your Global Workforce 

The modern business landscape is undeniably global. Companies with geographically dispersed workforces need to develop reward mechanisms that not only acknowledge cultural differences but also foster a sense of global unity and purpose. In today's interconnected world, companies with a diverse and geographically dispersed workforce need to move beyond traditional, one-size-fits-all reward programs. Here is how to create a program that resonates with a global workforce and fuels business success.

Understanding Your Global Workforce:

• Embrace Diversity & Tailor Rewards: Respect cultural nuances. Partner with local HR teams to design programs that cater to specific needs and preferences. This could include localized benefits options, wellness programs tailored to regional health concerns, or language-specific recognition platforms.
• Go Beyond One-Size-Fits-All: Offer a customizable menu of rewards. Think health & wellness programs, professional development opportunities, or flexible work arrangements. Empower employees to choose what aligns with their personal and professional goals.

Aligning Rewards with Business Goals:

Performance Matters – Link Rewards to Impact: Connect rewards directly to performance metrics and key business outcomes. This could involve performance-based bonuses, targeted recognition programs for exceeding goals, or profit-sharing initiatives that incentivize collective success.

Transparency is Key: Clearly communicate expectations and ensure fair, transparent evaluation processes. Employees need to understand how their performance translates to rewards, fostering trust and motivation.

Leveraging Technology for Efficiency and Impact:

• Embrace Digital Transformation: Utilize a global HR technology platform to streamline program administration. Track employee preferences, performance data, and reward redemption activity for deeper insights and program optimization.
• Real-time Recognition: Facilitate immediate feedback and recognition through technology. This fosters a culture of continuous improvement, and appreciation, and motivates high performance.

Fostering Collaboration and Knowledge Sharing:

• Incentivize Teamwork: Encourage and reward cross-border collaboration. Utilize team projects, global mentoring programs, and knowledge-sharing platforms to break down silos and drive innovation.
• Learning & Innovation Culture: By incentivizing collaboration, organizations can foster a culture of continuous learning, knowledge exchange, and global teamwork. This leads to enhanced employee engagement, improved problem-solving, and a stronger competitive edge.

Ensuring Fairness and Equity:

• Global Benchmarking: Regularly benchmark your compensation and benefits programs against local market data. Consider cost-of-living adjustments, cultural norms, and competitor offerings. This ensures your programs remain competitive, attract top talent, and comply with local regulations.
• Transparency Matters: Clearly communicate reward structures and processes to all employees, regardless of location. Transparency builds trust, reduces feelings of inequity, and promotes employee satisfaction.

By following these recommendations and staying agile in a constantly evolving business landscape you can create a global rewards program that is not only competitive but also resonates with your diverse workforce and drives business success. Remember, a well-designed rewards program is an investment in your most valuable asset – your people.

1. Conduct Global Employee Surveys to Gather Valuable Insights:

• Targeted Surveys: Don't settle for a generic survey. Develop targeted surveys for different regions or employee segments to capture specific needs and preferences. Consider translating surveys into local languages to ensure wider participation.
• Open-Ended and Multiple-Choice Questions: Combine open-ended questions, allowing employees to elaborate on their desired rewards, with multiple-choice options for ease of data analysis.
• Focus on Specific Areas: Tailor surveys to specific aspects of your rewards program. For example, conduct surveys to understand preferences for health and wellness benefits, professional development opportunities, or recognition styles.
• Incentivize Participation: Offer small rewards or recognition for employees who complete the survey. This demonstrates the value you place on their feedback and encourages participation.

2. Develop a Comprehensive Communication Plan for a Diverse Workforce:

• Multi-Channel Approach: Utilize various communication channels to reach your entire workforce. This could include company intranet, email newsletters, local team meetings, video messages, and translated flyers or posters.
• Localization is Key: Translate all communication materials into the native languages of your employees. This ensures everyone has equal access to information and eliminates confusion.
• Focus on Clarity and Transparency: Clearly explain the program's goals, eligibility criteria, how to participate, and the types of rewards available. Use simple language and avoid technical jargon.
• Ongoing Communication: Don't limit communication to the program launch. Regularly update employees on program updates, and success stories, and highlight employee achievements through the rewards program.

3. Pilot New Initiatives in Smaller Groups Before Full Rollout:

• Identify a Pilot Group: Select a representative group of employees from different locations and departments to participate in the pilot program. This allows you to test the program's functionality, gather initial feedback, and identify any potential issues before a wider rollout.
• Gather Feedback Through Surveys and Focus Groups: Actively solicit feedback from pilot participants through surveys and focus groups. This feedback can be used to refine the program and ensure it caters to the needs of the broader workforce.
• Analyse Data and Make Adjustments: Track key metrics such as participation rates and employee satisfaction during the pilot phase. Use this data to identify areas for improvement and make necessary adjustments before launching the program to the entire workforce.

4. Regularly Review and Update Your Rewards Programs:

• Schedule Regular Reviews: Don't let your rewards program become stagnant. Schedule regular reviews, at least annually, to assess the program's effectiveness.
• Utilize Data and Feedback: Analyse data from surveys, program usage statistics, and employee feedback to identify areas of success and areas for improvement.
• Adapt to Changing Needs: Employee needs and preferences can evolve over time. Be prepared to adapt your rewards program based on new data and feedback to ensure it remains relevant and engaging.
• Embrace Flexibility: Develop a rewards program that allows for flexibility. Consider offering employees the option to customize their rewards packages or allowing them to trade points for several types of rewards.

By implementing these strategies, you can create a rewards program that not only attracts and retains top talent but also fuels global collaboration, innovation, and ultimately, business success.

As companies review their expatriate compensation approaches to deal with the HR implications in the current volatile and uncertain external environment. Solving challenges related to inflation, new forms of mobility, etc. is becoming increasingly important as mobility teams to balance employee experience and the cost of international assignments.

The scope of global mobility is rapidly shifting from expatriate management to a more comprehensive vision of talent mobility. Expatriate compensation be it for Inbound, Outbound, and or third-country moves has always challenged mobility professionals. For many years, expatriate compensation has been focused on a dilemma: having assignees on expensive home-based expatriate packages versus localization - which is about replacing expatriates with locals or at least transitioning expatriates from an expatriate package to a local salary. Many predicted that the traditional home-based balance sheet approach would gradually disappear. The predictions of the demise of the typical expatriate approach have been exaggerated. We are witnessing the emergence of new compensation challenges instead, due to the complexity of having to manage multiple types of assignments and assignee categories.

The home-based approach still retains its utility for certain kinds of moves (e.g. business-critical assignments or moves to hardship locations). Local strategies are becoming more common but, due to the difficulty of applying them consistently in all transfer destinations, they are used only in some cases (moves between similar countries, developmental moves) and take multiple forms as “purely local” or local-plus approaches. Additional approaches like international compensation structures have emerged to address issues of global nomads.

The challenge for mobility managers is, therefore, not so much to find the best approach applicable for all assignments as to deal with individual assignment complexity, envisage greater mobility policy segmentation and, if relevant for the company, map each compensation approach to a particular assignment consistently.

Reviewing international assignment approaches in three steps:

Step 1: Understand the options available.

Approaches linked to the host country (local or local-plus)

While these approaches sound logical and natural (when relocating assignees to a new country, they will be paid according to the local salary structure in that destination country) their practical implementation is often tricky. Few employees accept a salary decrease when moving to a low-paying country. It is often difficult to reintegrate assignees relocated to a high-paying country into their original salary structure due to their inflated base salary.

The host approach was historically not the most common for assignees on long-term assignments. However, we have witnessed a growing interest in recent years in host-based approaches – either a host approach or local-plus approach (host salary plus selected benefits or premiums) – as companies are trying to contain costs and as significant salary increases in many emerging markets make host strategies more attractive.

Approaches linked to the home country ("balance sheets")

Home-based approaches have been traditionally the most used to compensate international assignees. Assignees on a home-based approach retain their home-country salary and receive a suite of allowances and premiums designed to cover the costs linked to expatriation. The equalization logic behind the balance sheet approach (no gain/no loss) encourages mobility by removing obstacles. Retaining the home-country salary facilitates repatriation. The balance sheet approach can, however, be costly. Many companies either look for alternatives or try to reduce the benefits and premiums included for less significant moves.

 

Other Solutions

Hybrid approaches attempt to combine the advantages of the home and host-based approaches. These often mean running a balance sheet calculation and comparing the results with the host market salary to determine what solution would make sense. A hybrid approach can work well for a small assignee population, but it can generate inconsistencies when companies expand globally, and the assignee population grows significantly.

Finally, some companies rely on international compensation structures that do not use the host and the home structures at all. These might utilize the average salary in a selected group of high-paying countries where the companies operate. This approach facilitates mobility for global nomads and highly mobile employees. It is, however, often extremely expensive and doesn’t solve all assignment-related issues (e.g., currency issues, pension, taxation). It is typically used in specific industry sectors (e.g., energy and engineering) and for a few assignees (top-level managers and global nomads.)

Step 2: Assessing assignment Patterns and Business Objectives

Assignment patterns

Are assignees moving between countries with similar salary levels, which would make the use of local or local plus easier, or, on the contrary, are expatriates sent to host countries with different pay and benefits structures (low-paying to high-paying, or high-paying to low-paying country moves)? Are moves for a fixed duration – e.g., assignments lasting one to five years – or will the company rely on permanent transfers with no guarantee of repatriation?

Assignee Population

Are assignees coming from the headquarters countries (typical for early stages of globalization) or is the number of third-country nationals already significant? A growing number of multinational companies report that the number of moves between emerging markets (“lateral moves”) is catching up with or exceeding the number from the headquarters, prompting a review of compensation approaches.

Are some assignees becoming true global nomads who move from country to country without returning home during their careers? Employees, and especially the younger generations, are becoming much more mobile, but only a minority would be global nomads. These assignees are usually top-level managers, experts with unique skills, or globally mobile talent sourced from small or emerging countries where the absence of career opportunities perspective would preclude repatriation perspectives.

The company's philosophy and sector

Some industry sectors like services and finances relocate employees between major regional and financial hubs which facilitates the use of a local approach, whereas energy and engineering companies transfer employees to hardship locations are a key feature of the business – and require comprehensive expatriation packages often based on balance sheets and international salary structures.

Step 3: Assess segmentation needs

An increasing number of companies rely on expatriate policy segmentation to reconcile the cost control versus international expansion dilemma – how to have the same number of assignments or more without increasing the budget dedicated to international mobility. Segmentation means reallocating part of the budget to business-critical assignees and limiting the costs of non-essential moves.

Some of the commonly used assignment categories include strategic moves (business-critical), developmental moves (which benefit both the company and the employee), and self-requested moves (requested by the employee but not essential to the business).

A consistent policy segmentation approach allows HR teams to present business cases or assignment options to management and provide a clearer understanding of the cost and business implications of relocation for different assignees.

It could also help manage exceptions into a well-defined framework based on a consistent talent management approach, as opposed to ad hoc deals.

Example of segmented compensation approach: the four-box model

While the notion of finding a perfect compensation approach that suits all mobility types has persisted, the best strategy will always be to use a mix of approaches aligned with the logic and purpose of the move in question. In practice, this could mean using a local or local-plus approach for moves between countries with comparable salary structures and tax rates in India, between more-developed locations, and for permanent transfers. Or it could mean using the balance-sheet approach for business-critical moves of highly mobile employees to emerging markets.

Author

Malathi KS
Principal | Director - Compensation Consulting
Mercer