(Week 9) International Reward and Performance

Management
Reward systems exist to reward employees for their knowledge,
skills and aptitudes. Economic and social factors strong influence
the design of reward systems, as does the frame of reference of
international managers. The new pay agenda emphasises on
individual market value, flexibility and performance.
Types of Rewards:
Extrinsic rewards: E.g. pay and fringe benefits, promotion or
advancement opportunities in the organisation, the social
climate and physical working conditions.
Intrinsic rewards: Rewards derived form the job itself, e.g.
variety, challenge and autonomy.
Transaction Rewards: Financial rewards in the contract of
employment.
Relational Rewards: E.g. Recognition, autonomy, learning and
development, quality of working life and work-life balance.
Foundations of Reward Systems:
Basic Pay: The labour market of a particular economy
influence base pay. Varying employee expectations of reward
in different national context make comparability and
differentials difficult issues for the international reward
manager. Different external and internal regulation make also
make comparison difficult.
Variable Pay: The advantage of this is that it motivates the
employee to achieve performance objectives and gives
recognition for their effort. Disadvantage is that pay is
contingent on individual or organisational performance, and
there is a degree of uncertainty and security.
Benefits: Benefits encourage prospective expatriates to accept
international assignments. It also enables expatriates to
receive a consistent reward package wherever their job may
take them.
Reward System Implications and Concerns:
Legal compliance: Need to comply with employee legislation
and be aware of social and cultural norms. ILO policy
Internal/External Equity: Ensure rewards are distributed in
accordance of contribution of employees and applied
consistently and transparently. External equity is based on
labour market equilibrium and equilibrium wage.
Corporate strategy: Align to organisations values, structure,
and design.
Reflection:

The article states that pay is prevalently used as a strategic tool for
the attraction, retention and motivation of employees in the seven
firms surveyed. Managing a pay reward system is difficult due to
institutional pressures, plurality of interests, and local management
resistance. Therefore, it is claimed that strategic pay isnt very
effective as it is poorly implemented and executed. Workplace
harmony and perception of equity may also be compromised. As a
result, new pay systems are often adapted to local circumstance, or
are not implemented at all.