Managing Global Compensation & Benefits

WorldatWork and Watson Wyatt Worldwide recently partnered to complete a second edition (first was in 2004) of their joint survey Effectively Managing Global Compensation and Benefits, which features the global HR practices of 275 multinational organizations that collectively employ nearly 10 million workers.

Key findings from the survey are presented below (note that WorldatWork members can access the full survey brief online):

• The most common structure for managing HR programs is partial centralization.  More than half of all multinationals (56 percent), however, plan to shift to a more centralized structure over the next two years, up from 42 percent in 2004.
• Two-thirds of multinationals (66 percent) report they have adopted a globally consistent HR strategy.  The strategies of financially high-performing companies tend to focus on outcomes - such as attracting and retaining key talent, linking rewards and results, and developing a common corporate culture - while the strategies of low performers focus on implementation.
• Half of multinational organizations (51 percent) have a formal or informal global total rewards strategy, and another 20 percent plan to develop a strategy within the next 12 to 24 months.  Twenty-nine percent have no plans to do so.  Of those companies that have a strategy, half (51%) also have a strategy for communicating it.
• High performing companies provide more opportunity for above-market compensation.  For example, 25 percent of high-performing firms target total cash compensation at the 75th percentile or higher (versus no low-performing firms).

At bit more detail on the second point above, which addresses the top objectives or focal points of global HR strategies for high versus low performing companies (note that this distinction is based on self-reported, but validated, responses to a survey question regarding the organization's financial performance relative to peers).  Some of the differences are revealing, if not surprising, but it is heartening for me to see that tying rewards to results appears to be a top priority for all respondents!

The top five objectives reported by high performing companies for their global HR strategies:

• Improving attraction and retention of key talent (50%)
• Ensuring a consistent link between rewards and results (50%)
• Developing a common corporate culture (39%)
• Adapting a global HR strategy to local culture (36%)
• Improving governance of compensation policies, implementation and administration (33%)

The top five (six, actually, since there was a tie for 5th place) objectives reported by low performing companies for their global HR strategies:

• Implementing a consistent global HR philosophy (58%)
• Ensuring a consistent link between rewards and results (46%)
• Improving attraction and retention of key talent (42%)
• Implementing streamlined and efficient processes (42%)
• Adapting a global HR strategy to local culture (27%)
• Reducing overall HR costs (27%)

Comments

[Paul Hebert]

I find it interesting that the objectives for the top and the bottom performing companies are pretty much the same.

I'm sure when you look into it more you'll see that "knowing" what you need to do is easy. "Implementing" is the hard part.