Evaluation of compensation problems & soultions

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MAIN TASK: EVALUATION OF COMPENSATION: PROBLEMS & SOULTIONS
INDEX
1. COMPENSATION: MAIN TASK: ASSES MAJOR COMPENSATION ISSUES
2. ANALYZE EXTRINSIC AND INTRINSIC COMPENSATION
3. COMPENSATION: EQUITY & JUSTICE ANALYZE ISSUES OF INTERNAL &
EXTERNAL EQUITY
4. BOARD OF DIRECTORS: COMPENSATION MANAGEMENT
RESPONSIBILITIES EVALUATE THE ROLE OF PERFORMANCE
MEASURES
5. INTERNATIONAL COMPENSATION: MANAGEMENT AND SPECIAL ISSUES
6. COMPENSATION PLAN FOR INTERNATIONAL PERSONNEL

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Main Task: Assess Major Compensation Issues
The United States was faced with financial climate changes that impacted business as a
whole with respect to responsibility, affordability, and suitability of compensation and benefit
programs, CEO Jeff Immelt of General Electric labeled the term as "the reset economy"
(Purushotham, 2010, p. 549). A prosperous compensation and benefits platform requires not
only knowledgeable administrators but efficient face to face communication with employees
and explain compensation packages and link rewards with performance (Purushotham, 2009).
Securities and Exchange Commission (SEC) suggest that there are complex issues
underlying compensation practices (Meyer & Partners, 2010). Evident pay issues arise
regarding minimum wages, discrimination, and overtime pay (Kleiman, 2014). Other relative
and important issues have been suggested to as benefits, unemployment compensation,
pensions, and compensation on behalf of work injuries (Kleiman, 2014).
Paradigm Shifts
Technology Shifts. technology have changed at a rapid pace over the past 10 years,
organizational processes become outdated quickly (Taggart, 2013).
Shifting Demographics. Generational issues have created challenges that influence
organizations, the mass population from baby Boomers is entering into the retirement cycle
and there is a significant need for new labor, yet there has also been a reduction in
accessibility of experience accompanied with matching skills that are critical in workplace
(Taggart, 2013).
Non-compliance with monitored business practices. Monitored practices in business
compensation are done so through the equal pay act, fair labor standards act, and the

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employment retirement income security act and organizations need to recognize, understand,
and follow laws set in place to prevent expensive lawsuits as well as government penalties that
will encountered when corporations are in non-compliance (Kleiman, 2014). Compensation
committees have numerous topics to focus on and address such as the enhancement of tools to
design and oversee operational compensation programs that equally compensate employees
while still safeguarding shareholder value (Randolph-Williams, 2010). Problems encountered
by compensation committee's such as the ones listed above due to the fact that their roles have
become complex. Committee’s are not being proactive in forecasting new issues, since there
are ongoing changes in legislation and regulations with regards to the capacity of
compensation (Randolph- Williams, 2010).
Concerns with International businesses compensation. Despite the benefits international
businesses offer employees multinational organizations encounter substantial challenges with
regards to compensation issues (Haile & Williams, 2011). Intertwined in the issues with
globalization of business stresses development of management and its employees through
compensation in other countries (Haile & Williams, 2011). Problem developed in
organizations regarding employees who works internationally with compensation issues are
complex interconnected systems; including difficultly relating and motivating talented
employees as well as the recruiting processes (Haile & Williams, 2011).
Issue implementing pay performance systems in organizations.
Organization error in applying a pay-for-performance compensation platform occurs
when companies do not consider the issues implement it before carefully assessing

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the consequences. Ignoring the issue, results in costly damage control to repair the system and
in the process of fixing it there is a loss valued resources. Organizations manage pay systems
through avoidance tactics and disregarding compensation issues and as well as systems of pay
performance resulting in damaging consequences such as costly lawsuits and high
(Organization & Management Theory Conference Paper Abstracts, 2010).
Salaries paid to executives have been criticized for their hefty salaries referring to the
compensation as payment without performance, although advocates explain top talent
deserves proper compensation. Clarification in the rise of management compensation salaries
creates efficient labor but there has been a shift in recent years for the exchange of managerial
skills in strong performance related compensation (Organization & Management Theory
Conference Paper Abstracts, 2010).
Effective administration choice of employees should important practices and
principles include such as project planning, moving services, support provided to family,
career planning, evaluating process and assignments results are to be and to be included in the
international staffing process. The above elements contribute to core challenges in HR (Haile
& Williams, 2011).
Problems encountered with employee surveys.
SHRM published Foundation Human Capital Challenges Report in 2008 suggesting
that one of the biggest challenge for organizations is formulating appropriate performance
measurements due to that idea that it is hard to define true measures with relation performance
companies are faced with the creating, not only measurable objectives aligned with
organizational performance goals, but also ensuring that employees will be people accountable
their goals (Koss, 2008). Properly designed pay structures and performance measurements

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assist through appraisals for specific positions to assist this process and provide support in a
performance based culture (Koss, 2008).
Organizations may only use employee surveys once, use similar surveys annually,
provide poor summaries of survey results, and do not effectively communicate the results of the
survey or create a strategic plan of action from the results (Koss, 2008).
Employee surveys should address key issues if well designed gathering concise and
comprehensive feedback through online resources and cautiously interpret and summarize the
survey results (Koss, 2008) Successful survey results tend to use outside vendors to convey
and interpret the organizations results create a strategic plan of action and communicate
survey results accompanied by a plan of action. Results should be addressed though proper
chains of command for example first the administration team and second the employees
(Koss, 2008).
Changes in performance and compensation issues over the last 10 years and
Measurements role in compensation decisions
In the past single solution ideas for compensation plan were based in a model of ‘one
size does not fits all’. Over the years organizations encountered critical issues around
compensation systems and are now creating customized compensation systems meeting
employee needs that fit the company’s unique circumstances (Human Capital, 2010). The
General Schedule classification of compensation system has persisted with very few variations
for over 50 years. The General Schedule classification system is orderly pay progressions and
systems that are clear, offer over the years greater flexibility with composition and now
requires effort to be transparent as well as offer the best-designed compensation (Human
Capital, 2010). Resolutions made regarding compensation design and implementation systems

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are crucial. Organizational leaders need to consider design options from the perspective of
possible advantages and disadvantages, and knowledge not only addresses concerns but also
specifies employee rewards with reliability. Fair and credible pay for performance system
need performance evaluation system and proper analyze (Human Capital, 2010).
The business should be competent to provide predictable performances that offer
sensible compensation management that utilizes its manpower (Hsin-His, 2011).
Concepts of skilled worker and expertise based pay have created changes in the type of
compensation offered to employee (Mahajan, 2012). WorldatWork organization (2009)
concluded that rather then competency based pay structures there have been an increased
popularity in job centered pay structures (Mahajan, 2012). Essential in job-based structures is
focused on internal and external consistently and competitive, it is important to note that
consistency is done so in job evaluations (Mahajan, 2012). Job evaluations have been the
foundation of compensation theories for decades in both public and the private sector to make
compensation choices (Mahajan, 2012). Job evaluations measures the worth of a job in
comparison to other jobs throughout the company (Mahajan, 2012).
Pay strategy of an organization.
Total reward strategy. A total reward strategy to include following: base salary,
variable pay including both long term and short-term incentives, and perquisites for
performance and benefits administration (Haile & Williams, 2011). Total reward included
three fundamental elements in the framework: benefits, compensation, and experience
workers. The total strategy can comprise of coaching, training, and career improvement.
Reward strategies provide added factors of education and development programs attacked in a
benefits package (Haile & Williams, 2011). Configuration of the reward strategy in any

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business model for pay is now critical. Companies progressively using new pay models such
as skill-based pay to compensate employees for the capacity as well as the types of skills the
person has instead of the jobs actual requirements (Kleiman, 2014).
Note. Human resource can be an asset for capital in most successful companies
assisting companies to create flexible compensation in order to advance corporation
performance and retain talent (Hsin-His, 2011).

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Resources
Kleiman, L. (2014 ). Reference for Business. Encyclopedia of Business, 2nd ed.
Advameg, Inc. Retrieved on December 7, 2014 at
Koss, S. (2008). Solving the Compensation Puzzle: Putting Together a Complete Pay and
Performance System. E-book. ISBN: 978-1-58644-092-3, Chapter 3, pp. 21-36.
Retrieved December 12, 2014 at
https://www.shrm.org/Publications/Books/Documents/5_chapter3.pdf
Haile, S., & Williams, D. (2011). Factors that Influence Expatriate Compensation Problems.
Academy Of Business Research Journal, 125-32.
Hsin-Hsi, Lai. (2011). A Study Of The Relationship Among The Compensation Management,
Operational Management And Organizational Climate. Business Source Complete,
Ebscohost. International Journal Of Organizational Innovation 3, No. 3: 231-249.
Human Capital: Symposium on Designing and Managing Market-Based and More
Performance-Oriented Pay Systems…Organization & Management Theory
Conference Paper Abstracts. (2010). Academy Of Management Annual Meeting
Proceedings, 1-133. Doi:10.5465/Ambpp.2010.54506144.
Mahajan, A. (2012). An experiential approach to developing a pay structure: Insights from
teaching compensation management. International Journal Of Management Education
(Oxford Brookes University), 10(1), 2-11. doi:10.1016/j.ijme.2012.02.001
Pearl, M. & Partners. (2014). “Trends and Issues: Top 10 Executive Compensation Issues in
the New Economy,” Retrieved on December 7, 2014 at

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http://www.pearlmeyer.com/top10issues/index.shtml.
Purushotham, D. P. (2009). Compensation and Benefits: Theory to Practice. Proceedings Of
The Northeast Business & Economics Association, 177-179.
Purushotham, D. P. (2010). The Impact of Current Economic Climate on Compensation and
Benefits Issues. Proceedings Of The Northeast Business & Economics Association,
547-549.
Randolph-Williams, E. (2010). The Changing Role of the Compensation Committee: Five
Areas Compensation Committees Should Be Addressing in 2010 and Beyond.
Benefits Law Journal, 23(2), 17-27.
Reilly, T. (2013). Comparing Public-Versus- Private Sector Pay and Benefits: Examining
Lifetime Compensation. Public Personnel Management, 42(4), 521-544.
doi:10.1177/0091026013505504
Taggart, J. (2013) Workforce of the Future. Boston Consulting Group Report on Management
in the 21st Century, pp. 1-27. Retrieved December 12, 2014 at
http://www.mwdh2o.com/BlueRibbon/pdfs/Workforce-Future.pdf

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Analyze Extrinsic and Intrinsic Compensation
Analyze various pay structures and the pay model.
Types of Compensation  
The significance of money or pay is merely subjective that can psychologically
symbolizes pay (Chamorro-Premuzic, 2013). Base pay or variable pay tend to be the most
commonly applied methods for direct compensation and the most commonly applied indirect
compensation tend to be employee benefits packages (Chapter 13, 2013).
Compensation has three main choices explore with regards to pay; pay structures, pay level, and
pay distribution systems (Gerhart, & Rynes, 2003).
WorldatWork and Deloitte Consulting LLP Salary Structure Policies and Practices
conducted a survey on the types of salary structures as follows:
Figure 1: Salary structures range spreads/midpoint/Type of Salary Structure(s) used for US-
based Employees.
Salary
Structures
Label
Range Spreads/ Midpoint
Percentage Of Salary
Structure(s) Used For Us-
Based Employees
Traditional Range spreads of 20% to 40% and
midpoint progressions of 5% to 10%
23%
Market-based Range spreads of 30% to 80% and
midpoint progressions of 10% to15%
64%
Broadbands Range spreads of 80% to 200% with no
defined midpoints
12%
Step
structures
NA 8%
No formal
structure
NA 4%
WorldatWork and Deloitte Consulting LLP 2012, pp. 6-8

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The Policy and Practices Survey conducted in (2002) by researcher William Mercer
concluded 75% to 80% of respondents used traditional structures. Mercer’s 2001 survey
compared to more recent studies from 2012, seems to organizations are using market based
structures reflected by the upward trend, and the downward trend in traditional structures from
organizations. The most predominant kind of pay structure used by survey partakers was market-
based salary structures. The total of organizations using broadbands marginally decreased by 4%
of participants, and from the survey responders on no formal structures 5%. From the above
research it showed that pay structures act as the groundwork for processing base pay in a
company, it is a slow moving trend.
Employee rewards are both intrinsic and extrinsic.
Intrinsic rewards
Intrinsic rewards. Intrinsic rewards to employees may be praise or recognition when meeting
performance objectives. Intrinsic rewards can definitely be interrelated to performance, because
they are connected to the person’s internal sense of self (Shah, et. al. 2011). Intrinsic rewards
emphasize an accomplishment of something, which is positive, or has a sense of urgency that is
directly connected with performance. The intrinsic rewards are seen in job content, autonomy,
and involve challenges (Shah, et. al. 2011).
Harvard researchers suggested that intrinsic motivation was a stronger predictor verse
extrinsic motivation for job performance. Harvard researchers also stated that it was practicable
to expect increased financial rewards to inhibit intrinsic motivation and also job performance
(Chamorro-Premuzic, 2013).
Extrinsic rewards
Extrinsic rewards. Extrinsic rewards tend be tangible, tangible monetary rewards are offered by

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the employer to the employee as direct compensation (Chapter 13, 2013). Extrinsic rewards
denote the context of any given occupation compensation such as pay and fringe benefits,
promotion or advancement opportunities within the organization, the social climate, and physical
working conditions (Shah, et. al. 2011). Extrinsically motivated people have been suggested to
be drawn to compensation proposals that provide higher starting than compared to the run-of-
the-mill starting salaries (Dave et al., 2011). Delayed gratification and moderating emotions in
the moment are signs of extrinsic motivation in people, they tend to seek extrinsic rewards which
are based on future gain (Dave et al., 2011). So the work that they do is usually motivated
towards something in the future that would lead to feeling good, such as a promotion or pay
increase (Dave et al., 2011).
Extrinsic and intrinsic compensation and their respective value to the organization
In Dave, Dotson, Cazier, Chawl, & Badgett, (2011) article Dr. Ramon Aldag defined
extrinsic motivations and intrinsic motivations. Intrinsic work motivation reflects a cognitive
state to the degree in which an employee puts forth the energy in their own tasks and behaviors
that leads to a outcome resulting from tasks and behaviors. This motivational experience has
been described as self-fulfilling. To an extrinsic employee the consequence tends to be seen as an
object or event in which they experience or receive during or after work tasks are complete.
Various researchers have examined how rewards are separated narrowing it down to two
central categories labeled as “intrinsic and extrinsic rewards” (Shah, Warsi, Naeem, & Chaudhry,
2011, p. 2). Researchers have suggested that it is beneficial to distinguish between extrinsic
rewards offered and intrinsic rewards offered but create different types of outcomes
Practicing reward strategies are key in creating motivating roles in the workforce and
strengthening organizational performance. Reward strategies are crucial in playing a significant

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part to motivate employee and gain an overall effectiveness within the organization (Shah, et. al.
2011).
Researcher suggested that one of the most relevant finding in his research study the
importance placed on intrinsic rewards rather than extrinsic rewards. Also noted by the
researcher was that there was less concern related to structures with extrinsic rewards (Shah, et.
al. 2011).
Five examples of these extrinsic and intrinsic pay programs and explain your reasons for
selecting these programs.
Pay programs applying extrinsic rewards. Pay programs applying extrinsic rewards do so
terms of either
Salary. A factor viewed as simple, salary either increase or decrease. Salary added with
commission is an important structure (Riley, 2005).
Incentives. Behavior-based pay incentives tend to be offered to enhance motivation for
performance levels in the future, researchers suggest that employees are more likely to feel a
sense of control (Grandey, Nai-Wen, & Diamond, 2013).
Bonuses. Are a more unanticipated reward for or performance outcomes (Grandey, et. al., 2013).
Promotions. Are applied within organizational structures to motivate (Riley, 2005).
Job security. This is a significant factor related to the overall job content; it is the sense of
security within a job position at the organization as a whole (Riley, 2005).
Pay programs applying intrinsic rewards. Pay programs applying intrinsic rewards are
intangible rewards or psychological rewards like;
Appreciation. Acknowledged that every individual is doing work, which the organization values
can be verbalized through praise or acknowledgement (Riley, 2005).

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Sense of meaningfulness. This reward includes the meaningfulness or significance of the
purpose one is trying to reach, given opportunity to achieve something of value or has meaning,
matters in pay structures (Thomas, 2009). 
Meeting the new challenges
Positive interactions. A positive and caring attitude from employer is expected across today's
workforce, many staff work in diverse settings are encouraged keep positive interactions within
all encounters which is being implied as job performance (Grandey, et. al., 2013).
Progress. Personal progress is highly encouraged and it is key for employees to meet efforts or
accomplishing something, it keep the person feeling as if they are heading in a direction and on
the right track in there efforts which build employees confidence (Thomas, 2009).
Organizational methods that utilize extrinsic & intrinsic pay programs to motivate workers
& increase organizational productivity.
A study from a research article published suggested by researchers intrinsically nurses
hunting for jobs were motivated and attracted to pay plans that propose a great level of personal
involvement, to avoid burnout. Extrinsically motivated people who tend to have a lower
perception of attainment, solving problem abilities and supplementary learning abilities, and tend
to have a greater need for not only recognition but also control, with lower concentrations of
creativity, and tend to place greater emphasis on money emphasis. (Dave, et. al., 2011).
The results obtained from a sample of employees backed the investigation by researcher
Ryan & Deci (2000), he observed employees who are intrinsically motivated/rewarded when
compared to extrinsically motivated/rewarded tended to have more interest in there work
showing emotions of enjoyments or excitement which eventually helps enhance organizational
performance (Shah, et. al. 2011). The employees who are intrinsically motivated/rewarded

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tended to have more confidence, determination, job security and more inventiveness (Shah, et. al.
2011). The research done by Shah, et. al., (2011), acknowledges intrinsic rewards as a more
efficient method of rewards that extrinsic rewards.
Strategies to maximize organizational potential & meet the needs in workforce.
Successful direct compensation strategies facilitate corporations in not only attracting
employees but also retaining employees (Greene, 2010). Good direct compensation programs
have resources and staff to express organizational objectives and priorities, which will motivate
employees (Greene, 2010). Compensation pay rates improve organizational effectiveness with
equitable, fair, but competitive (Greene, 2010). Its important that the pay system incorporate the
organizations mission, strategy, structure, work culture, and environment objectives (Greene,
2010)

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Resources
Chapter 13. (2013). Compensation Strategies and Practices, E-book, CH 13, pp. 416-451.
Retrieved December 15, 2014 at http://ebook-ereferences.rhcloud.com/chapter-13-
compensation-strategies-and-practices/
Chamorro-Premuzic, T. (2013). Does Money Really Affect Motivation? A Review of the
Research. Harvard Business Review. HBR.org.
Dave, D. S., Dotson, M. J., Cazier, J. A., Chawla, S. K., & Badgett, T. F. (2011). The
impact of intrinsic motivation on satisfaction with extrinsic rewards in a nursing
environment. Retrieved December 14, 2014 at
http://proxy1.ncu.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=
bth&AN=60769699&site=ehost-live
Grandey, A. A., Nai-Wen, C., & Diamond, J. A. (2013). Show me The Money! do
Financial Rewards for Performance Enhance or Undermine The Satisfaction from
Emotional Labor?. Personnel Psychology, 66(3), 569-612.
doi:10.1111/peps.12037Gerhart, B., & Rynes, S.L. (2003). Compensation: Theory,
Evidence, and Strategic Implications. Thousand Oaks, CA: Sage.
Greene, R. (2010). Effectively managing direct compensation. SHRM, Reward Systems,
Inc. pp. 1-17. Retrieved December 15, 2014 at
http://www.sncba.org/pdf/direct_compensation_wp.pdf.
Hafiza, N. S., Shah, S. S., Jamsheed, H., & Zaman, K. (2011). Relationship
Between Rewards and Employee‟s Motivation in the Non-Profit Organizations of
Pakistan. Business Intelligence Journal, 4(2), pp. 327-334.
Jordan, P. C. (1986). Research notes. Effects of extrinsic reward on intrinsic motivation:

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a field experiment. Academy Of Management Journal, 29(2), 405-412.
doi:10.2307/256195
Shah, J., Warsi, J., bin Naeem, S., & Chaudhry, A. (2011). Reward practices: a technique
towards enhanced organizational performance. Retrieved December 14, 2014 at
http://search.proquest.com.proxy1.ncu.edu/docview/878742094?accountid=28180
Riley, S. (2005), Herzberg's Two-Factor Theory of Motivation Applied to the
Motivational Techniques within Financial Institutions. Senior Honors Theses, pp. 1-119.
Retrieved December 15, 2014 at http://commons.emich.edu/honors
WorldatWork and Deloitte Consulting LLP (2012). Salary Structure Policies and
Practices, pp. 6-8. Retrieved December 15, 2014 at
http://webcache.googleusercontent.com/search?q=cache:cFvd0_xS5igJ:www.worldatwor
k.org/sspp+&cd=2&hl=en&ct=clnk&gl=us
Thomas, K. (2009). The Four Intrinsic Rewards That Drive Employee Engagement. Ivey
business journal, pp. 1-5. Retrieved December 15, 2014 at
http://iveybusinessjournal.com/topics/the-workplace/the-four-intrinsic-rewards-that-
drive-employee-engagement#.VJGgbAAI

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Compensation: Equity & Justice Analyze Issues of Internal & External Equity
Examination Of Pay Versus Benefits In Organizations
Comprehensive transformations in employment relationships are now changing the
method in which societal resources are being dispersed. Organizational, management, and
connected researchers need to comprehend these changes and be ready to deal with the complex
effects changes will have on individuals and the material resources of individuals (Bidwell,
Briscoe, Fernandez-Mateo, & Sterling, 2013).
Diverse employment relationships have been seen in terms of a employment matters with
employees, workers are still doing comparable work but now operating under employment
arrangements which have changed depending on the employee’s work arrangement with a
company such whether they are subcontracted, contracted, or regular employees (Bidwell, et. al.,
2013). The absence formal employment relationship has lead to organizations withholding
benefits and a reduction of pay to employees such as contractors, subcontractors, or part time
workers (Bidwell, et. al., 2013). The pay arrangements allow companies to decrease pay with a
less rewarding function for external market rates or increase pay for the most rewarded functions
(Bidwell, et. al., 2013).
Table 1. Employment change: Effects of the New Employment Relationship on Inequality
(Bidwell, et. al., 2013, p. 85).
 Organizational membership decline of importance
 Performance pay has increased
 Growth of provisional employment
 Outsourcing has increased
 Decline in prearrangement of benefits to employees

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Table 1 on employment change and its effects of the new employment relationship
contribute to pay inequality (Bidwell, et. al., 2013). The wage inequality reinforces lower wages
and loss of benefits, there has been increased outsourcing of employees for occupations that are
considered low-skill and the outsourced workers tend to make less in comparison to regular
counterpart workers (Bidwell, et. al., 2013). Contractors considered to be high-skill workers are
being outsourced to independent contractors who tend to earn more then full time employees.
Another trend more new hires verse promotions in workforce labor (Bidwell, et. al., 2013).
Overall there has been an increase in seen in the correlation between an employees pay and an
employees ability (Bidwell, et. al., 2013).
Corporate Operational Risk
Risk is part of business with regards to a majority of operational functions (Earle, 2009).
Risk management tries to foresee business risks as well as consider the degree and likelihood of
the risk occurring and the severity of loss if a negative event were to occur (Earle, 2009).
Companies attempt to detect, label, and categorize the risk through assessments in order to
prioritize risks constructed on a process to avoid and plan for potential risk; this would be called
the risk management process (Earle, 2009).
The over-all public consensus according to Earle, (2009) determined that the banking
industry participated in the collapse of the credit market through poor compensation practices.
Poorly operated compensation practices can lead to failure in internal processes resulting in
fraud, illegal compensation practices and non-compliance of ethical and legal standards.
There is a strong push in the corporate world to integrate goals which create lasting
sustainability into traditional business bonus schemes, but until recently there has been a lack of
comprehensive implementation of these systems (Kolk & Perego, 2014).

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Multinational corporations have begun to establish sustainable bonuses in over the past
few years (Kolk & Perego, 2014). Kolk & Perego (2014) article assesses systems involving
different elements of bonus programs that have been applied in terms of performance criteria
with an emphasis on external vs. internal benchmarking, linking certain stakeholders, specific
kinds and bonus sizes that target transparency (Kolk & Perego, 2014). Focus is on corporate
awareness of responsibility sustainable bonuses, this is a signal demonstrating corporate
awareness of responsibility for society and stakeholders, but credibility fluctuates considerably
depending on the condition on these elements (Kolk & Perego, 2014).
The framework below in Figure 1 offers a sustainable design of bonuses, yet it is still
contingent on the company’s variable sets (Kolk & Perego, 2014). It is often argued among
scholars that argued that sustainability is created through the optimal alignment of incentives but
is also a consequence of internal and external factors in combination (Kolk & Perego, 2014). In
organizational strategies and incentive systems related to internal variables sett in place is
crucial, but misaligned incentives create challenges and a conflict of interest when dealing with
the risks possible inherent sustainability objectives pose. Therefore a balanced reward structure
which assists in overcoming challenges with regards to conflict of interest that are presented
(Kolk & Perego, 2014).
External Competitiveness. The relationship of compensation external to the organization is
external competitiveness compared to an industry’s competitors (Milkovich, 2001). External
competitiveness can be reputable when the organization’s pay structures meet or exceed a
competitors (Milkovich, 2001). Since the majority of total compensation packages are defined by
comparative or relevant industry external competition pay structures influence is necessary to
attract and retain a skilled labor and budget labor costs (Milkovich, 2001). Organizational

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policies and employee surveys for desired pay structures could be designed more efficiently to
endorse a compensation and benefit program when focused on external market competitiveness
(Milkovich, 2001).
On the same point pay structures need to demonstrate fairness taking in to account how
pay systems affects the overall organization’s compliance regulations and the employee attitudes,
behaviors, and overall mindset (Milkovich, 2001). An employee who views the pay as unfair
may be more likely to leave for another company who is offering equal pay (Milkovich, 2001).
New Compensation Design
A new compensation design labeled, “dynamic incentive account” was proposed by
scholars at leading universities (Earle, 2009). The proposed design gives a percentage of annual
incentives delivered into an account, a portion is then held in cash and another portion is placed
in corporate stocks (Earle, 2009). The idea behind this incentive account is that if stock prices
fall short occasionally the account can be re-balanced by shifting specified amounts from the
cash portion into the stock portion (Earle, 2009). The positive thing about this incentive program
is that the account gradually pays out vested money out over time to current or old employees
(Earle, 2009).
Its essential for organizations to retain and recruit ambitious and productive employees,
in order to do so the a compensation and benefit programs need to be efficiently designed and
promote external market competitiveness verse a structured to promote internal equity (Earle,
2009). Compensation has a variety of financial forms of exchange from employer to employee.
Tangible financial exchanges are provides to the employee such as; cash, benefits, and numerous
services to compensation employees (Milkovich, 2001). The objective organizations it to
determine effective, efficient, and realist pay structures, which align and support the

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organizations over all mission and goals.
Articulating Just & Equitable Compensation Concepts
Scott, McMullen, & Royal, (2011) study validates there is a need for a fair reward system
offered to employees in a work setting. Scott, et. al. 2011 conducted a survey to employees and
concluded with the following key points from their researcher which indicated that workers
expressed concern on different with regards to different reward elements (Scott, et. al. 2011).
The researchers also suggest that professionals should address issues regarding fairness to
individuals based on performance, this appeared to be a prevalent criteria for structures of reward
to employees, as compared to rewards programs which allotted pay based on employee
membership, group, or team involvement (Scott, et. al. 2011).
HR executives and managers have emphasized and endorsed concepts of reward
programs based on external benchmarking and policies to do the same; internal pay program
structures ultimately are what drive perceptions backing fairness and equality (Scott, et. al.
2011). Communicating reward issues is imperative in establishing employee perception of
fairness. Since the recession there has been a lack of fairness in employee perceptions,
employee’s need to re-rebuild trust in structures of business reward systems (Scott, et. al. 2011).
It’s important to note that unrewarded or unrecognized individual performance from employers
to tends to create more focus from employees regarding issues of fairness (Scott, et. al. 2011).
Larger organizations tent to more frequently reward verse smaller organizations, yet
employees tend to be more expressive about their concerns in a larger organizations verse then in
smaller organization (Scott, et. al. 2011). Reward professionals think that perceptions of fairness
and equity among employees are heavily influenced based on employee “engagement,
commitment, and tenure” (Scott, et. al. 2011, p. 88). To enhance employee perception of fairness

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researchers suggested that there needs to be an emphasis on employee motivation, which is
continually monitored and maintained with needed actions (Scott, et. al. 2011).

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References
Bidwell, M., Briscoe, F., Fernandez-Mateo, I., & Sterling, A. (2013). The Employment
Relationship and Inequality: How and Why Changes in Employment Practices are
Reshaping Rewards in Organizations. Academy Of Management Annals, 7(1), 61-121.
DOI: 10.1080/19416520.2013.761403
Earle, J. E. (2009). The Evolving Role of Risk Management in the Design and
Governance of Compensation Programs. Retrieved December 29, 2014 at
Kolk, A., & Perego, P. (2014). Sustainable Bonuses: Sign of Corporate Responsibility or
Window Dressing?. Journal Of Business Ethics, 119(1), 1-15.
Milkovich, G. (2001). Compensation. McGraw-Hill Publishing Co. ISBN 10:
0071123245.
Scott, L., McMullen, T., & Royal, M. (2011). Reward fairness: slippery slope or
manageable terrain? WorldatWork, 1-15.

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Board of Directors: Compensation Management Responsibilities
Evaluate the Role Of Performance Measures
Abstract 
This paper explores evaluates the role of performance measures related to job
performance standards and management/supervisor responsibilities from scholarly research
conducted on online (internet) from published articles. The paper examines performance
evaluations evaluation standards and implementation planning as well as addressing difficulties
faced when incorporating Performance Evaluations into an organization.

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Evaluate the Role of Performance Measures
After the most recent recession companies were forced to analyze compensation
programs and create a plan for compensation philosophy and keep records to reflect important
matters this is why formal performance evaluation plans evaluations so important (New media
learning, 2011).
Job Standards: Essential Components of Performance Measures
Formal performance evaluation plans are intended to meet a business and employee
needs through systematic judgments to provide positive outcomes such as compensation
increases, promotions at work, transfers to new positions or departments, as well as negative
outcomes such as demotion to an employee or even terminations (New media learning, 2011).
Job performance standards can are clearly written job description defining the job roles
and tasks performed by the employee and enforced through appraisal systems. (Mulvaney,
McKinney, & Grodsky, 2012). All performance appraisal systems should be rated based on
ratings objectives, which are tied to the overall job requirements (Workplace Answer, 2011).
The processes of formal evaluations or performance appraisals assesses and
communicates job performance ranking to employees making suggestions for any changes which
may be needed in terms of proficiencies, job knowledge, conduct, or attitude (New media
learning, 2011). Formal evaluations or performance appraisals are widely applied by supervisors
to train or coach individual employees and pinpoint performance insufficiencies in order for
them to be proficiently be addressed (New media learning, 2011).
Job Standards: Difficult To Incorporate Into Performance Evaluations
Performance appraisal can be difficult overall with confusing process and unclear rating
systems the appraisals tend to be viewed as biased from the employee’s perspective and in-point

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steps for effective creation of pay performance system for pubic groups (Mulvaney, et al., 2012).
Past organizational dilemmas were involving proper combination benefits to entice new
employee and retain top workers but in todays organizations there has been more of a concern
with benefits allocation with regards to distribution and budgeting. Compensation and benefits
programs distribution are being examined for fairness.
There has been continued alteration to corporate pay and benefits compensation plans to
offer employees fair compensation. SHRM (2012) stated minimum elements standards for
effective performance systems involved goal setting, performance reviews, and improvement
plans for performance. In the minimal standards a process should have; employee goal setting,
employee performance improvement plans, and alternative solutions for employees and proper
resources for documentation. In any assessment process for employee evaluations a company
should have set standards that are measureable and posses valuable (SHRM, 2012).
Disciplinary action or a termination can be hard to defend if the employee is being
evaluated with records that suggest the employee is meeting or exceeding work performance
expectations (New media learning, 2011).
Issues also arise is evaluations are to frequent because a supervisor may lean towards
overrating or underrating employee performance (New media learning, 2011).
Although the supervisor may be a comfortable overrating employee popular with subordinates if
they demote or terminate the employee it makes for a difficult defense legally (New media
learning, 2011).
Evaluation meeting should be immediately and carefully documented by the supervisors
on hat the employee and supervisor discussed, any agreements or resolutions made, due to the
fact that it could be used as evidence in court if there is a dispute by the employee suggesting

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discriminatory (such as harassment or discrimination) intentions from the ratings from the
evaluation (New media learning, 2011).
Why Performance Evaluations Important.
It is essential documentation due to ongoing issues with litigation in today’s workforce
(New media learning, 2011). Problematic employee behavior needs to be backed by proper
documents by supervisors, which includes relevant facts (New media learning, 2011).
Performance appraisals should not include inappropriate information such as sole parenthood,
marriage issues and divorce, financial concerns, medical concerns (New media learning, 2011).
Job Standards: Importance Of Performance
Measures In Compensation Practices, & Pay For Performance Programs.
Researchers have discussed differences among the design of employee performance
appraisal tools for years (Mulvaney, et. al., 2012). Pay performance scales require extensive
attention of all concerns and issues, no one model exists for the perfect design each company
must consider their unique conditions and make ethical and legal choices from to implement
performance system taking in to account undated information during any design phase (MSPB,
2006). During the assessment employees performance the following is needed;
 Regular monitoring and documentation of periods (MSPB, 2006).
 Requires timely feedback (MSPB, 2006).
 Accurate documentation which is relevant factual and significant (MSPB, 2006).
Adjustment may be needed at times for the evaluation system especially during the
implementation phase. Companies need to tailor pay for performance systems to their mission
and environment and supervisors delivering feedback need to recognize that employees that it
requires a huge sense of responsibility and obligation to the organization which ensures

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employees labors align with the priorities if the organization (MSPB, 2006).
Trust is essential in performance management process from supervisors/evaluators and
employees (MSPB, 2006). Supervisors must fairly handle employees when evaluating
performance, delegating workloads, and allocating rewards otherwise trust can be broken and
work motivation or performance standards can be jeopardized (MSPB, 2006).
Supervisors can contribute to change with regards to employee’s poor performance
improvement by providing good feedback and proper training that motivates employee behavior
to reach performance standards (MSPB, 2006). Pay reduction may be needed if there is no
improvement with their performance or other adverse action may be taken. Supervisors have the
necessary discretion to make personnel decisions (MSPB, 2006). Supervisors who evaluate
employees need to be held accountable when ensuring differentiating between scale levels of
performance (MSPB, 2006).
Appraisal Outcomes & Job Standards:
Necessary And Useful In The Overall Compensation Strategy To Link Performance
The researchers suggested that by providing information on such tools is an important
asset administrative for decision-making and developmental reading the employee appraisal
(Mulvaney, et al., 2012). Performance appraisals assist managers in decision making the pay
distribution, pay increases, promotion or reduction of an employee, as well as assist in the
identification of employee training that may be needed (Mulvaney, et al., 2012).
Since outcomes are critical in regards to performance measures designing system has to
encompass elements that lead to desired performance outcomes such as;
 Evaluate Performance level appropriately (MSPB, 2006).

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 Organizational outcomes are to be clearly explained so employees can understand
(MSPB, 2006).
 How performance supports the organization (MSPB, 2006).
The American National Standard for Human Resource Management (2012) suggested
that organizations are to strive to meet workforce objectives which are measured through all
members in an organization aligning individual goals with strategic goals regardless of the
organizations overall mission. From the article job standards are to be based on all employee
performances valuing it as critical to the organizations success (SHRM, 2012).
Swiercz, Bryan, Eagle, Bizzotto, & Renn, (2012) survey on performance appraisal
systems results concluded that procedural fairness is of primary importance in work settings.
Performance appraisal systems have been developed by companies to assist with employee
motivation and rewards. Yet the overall effectiveness of the appraisal system has been suggested
to be contingent on employee responses to the actual appraisal process based on the overall
outcomes in which the employee will receive (Swiercz, et al., 2012). Performance appraisal
systems are most effective when there is an overall consensus of perception of fairness among
employees, and they lead to employee productivity based on increasing compensation and
rewarding employees (Swiercz, et al., 2012).

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References
MSPB, Merit Systems Protection Board (2006). Designing an Effective Pay for
Performance Compensation System. U.S. Merit Systems Protection Board, pp. 1-55.
Retrieved January 4, 2015 at
http://www.mspb.gov/netsearch/viewdocs.aspx?docnumber=224104&version=224323&a
pplication=ACROBAT.
Mulvaney, M. A., McKinney, W. R., & Grodsky, R. (2012). The Development of a Pay-
for-Performance Appraisal System for Municipal Agencies: A Case Study. Retrieved
January 2, 2015 at
SHRM, Society for Human Resource Management. (2012). Performance Management
Programs. American National Standards Institute, Inc. ANSI/SHRM-09001-2012, pp. 1-
43. Retrieved January 2, 2015 at
http://www.shrm.org/about/foundation/products/Pages/PerformanceManagement.aspx.
Swiercz, P. M., Bryan, N. B., Eagle, B. W., Bizzotto, V., & Renn, R. W. (2012). Predicting
Employee Attitudes and Performance from Perceptions of Performance Appraisal
Fairness. Retrieved January 2, 2015 at
New media learning. (2011). Performance evaluations: more Important than ever in 2011.
New Media Learning, white paper, pp. 1-32. Retrieved January 4, 2015 at
http://www.juniata.edu/services/hresources/documents/whitepaperperformancerevieweva

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luations.pdf
I

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NTERNATIONAL COMPENSATION: MANAGEMENT AND SPECIAL ISSUES
Analyze Globalization and Compensation Issues
Globalization has become ingrained into the organizational cultures for companies and
their employees, with globalization comes a multitude issues. Simple economics for supply and
demand affect employee’s compensation a major constraint in today system is related to legal
issues surrounded in external and internal global market.
International Pay Systems: United States Laws Regarding Compensation Practices and
Policies, Such As The FLSA, The Pay Discrimination Act, And Others And Its Effect Of
Conforming Globalization
Progressively integrated systems have developed in business and interaction throughout
the world is leading policymakers to focus on conduct that is of a uniformed standard (Cummins,
2005, p.10). International trade agreements for example “The North American Free Trade
Agreement, NAFTA” and “The General Agreement on Tariffs and Trade, GATT” are committed
to commitments from nations for specified rules with regards to commercial and labor practices
(Cummins, 2005, p.10). Influential authorities in the growing trade associations such as the
“World Trade Organization, WTO and International Monetary Fund, IMF” decide how business
and labor operations take place in the US and other countries (Cummins, 2005, p.10). Legislation
with the Congressional trade is a governing statute, which is clearly for operating under fair
norms for human rights on an international stage. One example would be congress makes it an
obligation of the Executive to refuse trading rights if countries choose not to uphold fair working
standards and recognize employee rights (Cummins, 2005). This methodology creates clear
interchange of partnership between labor, human rights advocates, and civil rights. The United
States has become a leader in respects to the pursuit of justice for all workers (Cummins, 2005).

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Istanbul, (2004) article Promoting Entrepreneurship And Innovative SMES In A Global
Economy: Towards A More Responsible And Inclusive Globalization recommendations from
officials of governments suggested they want to promote innovative with SMEs in regards to
global economy. The article suggested there is a huge range of alternative ideas in plans of the
development economic stages of, different political context throughout the economies in
participating institutions, and various measures in participating political economic contexts
(Istanbul, 2004)
Title VII, the ADA, or the ADEA enforce employee right and deter organizations from
actions of discrimination and retaliation. Actions can be taken under these statues and filed with
the EEOC inside of three hundred days of when the alleged act occurred of discriminatory in
order to meet the standard of enforcement for the statute of limitations. In January 2009 the a
statue was passed called The Lilly Ledbetter Fair Pay Act to reverse a the amendment of the the
federal discrimination statutes which now allows for employees make a claim even after the 300
days based alleged acts discrimination (Dorsey & Whitney LLP, 2013)
Compensation system must follow labor laws such as the Fair Labor Standards Act
(FLSA), and Americans with Disability Act (ADA) as well as pay discrimination laws. The
global financial markets were effected by the US defaults on national debt raise the debt (Ostro,
2014). The President can choose to raise the debt maximum to safeguard sustained funding for
public spending programs and to stabilize the global financial markets (Ostro, 2014). Congress
formerly endorsed expenditures, which were in excess of the present revenues and debt limits
(Ostro, 2014). Presidential action is for unilateral choice can be made by the President in order to
increase the debt ceiling and financially back measures that are lawfully correct according to
constitutional laws (Ostro, 2014). If American debt is in default this would create an impact

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global markets and may lead to could a financial crisis on a global scale (Ostro, 2014).
National foreign hold American debt not just America, so instruments to measure the
pricing of debt run through global markets, depending on foreseeable valuing and appraisal of
the US debt becomes associated with U.S. dollar. An important fact is the reserve currency is
based on the US dollar primarily; this alone creates threats to the national security (Ostro, 2014).
America’s history has applied debt as a method to fund government expenditures and
become a normal political mark in the US. Escalating debt and divergence in political parties in
recent years has been used as a political bargaining chip (Ostro, 2014).
The 2008 Economic Stabilization Act of 2008 rescued a number of chief financial
institutions; after the act was pushed through compensation practices were transparent (El-Tahch
& Ricaurte, 2009). The Act created limitations on executive compensation enforced for all
institutions that partake in government loans (El-Tahch & Ricaurte, 2009). ESOP companies are
the main bridge for attracting the highest prospective executives providing parity in benefits by
giving benefit packages that equal out pay contributions. Yet the law prevents major employees
from accepting benefits that are contributions equal to pay (El-Tahch & Ricaurte, 2009).
The differences in compensation packages may be seen as necessary in order to
compensate for the country’s differences in general. These distinctions in laws, tax rules, living
costs, a variety of factors have to be taken into consideration when determining any
compensation employees, as well as administrators shipped from other countries (Hallie, &
Williams, 2011). When managing global compensation system complex issues have to be taken
into consideration, a suggested method to manage the problem was made by researchers Hallie,
& Williams (2011), company-wide systems should have comparable base salaries which
supplement allowances concurring the specified labor market levels.

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Global Market Place And Salary Issues: Means To Control Salary Budgets When Dealing
With The Multitude Of Issues.
Employees perceptions of fairness in compensation system are was linked to
organizations commitment and its intentional methods of employee turnover as well as
distributive justice dimensions. Researchers suggested a need for a negotiating role for
compensation system fairness (Choi & Chen, 2017).
Compensation in different countries has to cost-effective for organizations. There is a
need for enhanced compensation and benefits systems in order to retain and recruit foreign
employees, they also anticipate their acquired ability and knowledge will be a benefit in terms
salary advance in overseas markets as well as external marketability (Hallie, & Williams, 2011).
Communicate main strategic challenges decide what assignments will be assigned to what
countries and choosing what implementation plan and type of compensation programs will be in
place (Hallie, & Williams, 2011). Researchers noted that international experience is beneficial
long-term for occupation achievement for employees (Hallie, & Williams, 2011).
Researchers suggested an ideal method is to build a global labor force that is rich with the
accurate knowledge and excellent ability so good compensation programs can be created to
employees for career opportunity and development (Hallie, & Williams, 2011).
Expatriate Pay Approach
Expatriate pay believes in equalizing buying power in order to create a labor force that is
able to have quality living standards in their home county as well as their host-county
(Chitakornkijsil, 2010). The expatriate has an obligation to pay income tax to the home
governments and the host-country. Businesses can allow for an increase of the income tax rate to
the home–country by decreasing the expatriate’s take-home pay (Chitakornkijsil, 2010).

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Researchers such as policy analysts in suggest obstacles are need to overcome in expatriate
compensation plans that include cultural identification in differences (Haile, & Williams, 2011).
Employees perceptions of fairness in compensation system are were linked to
distributive justice dimensions (Choi & Chen, 2007). Researchers suggested a need for a
negotiating role for compensation system fairness (Choi & Chen, 2007).
Organizations need to think globally and not locally, this can be seen through countries
such as Nigeria and China which are behind in regards to the supply and demand management
skills and creating a gap between the compensation pay to their management labor as well as pay
to the clerical workforce (Hallie, & Williams, 2011). Multinational companies have to
contemplate possible foreign employees skill, style of learning, and the different problem solving
approaches when choosing and recruiting employees (Hallie, & Williams, 2011). Factors should
have to connect with organizational goals and achievement when deciding on problem solving
ideas, employees exchange of knowledge in host-country, or even the development of future
frontrunners in the organization (Hallie, & Williams, 2011).
Changes In Financial Regulation
SHRM conducted a Workplace Forecast Survey for over a decade. Identifying recurring
trends that have developed over the years. In a global economy in which international business
there has been added problems with regards to legal compliances due to the numerous laws that
must be followed across international borders.
A major issue concerning the business world is “global economic recovery and related
improvement in labor markets” (p. 36). The financial crises lead to new financial regulation
affecting corporate globalization. Financial Globalization has increased in its complexity

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regarding the application of instruments applied in financial markets and making the creation of
a standard set of criteria and guidelines much more difficult to follow. Although global business
has become a competitive scene there are complicated securities systems and new and evolving
technologies are two elements that were identified as influential on responses from regulatory
decisions (SHRM, 2013).
References
Chitakornkijsil, P. (2010). The internationalization of human resource management in
the host nation context & strategic approach of IHRM. International Journal Of
Organizational Innovation, 3(2), 379-400.
Choi, J., & Chen, C. C. (2007). The relationships of distributive justice and compensation
system fairness to employee attitudes in international joint ventures. Journal Of
Organizational Behavior, 28(6), 687-703.
Cummins, J. D. (2005). Invigorating Labor: A Human Rights Approach in the United
States. Emory International Law Review, 19(1), 1-68.
El-Tahch, A., & Ricaurte, M. (2009). Executive Compensation Programs in ESOP
Companies and Their Impact on Value. Retrieved January 4, 2015 at
Istanbul, (2004). Promoting Entrepreneurship And Innovative SMES In A Global

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Economy: Towards A More Responsible And Inclusive Globalization. OECD,
Organization For Economic Co-Operation And Development, pp. 1-59. Retrieved
January 4, 2015 at
http://webcache.googleusercontent.com/search?q=cache:nuTAxN3H0lMJ:www.oecd.org
/cfe/smes/31919278.pdf+&cd=1&hl=en&ct=clnk&gl=us
Haile, S., & Williams, D. (2011). Factors that Influence Expatriate Compensation
Problems. Retrieved January 9, 2015 at
Ostro, Z. K. (2014). In The Debt We Trust: The Unconstitutionality Of Defaulting On
American Financial Obligations, And The Political Implications Of Their Perpetual
Validity. Harvard Journal On Legislation, 51(2), 241-275.
SHRM, (2013). SHRM Workplace Forecast: The Top Workplace Trends According to
HR Professionals. Society for Human Resource Management, SHRM Workplace
Forecast, pp 1-66. Retrieved January 9, 2015 at
www.shrm.org/research/futureworkplacetrends/pages/topworkplacetrends2013.aspx+&cd
=1&hl=en&ct=clnk&gl=us#sthash.KUxrwSvO.dpuf
Sporer, M. J. (2013). In and Out: Reconciling "Inherently Incompatible" Group Action
Procedures Under FLSA and Rule 23. ABA Journal Of Labor & Employment Law,
28(2), 367-382.
Week 8 COMPENSATION PLAN FOR INTERNATIONAL PERSONNEL
Compensation Planning: Introduction
The course has brought in a variety of pieces associated with compensation and benefits,

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which includes current trends, the role of the board of directors in creating compensation for
executives, performance evaluation, internal and external equity, and international compensation.
One of the most challenging concepts is international compensation due to the fact it is
dependent upon the US in so many arenas with regards to different laws and regulations, which
govern compensation in other countries. This aspect alone makes it difficult for any HR
department operating in international companies to produce and support effective plans. Yet this
has to be established for day-to-day operations to run effectively. Due to the added issues with
globalization on the business front, management has asked you to design a compensation
program for international personnel. Employees or potential employees will be entering into the
United States and traveling out of the United States into other countries. This paper will give a
detailed description in detail of essential elements in compensation and benefit programs for
individuals moving in and out of the US, so it will entail plains for people moving “in either
direction.” The paper will prepare a sequence of options for management to consider and make
recommendation for a
plan and clarify issues and forecasts of doing business abroad with detail of the challenges;
issues will deal with international travel, cultural issues, currency fluctuation, and global unrest.
Analyze Globalization and Compensation Issues
Globalization has become ingrained into the organizational cultures for companies and their
employees, with globalization comes a multitude issues. Simple economics for supply and
demand affect employee’s compensation a major constraint in today system is related to legal
issues surrounded in external and internal global market. As long as the world economy
continues to become more unified, global organizations stay consistent with expansion of their

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responsibilities for global governance, and global movements of goods, services, and products,
people endure there ideals of problematic thinking of globalization (Boli, Elliott, 2004). There is
an expected increase in global imagery, world society thinking, relativized conceptions of
“nation” and “culture,” and the like, by a growing proportion of the world’s population. Further
expansion the premise of the global will be complemented due to the amplification of the
problems (Boli, Elliott, 2004). Although globalization can be a flexible concept, which possibly
has been overextended in to many directions. Globalization can create a host of social problems
creating institutionalization of the global order (Boli, Elliott, 2004).
Technology Makes It Possible
Technology is perhaps the most remarkable facilitator within Societal and commercial
changes today is possible due to technology. Consumers use Internet technology reach goods
across the world and gather information needed for purchasing goods and services (Wild, Wild,
& Han, 2009). Businesses apply technology to obtain resources and products from foreign
countries in order to buy and sell services and abroad (Wild, Wild, & Han, 2009). Technology
conduct business transactions through e-business using computer networks to buying, trading,
and exchange merchandise and provide services for customers. It also provides a channel to
collaborate with employees across seas and other partners (Wild, Wild, &Han, 2009) E-business
has made it simple for corporations to move abroad with their products and the exchange of
goods through import and export (Wild, Wild, &Han, 2009).
Globalization And Its Perspective Viewers
Globalization has forced countries decrease the number of barriers in trade and
investment industries so that there can be competitive grow and survival (Wild & Wild, 2009).
Globalization is different depending on business and people involved (Wild & Wild, 2009).

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Businesspeople may view it as opportunity for good and services resources to be opened up from
locations, which are low-cost and possibly open into new markets (Wild & Wild, 2009). A
political however might be worried about the impact of globalization will have on the power of
governments compared to its multinational companies (Wild & Wild, 2009). The employee’s
view of globalization may be seen as opportunity for new possible employment or threat to their
present employment (Wild & Wild, 2009). Through different perspectives and events related to
globalization, the debate whether to be for or against it is complex (Wild & Wild, 2009).
Hewlett-Packard: Globalization
Hewlett-Packard (HP) (www.hp.com) designed a special computer built to serve small
businesses, there was a need they built based on the need. Once HP identified there was a need
for a low-cost computer server and they patented it, the company took the rewards that
globalization offered (Wild, Wild, &Han, 2009). HP distributed its computer design based and
production methods through a manufacturing system that was a specialized system throughout
five Pacific Rim nations and India (Wild, Wild, &Han, 2009). Globalization assisted the
company with shipping delays, decreasing labor costs, taxes cost, and dispensing the new
product. Their international operations helped the company yet maximize productivity when
designing, building, and distributing its new product. HP used their innovative production and
distribution techniques cut out inefficiencies and enhanced the companies ability to be
competitive (Wild, Wild, & Han, 2009).
Global Mindset In HR
Global mindset with regards to HR professionals has been defined as an all embracing
method of thinking with regards to the aspect of doing business as it incorporates the
comprehensive idea of cultural sensitivity differences between employees in other countries, as

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well as inherent legal issues with the process of operating a business operating on a multinational
scale (SHRM, 2008). The biggest overall difference among competencies needed in HR leaders
at the top of their field whom are working in a global organization is comprehension in dealing
in basic competencies (SHRM, 2008). A senior HR professional’s role is now to create a shift in
perspective with increased awareness in a global mindset, including what is known in regards to
arranging business in other countries and enhanced awareness of what are inherent human capital
concerns (SHRM, 2008). An HR leader may have a global mindset that includes a working
knowledge of labor relations and unions in other countries, as well as laws and regulations that
are relevant in doing business in other countries along with cultural concepts of the work force
which could possibly affect employee relations and the overall total rewards design (SHRM,
2008).
Flexibility/Adaptability.
Flexibility and adaptability have increased in popularity as an important competency for
senior HR leaders dealing in global organizations (SHRM, 2008). Flexibility or adaptability for
HR professional includes their ability to adjust with any new or evolving approach that may be
needed for shifts to take place in the organization involving environments of external business
(SHRM, 2008). This will include a readiness to adapt in present situations or changes that are
projected for the organization. They can do this through flexible work arrangements and the
nature in which business is managed, as well as flexibility in one’s role as a senior HR leader
with relations to business stakeholders (SHRM, 2008).
Flexibility Policies
Employees have busy agendas outside of the work environment, daily responsibilities
with family life, personal healthcare appointment, Interests, hobbies, social engagements, paying

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bills, keeping up with daily home activities is time consuming. Employees can become so
overscheduled accomplishing individual tasks during normal working hours may be the only
reasonable or possible time for tasks to be completed (Miller-Merrell,  2015). Flexible work
schedules take into account hours that are more conducive to a functional schedule for employee
lifestyles and disposition (Miller-Merrell, 2015). Companies contemplating the idea of offering
work/life balance to employees need policies in place for flex time when needed. As long as
work is getting done on time and with the same quality standards, flexible schedules shouldn’t be
an issue for those employees whose jobs allow them to adopt one.
Research by Working Mother Research Institute also suggested companies offering
flexible work schedules had employees that were happier, more productive, lower levels
stressed, and more ambitious to work better (Miller-Merrell, 2015). Only 29% of employees
have flextime policies offered from their companies according to research by Working Mother
Research Institute.
The world’s population and its maturing workforce presents will bring unparalleled
changes to the economic global environment, generating rare challenges and opportunities
simultaneously to the corporate marketplace on a worldwide scale crossing numerous business
area (Chang & Tung, 2014). Strategies have to shift with regards to the following areas; human
resources, cross-cultural management, marketing in order to to meet both the opportunities and
challenges presented in any company and still fit into the international and national public policy
and laws at a functional level (Chang & Tung, 2014). An aging population has various effects on
national standards. Rising health care costs and pension create extreme pressure on government
budgets (Chang & Tung, 2014). Governments and businesses need to plan and prepare for short
term and long-term agendas to deal with issues that arise around the rapidly aging workforce

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coupled with the now higher level of unemployment with youth in these subdivisions of the
workforce (Chang & Tung, 2014). Businesses must acclimate to the need for retaining and
attracting and a workforce that encompasses the older generations. There has been a shift of
resources away from pensions and health care towards education and childcare over time (Chang
& Tung, 2014). On average In the United States, baby boomers spend more than two times as
much for health and have different priorities then compared to the previous traditional younger
workforce. Spending habits have changed in the younger generations, to more on health care and
less on automobiles and health (Chang & Tung, 2014). Baby Boomers are particularly significant
due to the fact this is the first generation in human history to reach that age with revenue and
substantial wealth. Previous U.S. generations earned less then the baby boomers have earned
with regards to any age (Chang & Tung, 2014). The aging population eventually will lead to
altered demand and consumption patterns for various sorts of services and goods bought by
consumers (Chang & Tung, 2014).
Possible Solution: Extra/Additional Savings Program
Additional savings program will allow employees to save extra amounts of revenue,
counting the bonus payments and unexploited vacation time into savings as part of total
conversion. Extra savings can be applied in flexible retirement, part-time work, vacations, and
other factors.
Total Compensation
Compensation and benefit authorities need to pay attention to pay trends and stay ahead
(Miller-Merrell, 2015). A recent study by the company WordatWork, who advocates on
compensation and benefits suggested that base salaries would have a 3.0% increase for 2015. Pay
increases can either meet, exceed, or lag behind the market place, to be competitive in labor

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markets compensation and benefit trends need to address and overcome challenges (Miller-
Merrell,  2015).
Expatriate Pay Approach
Expatriate pay believes in equalizing buying power in order to create a labor force that is
able to have quality living standards in their home county as well as their host-county
(Chitakornkijsil, 2010). The expatriate has an obligation to pay income tax to the home
governments and the host-country. Businesses can allow for an increase of the income tax rate to
the home–country by decreasing the expatriate’s take-home pay (Chitakornkijsil, 2010).
Researchers such as policy analysts in suggest obstacles are need to overcome in expatriate
compensation plans that include cultural identification in differences (Haile, & Williams, 2011).
Employees perceptions of fairness in compensation system are were linked to
distributive justice dimensions (Choi & Chen, 2007). Researchers suggested a need for a
negotiating role for compensation system fairness (Choi & Chen, 2007).
Localization Approach & Cafeteria Approach
Nazir, Shah, & Zaman, (2014) suggest professionals employed abroad with great
qualifications need to be offered higher levels of flexibility and independence in order to allow
for effective execution in job duties with regards to international assignments. The reduced
involvement of additional cost is a fundamental part of planning reward strategies. For the best
results it would be important to offer various compensation strategies, businesses can select a
mixture of multiple approaches that polices such as a localization approach or a cafeteria
approach (Nazir, Shah, & Zaman, 2014)
Localization Approach. This approach is address concerns related to excessive costs or

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inequality perceived amongst the workforce in foreign subsidiaries. Expatriates can be
compensated compared to local workforce. Exceptional supplements can be applied for different
living standards for the foreign country the employee is working in (Nazir, Shah, & Zaman,
2014)
Cafeteria Approach: Is popular for expatriates, it provides a set of benefit choices like a
company car, company-provided adjustments, and insurance that is not part of the expatriate's
taxable income (Nazir, Shah, & Zaman, 2014).
Total Compensation And Its Overall Meaningful To Employees
Often total compensation and its true meaning often is overlooked or undervalued by
employees who simply do not comprehend the meaning or information provided to them (Taylor,
2013). Complex terms and topics of Benefit and compensation leave employees are not always
provided with organized statements that make logical sense leaving the employee overwhelmed
or confused but the overall total compensation (Taylor, 2013).
Pay & Compensation Packages
Pay levels need to reflect comparable and competitive pay in comparison to the market
practice. If a business adopts this philosophy elements of a total pay program can be decided
based on what is suitable relative to corporate culture and business objectives (Chapter 3:
Compensation and Benefits Packages, 2001). An effective compensation program needs to also
be inline with employee performance and corporate performance. Employees would benefit from
clear expectations and the prospective rewards if expectations of performance are met. This can
be a good global pay approach or pay design to require a sense of ownership frameworks for
employees. Company compensation program shows employees with regards to rewarding
employee performance, commitment, motivating, recognizing the employee from the company

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(Chapter 3: Compensation and Benefits Packages, 2001). Instituting unbiased, fair, and
competitive pay scales are to be considered with more then simply a monetary reward can offer
merit increases, signing bonuses, and/or variable pay. Encompassing a wide range benefit
offerings and innovative perks are best when they offer generous benefits packages (Chapter 3:
Compensation and Benefits Packages, 2001). Company benefits can encompass a wide range,
specialists on compensation issues suggest employers perform better and do there individual best
if packages remain flexible and competitive with compensation offerings. Among the top
offerings suggested through research were a combination of; flexible work schedules, paid leave,
vacation time, pension plan, insurance and medical benefits, prepaid legal services, and stock
options (Chapter 3: Compensation and Benefits Packages, 2001).
Multiple Medium Communications To Employees For Total Compensation
Continual communicate updates and memos help retain workforce and enhance employee
morale (Taylor, 2013). Applying multiple mediums can assist in accomplishing comprehension
and keeping employees informed which can be done so at; employee meetings, performance
reviews, or social networks. This information can be provided at places such as during team
meetings, performance reviews, and even social networks (Taylor, 2013). To sum up total
compensation meaning for employees its essential for them to clearly understand the perks of
being employed in the company (Taylor, 2013) let employees know that they are being
compensated though other means such as information; a memo, information letter that is
addressed to each employee personally (Taylor, 2013).
Total Compensation Statement. Total compensation statement would provide a well-organized
synopsis of his or her compensation (Taylor, 2013). Including benefits performance pay
incentives and traditional benefits like medical, dental, vision, and life. Then move towards

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additional benefit options, which are low cost, suggest the impact on employee well being
(Taylor, 2013). Incorporate unique perks your company offers such as special discounts or
programs, wellness incentives, merit pay increases, and end with the important of retaining them
as an employees and any information that would support work life balance or impended policy
options on flextime (Taylor, 2013).
EEOC Complaints Of Wage Discrimination Are On The Rise. EEOC suggested a
wage gap in the U.S is an ongoing problem and complaints of wage discrimination are on the
rise. For example a standard female working full-time makes 77 cents for every dollar grossed by
a male equivalent (Spraggins, 2009). This issue attached with pay discrimination has caused a
rise in the number and frequency of claims filed with the EEOC (Spraggins, 2009). Countless
companies falsely believe it is acceptable to provide higher wage because of the competitive
work environment. Yet it does not change the fact that job duties are equal between positions, so
current employee might inquire about the issues with the unequal pay variance and file a claim.
In the perception of the government, pay differential is not acceptable at all (Spraggins, 2009).
Protect The Company Avoid Claims Of Unequal Pay/ Wage Discrimination. The
most essential provisions is to avoid unequal pay all together if and whenever possible. Equal
pay means tie pay to the work, which is performed, rather than the job title (Spraggins, 2009).
Any other work performed is to be grounded in business-related conditions like performance
pay, merit system, or a seniority system. Arrangements, which create associations of earnings in
quantity or quality of work, such as, such as experience or education or other business-related
factors are acceptable (Spraggins, 2009). Be objective and critical for positions when
determining direct or indirect pay. Make sure to review the candidate as an individual and assess
if there pay is appropriate in a comparable category or work as for as payment. Strongly attempt

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to offer advancements that are based in equal opportunity for all workers (Spraggins, 2009).
When conducting internal pay audits hire a third party or professional company annually to
review the records (Spraggins, 2009).
Employer steps after receiving a complaint of pay discrimination. First if a grievance is
received from an employee to the employer, the employer is to act by responding to the
employee with justifiable reasons that are clear and objective for the pay difference. If there are
not justifiable reasons seek to raise the wages of the employee to close the gap if the complaint is
unequal pay (Spraggins, 2009). The employee can file a formal complaint to the EEOC or even
sue for violation of the Equal Pay Act if they do not receive a response or the response is not
based on government standards (Spraggins, 2009). After the incident the company must take not
that further legal action can be filed if the company uses retaliation, reduce the wages of the
employee, or act with hostility to the employee (Spraggins, 2009).
Lowers Wages in Developed Nations. Groups which oppose globalization suggest that
globalization leads to dislocation of workers and this will eventually lead to lowered wages.
They claim that if an industrial job is replaced by a wealthy nation, the new job will pay less in
its wages to the employee then previous payment pays less and also creates employee loyalty to
decrease, and demotivates employee morale as well as job security (Wild & Wild, 2009).
Globalization has lead to fear related to lowering of wages and trade barriers (Wild & Wild,
2009). Globalization critics suggest that influential companies have continually forced low-wage
countries with manufacturing companies take a decrease profits, when retailers have cut prices to
consumers (Wild & Wild, 2009). This has resulted in practices in business to forcing a decrease
in wages and lead to poor working conditions worldwide (Wild & Wild, 2009).

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Reference
Boli, J., Elliott, F. (2004). International Handbook of Social Problems. Sage
Publications, pp. 1-62. Emory University. Retrieved January 4, 2015 at
http://sociology.emory.edu/faculty/jboli/isb408027.pdf.
Chang, M., & Tung, R. L. (2014). The Aging Of The World's Population And Its Effects
On Global Business. Academy Of Management Perspectives, 28(4), 409-429.
doi:10.5465/amp.2012.0070
Chapter 3: Compensation and Benefits Packages. (2001).
Chitakornkijsil, P. (2010). The internationalization of human resource management in
the host nation context & strategic approach of IHRM. International Journal Of
Organizational Innovation, 3(2), 379-400.
Choi, J., & Chen, C. C. (2007). The relationships of distributive justice and compensation
system fairness to employee attitudes in international joint ventures. Journal Of
Organizational Behavior, 28(6), 687-703.
Miller-Merrell, J. (2015). The future of flexibility in the workplace. PayScale Inc., pp. 1-
3. Retrieved January 13, 2015 at http://www.payscale.com/compensation-
today/2015/01/the-future
Nazir, T., Fida Hussain Shah, S., & Zaman, K. (2014). Review of Literature on
Expatriate Compensation and its Implication for Offshore Workforce. Iranian
Journal Of Management Sciences: A Quarterly, 7(2), 189-207.
SHRM, (2008). Leading Now, Leading the Future: What Senior HR Need to Know.
Society for Human Resource Management, SHRM. United States and subsidiary offices
in China and India, SHRM Online pp. 1-32. Retrieved January 13, 2015 at

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www.shrm.org.
Spraggins, C., SPHR. (2009). Unequal pay: legal and practical issues. PayScale Inc., pp.
1-3. Retrieved January 13, 2015 at http://www.payscale.com/compensation-
today/2015/01/unequal-pay-legal-and-practical-issuesFlexibility in vacation policies
Taylor, T. PHR. (2013). Communicating total compensation to employees in a
meaningful way. PayScale Inc., pp. 1-3. Retrieved January 13, 2015 at
http://www.payscale.com/compensation-today/2013/11/communicating-total-
compensation-to-employees-in-a-meaningful-way
Wild J., & Wild, K., Han, H. (2009) International business : the challenges of
globalization. Chapter 1 Global Business Environment. Pearson Prentice Hall. Retrieved
January 13, 2015 at
http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplechapter/02
73752634.pdf.

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