(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.