Global company, global pay, global benefits


As businesses become ever more global, a growing number of companies are shifting to more centralised compensation and benefits structures to ensure workers and managers around the world share the same incentives.

A study of 275 employers by consultants Watson Wyatt Worldwide and WorldatWork found that more than half planned to shift to a more centralised structure over the next two years, up from the 42 per cent reported in a similar poll in 2004.

On top of this, two-thirds of multinationals had adopted a human resources strategy that was consistent across offices worldwide.

"A centralised global approach to compensation and benefits is necessary for consistency and alignment with company goals, although multinationals should watch how much emphasis they place on consistency," said Bob Wesselkamper, director of international consulting at Watson Wyatt.

"Local cultures and the availability of resources play a big role, too. The key is finding the right balance, as some programs are best managed globally, while others are best managed locally," he added.

Most multinational companies managed executive compensation, long- and short-term incentives and performance management globally, largely because these programmes were linked to their rewards and performance measures, the survey found.

"Companies are fully centralising programmes that drive strategic performance," said Don Lindner, compensation practice leader at WorldatWork.

"Centrally managing executive compensation programs allows multinationals to strongly link rewards for executives to the results of the total enterprise," he added.

Part of this push for more centralisation had come from regulatory reporting requirements, such as Sarbanes-Oxley Act, the survey reported.

Nearly half of the multinationals polled now had a formal approach to global corporate governance in place, including requiring benefit changes to be approved by global or regional management.

The programmes that most frequently required global or regional approval before changes could be implemented were executive compensation (92 per cent) and long-term incentives (73 per cent).

In addition, 80 per cent of companies were developing clear global policies, and 64 per cent were implementing consistent global tools, processes and technology to strengthen governance procedures.

"Instituting clear policies to support the design and delivery of new rewards programs globally generates benefits beyond simple compliance with regulations," explained Laura Sejen, Watson Wyatt's global practice director for strategic rewards.

"It can help companies uncover and address inconsistencies and help them communicate to employees worldwide the value of their total rewards packages," she added.