Creating an effective international reward strategy - in depth - Gateley
In depth

Creating an effective international reward strategy

Gateley Legal

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It has been projected that within the next 15 years, there will be a labour deficit in most of the 15 largest economies, including in three of the four BRIC nations. Given that these 15 economies make up 70% of global GDP, the crisis will affect almost every large multinational company.

When operating internationally, many organisations can struggle to attract, retain and motivate sufficient talent. While it’s true that international reward strategies and their applications are rarely the sole cause of this struggle, they are often at the heart of the matter.

Businesses need to revolutionise the way that work gets done and rethink the most basic assumptions about how organisations function; discovering new ways of organising and performing, alongside leading and identifying new approaches to recruiting, developing, engaging and rewarding employees across their international networks.

How to position your international reward strategy

In today’s rapidly changing and uncertain international environment, organisations in many sectors rely on the knowledge, skills and competencies of their key people to build and realise value, as well as intellectual capital. 

These key workers are increasingly mobile – both relocating and travelling for work – and performing their jobs in increasingly digital and virtual work environments. A growing percentage of today’s international workforce is “blended”; that is, a combination of permanent and contingent workers, both full-time and part-time, with a variety of needs and constraints. Often teams on international projects are not co-located because they are constantly mobile and often work virtually.

This increasing diversity of requirements means that in many organisations, identifying, positioning and managing an international reward strategy is no longer a bit part in the repertoire of global mobility professionals. Instead, an international reward strategy is a regular and central theme in decisions relating to overall corporate performance and business growth.

What are the benefits of an international reward strategy?

Very significant competitive advantages, both generally and specifically, can be derived from the design and application of an international reward strategy that complements the wider corporate aims of a business.

Generally, an international reward strategy that flexibly reflects an organisation’s overall commitment to its internationally mobile people will undoubtedly help gain the upper hand in the increasingly competitive search for cross-border talent.

More specifically, a substantial bottom-line competitive advantage can often be achieved by developing international reward structures that maximise opportunities for savings arising from accounting, tax and legal requirements in the jurisdictions which an organisation operates, as well as offering mobility as a reward or incentive for younger professionals, for whom rewards as experiences are at least as important as financial remuneration.

Why review your international reward strategy?

If your global mobility programme, or a significant part of it, exhibits one or more of the following issues or symptoms, then you should consider a review of your international reward strategy:

  • Difficulties recruiting, retaining and motivating key international people
  • Misalignment between business, global mobility and international reward strategies
  • International reward programmes driving behaviours that destroy rather than add value
  • Ineffective coordination on international reward-related issues between unit management and HR, compensation, tax, accounting, legal and communications specialists
  • Poor communication of international reward policies, leading to an unclear link between performance and reward in people’s minds
  • Increasing international reward costs without a clear link to increasing performance
  • Lack of response to the changing psychological contract between employer and employee
  • Difficulty in coming to grips with the wealth of information on market pay data that is now available through a variety of communications channels, and its relation to the global marketplace
  • Policies not designed for the actual multigenerational workforce needs
  • Your workers are increasingly mobile – both relocating and travelling for work – and performing their jobs in increasingly digital and virtual work environments
  • A growing percentage of your international workforce is “blended”, a combination of permanent and contingent workers, both full-time and part-time, with a variety of needs and constraints
  • Your teams on international projects often not co-located because they are constantly mobile and often virtual

This increasing complexity and diversity makes it a must for many organisations to take a fresh look at their international reward strategies, in order to ensure that they have a coherent, flexible framework of strategic reward principles and policies in place to meet tomorrow’s demands.

How can we help?

We can work with you to develop appropriate international reward strategies by identifying where you stand currently and how any changes to your strategy would impact the business. If changes are necessary, we can work with you to implement them successfully.

Where do we start?

An in-depth consultative and technical appraisal would be carried out of your current international reward strategy and policies. Within the context of the values and aims of your future business and HR strategies, we will undertake a comparison of best and emerging practices, versus current reward strategy and policies.

The comprehensive review could include some - or all – of:

  • The international orientation of your business and global mobility policies
  • The type of global mobility undertaken by your employees, including contract workers, frequent business trips, short and long-term assignments, commuter assignments
  • Your international reward framework, including the balance between basic salary, variable pay and benefits, as well as home versus host-based pay, budget systems, lump sums, cafeteria systems and negotiation of personal agreements
  • The cross-border management of the impact of equity incentive and other performance related expat schemes
  • Your expense management processes, including removal and travel costs
  • Your international mobility allowances, including cost of living premiums
  • Your tax and social security administration, including tax equalisation policies

The various elements of our review can be undertaken as an integrated or standalone approach.

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