Building an Effective Global Comp Strategy

March 4, 2008 (PLANSPONSOR.COM) - Some 45% of multinational companies in a recent Mercer poll take an almost exclusively global compensation approach.

A Mercer news announcement said, however, that t he majority take a local approach (39% ) or regional approach (16% ) to their compensation system .

class=”NormalIndent2″> According to Mercer, the vast majority of responding organizations (84%) have established a global compensation strategy for their executive-level employees while slightly more than half of the organizations (53%) have global compensation strategies in place for their managers, just less than a third (30%) have global strategies for professionals, and slightly more than a quarter (26%) for sales employees.

class=”NormalIndent2″> More than half of all participating companies have global strategies for managers. However, nearly a third more U.S. companies have them than European firms, Mercer said.

class=”NormalIndent2″> “While the majority of global compensation programs are for executives and defined at the corporate level, strategies for other employee groups are often determined regionally or locally,” said Darrell Cira, principal with Mercer’s human capital consulting business in Philadelphia and global leader of the study. “However, this trend is changing rapidly, especially among U.S. multinationals. As these employers continue to focus on facilitating talent mobility and reinforcing common organizational cultures and values over the next two years, they will need to globalize pay programs for their management and professionals.”

class=”NormalIndent2″> After defining a global compensation strategy, companies next need to restructure the human resource function so that the compensation programs can be administered in a more centralized way, Mercer said. The poll found 36% of responding organizations have centralized administration of their global compensation programs.

class=”NormalIndent2″> The survey included responses from 168 multinational companies based primarily in the United States and Europe that have an average of 20,000 employees and revenues between $1 billion and $5 billion.