Multinationals manage pay on a global basis

Many multinational organisations now manage their employee pay programmes on a global basis, according to a survey by Mercer Human Resource Consulting. 

The research reveals that 85% of respondents have a global pay strategy in place. About half of these have had the strategy in place for less than four years, while the remainder (43%) moved to a global approach more than four years ago.

Of the 15% of firms that do not have a global pay strategy, all say they intend to introduce one within the next three years.

Mercer’s survey includes responses from nearly 90 firms based primarily in Europe and the US. Three-quarters of the respondents have annual revenues of $1bn (£520m) or more, and all are multinational.

Mark Edelsten, a European partner at Mercer in London, said: “Increasingly, pay is being managed from a global perspective to facilitate global expansion efforts, better manage labour costs, create internal equity, or ensure effective governance.”

While pay and broader reward strategies can encompass many elements, the survey respondents indicate that their global pay strategies focus strongly on four areas:

  • The positioning of pay relative to the market (cited by 72%)
  • Short-term incentive design (72%)
  • Long-term incentive design (68%); and
  • Consistent methodologies for job grading/leveling (64%)

Despite the prevalence of global pay strategies, the survey suggests that monitoring these strategies can be a challenge. Only half of the respondents said that the local HR function has a direct reporting relationship to corporate HR.

Some respondents indicated that monitoring of global pay programmes is achieved primarily through the annual budgeting process (42%), global HR information systems (41%), and regular audits of country and business practices (34%).

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