Rethinking International Compensation

Abstract

In the global economy, transnational economic factors are affecting compensation schemes for both expatriates and local hires. Also affecting new thinking about multinational compensation issues is the issue of meshing corporate cultures with local cultures. Conventional thinking has emphasized that all multinationals-like all politics, in the words of former House speaker Tip O'Neill-are local. But the authors argue that the importance of national cultures is exaggerated when thinking about global strategy and compensation and reward systems. Business strategy and markets are more appropriate units of analysis, they say. Companies should adopt models that allow managers the opportunity to tailor the total compensation system to fit the context in which they compete within a framework of corporate principles.