Question

Example of how can culture influence the international compensation design

Answer 1

Answer:

Explanation:

All compensation systems are affected by two cultural issues: corporate culture of the organization and the local culture in which the organization operates.

Compensation programs that might be extremely effective in a home-country location will fail if they violate local cultural values. Industries which tend to use individual rewards and pay-for-performance as both a motivator and core compensation component around the world risk their compensation strategies backfiring. Successful compensation approaches differ according to the type of organization.  For example, compare the compensation approach of the ownership driven structures of small, high-technology groups with the more traditional service and responsibility driven structures in the "smokestack" industry.

The effectiveness of using reward as a motivator is influenced by cultural attitudes about motivation. In group-oriented societies, it is not clear that individual pay relativities are high in society's hierarchy of needs. More powerful motivations are those centered on the fulfillment of group aspirations and potential. Incentive programs, such as employee-of-the-month, are likely to create embarrassment.  Motivation needs to be based around rewards that recognize the group rather than the individual. Programs that are aimed at differentiating individual performances are likely to be far less welcome in these group-oriented  societies where fear of loss-of-face may turn an employee program that may be successful in the U..S.  into a demotivator. Such programs may be equally unwelcome in nurturing societies which attach

greater importance to solidarity among colleagues, and individual prominence could  provoke resentment and jealousy.