Proceedings of the 21st International Academic Conference, Miami

INFLUENCES ON EMPLOYEE REWARD STRATEGIES IN INTERNATIONAL ORGANIZATIONS

CAROLAN MCLARNEY, JAMES HANSEN

Abstract:

It is of great importance that organizations seek to have a stable, productive, and motivated workforce. The primary way to accomplish this is through effective reward strategies to compensate employees for their efforts. The challenge for the global organization is to ensure that the rewards offered provide motivation for employees and generate workplace commitment, regardless of location. Three notable influences on reward strategies were summarized, the first being Maslow’s Hierarchy of Needs. Maslow stated that all people have the same needs and are motivated to fulfill these needs as they increase in complexity (Maslow, 1943, p. 370). The second influence was Herzberg’s two factor theory, which identified two factors that provide motivation for employees, motivators (job growth, advancement) and hygiene factors (policies, compensation) (Herzberg, 1968, p. 56). The final influence studied was culture, which emphasized Hofstede’s cultural dimensions: power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance, long term orientation, and indulgence versus restraint (Hofstede, 1994, pp. 2-5; Hofstede, Hofstede, & Minkov, 2010, p. 281). The evidence showed that using these influences as indicators along with other factors noted in research, such as organizational goals and demographic employee data, will enable a company to make a more balanced decision with respect to international employee reward strategies. Thus, a variety of factors must be considered when creating or revising reward strategies to ensure that irrespective of location, employees will be motivated by the rewards. Three examples were noted of companies who have faced the challenge of implementing an international reward strategy. Both Colgate-Palmolive and RBC were found to have completed analysis with their reward strategies to ensure their international policies were motivating for staff. Lincoln-Electric was identified as a company who failed in their international reward strategy; they incorrectly assumed the rewards that worked in the U.S. would work overseas, which contributed to losses in their European division and required drastic efforts to correct (Hastings, 1999, p. 171).To support leaders in these decisions, a model for assessing reward strategies in the international environment was presented and discussed. Leaders will find the model useful, as it consolidates the key influences that must be considered when reviewing international reward strategies and can be customized to include additional factors as required.

Keywords: Human Resource Management, International Business, Banking

DOI: 10.20472/IAC.2016.021.025

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