Multiple Country Compensation Programs

Discretionary Non-Statutory Benefits

In this section, we'll look at a wide range of benefits that are discretionary, non statutory, in the sense that they are based on local competitive market practice and not mandatory. These are needed to attract local talent to work for your company. The term "allowances" can also be used to deliver discretionary benefits. Although it's not common in highly developed economies, discretionary benefits in less developed economies may include the provision of hard–to–obtain supplies or advanced–technologies. The following section is a discussion of some of the more common benefits found in various countries.

Discretionary Benefits can increase an employee's remuneration by 20% or more.

Discretionary benefits can be adjusted on a per employee basis even where base salary is set mainly through third parties such as the government or union contracts or driven by competitive practices. They will likely vary by country and company policy. The design will reflect the local competitive practices, organization culture, and business objectives and can be based on either the position or culture.

Discretionary benefits based on position are the most common and are linked to job responsibilities, or job level. The distinctions could be by exempt/non–exempt, non–executive/executive, or sales/non–sales positions.

• Automobiles. One of the most valuable discretionary benefits based on position is the provision of an automobile. This can be a complex issue, since the class of automobile improves with the level of the person in the organization. This practice seems to have come from two sources.

  1. Automobiles can be more expensive outside of the United States. In many countries (particularly Europe), company cars or allowances are very much a status symbol typically attained at managerial levels.

  2. Some countries' tax codes make automobiles a desirable form of compensation. In these countries, the employee may pay just a portion of the taxes on the use and maintenance of the automobile.

• Public Transportation. Countries and some organizations commonly subsidize public transportation.

• Meals. It's common and tax effective for employers in Indonesia to pay for their employees' lunches. In Mexico, it is common to provide lunch vouchers for free or at a substantial discount to employees.

• Executive perquisites. Executive perquisites (or "perks") are common in many countries. Perks often make up for lower executive pay levels in some countries. More recently, especially for publicly traded corporations, perks are being questioned by shareholders and other stakeholders (i.e. unions and employees) since they can be perceived as extravagant, especially when corporate performance does not meet expectations. As a result, perquisites continue to typically include the following categories but at less extravagant levels:

  1. Corporate Jet Use
  2. Company Car (mentioned in Automobiles above)
  3. Transportation with Driver
  4. Security
  5. Financial and Estate Planning
  6. Club Memberships

  You must keep executive perquisites in mind if your company is hiring local executives as the perquisites will need to reflect the local practices.

Some discretionary benefits based on position can be anchored to shift work or undesirable physical working conditions. For example, some doctors are given rural allowances to take assignments in remote locations of underdeveloped countries. Another example is some manufacturing jobs may have a uniform allowance.

When discretionary benefits are attributed to the local culture they are typically offered because of status or behaviors that support both the national and organizational culture.

Recognition. Multi-national companies typically have a global recognition award program to recognize and engage employees and reward performance, key service, and career milestones. Occasionally, recognition programs are managed at the regional or country level. Common recognition awards are certificates or plaques, cash, gift certificates, company logo merchandise, or food. In some organizations, the Lunar New Year 13th month pay is a profit sharing bonus delivered in a red envelope to recognize the holiday. In collectivist cultures such as those in Asia, Central America, South America, and Africa, team awards can be a successful recognition vehicle.

Work Life Effectiveness. With the increase of dual income households in most societies, many multi-national companies are now offering work-life effectiveness benefit programs for employees that support their family life objectives like marriage or providing care for elderly parents or young children. This type of benefit is common in collectivist cultures found in Asia, Central America, South America, and Africa. In India, marriage leave is common and can include up to 15 days paid leave. Some organizations in Ireland may also offer marriage leave. In Australia, the long service leave remains one of the great entitlements for working Australians. Annual leave entitlements are covered by the state or territory law and can vary by location. A typical long service leave in Australia is six to thirteen weeks of paid leave after seven to ten years of continuous service.