Multinational Companies Pay Structures Extend Beyond Executive Compensation

March 10, 2008
Mercer studies show employers are focusing on talent mobility and are globalizing programs for management and professionals.

Less than half of the companies surveyed have predominantly global programs, according to Mercer's Global Compensation Strategy and Administration Survey. Companies take an almost exclusively global approach to compensation design but some take a local approach (39%) or regional approach (16%).

While the vast majority of responding organizations (84%) have established a global compensation strategy for their executive-level employees, much fewer have done the same for other employer groups, continuing to define their compensation strategies at the local or regional level. Slightly more than half of the organizations (53%) have specific global compensation strategies in place for their managers while just less than a third (30%) have global strategies for professionals and slightly more than a quarter (26%) for sales employees.

"While the majority of global compensation programs are for executives and defined at the corporate level, strategies for other employee groups are often determined regionally or locally," said Darrell Cira, principal with Mercer's human capital consulting business in Philadelphia. "However, this trend is changing rapidly, especially among U.S. multinationals. As these employers continue to focus on facilitating talent mobility and reinforcing common organizational cultures and values over the next two years, they will need to globalize pay programs for their management and professionals."

According to Mercer's survey, more than half of all participating companies have global strategies for managers, however nearly a third more U.S. companies have them than European ones.

"It's clear that the biggest difference between U.S. and European organizations with regard to global pay programs is at the management level," said Philip van Elsdingen, principal with Mercer's human capital consulting business in Amsterdam and European leader of the study. "European companies are less likely than U.S. companies to develop global strategies below the executive level because of a greater sensitivity to the potential barriers associated with implementing a common approach."

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