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Influences on Employee Reward Strategies in International Organizations

Author

Listed:
  • Carolan McLarney

    (Dalhousie University)

  • James Hansen

    (Dalhousie University)

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.

Suggested Citation

  • Carolan McLarney & James Hansen, 2016. "Influences on Employee Reward Strategies in International Organizations," Proceedings of International Academic Conferences 3305200, International Institute of Social and Economic Sciences.
  • Handle: RePEc:sek:iacpro:3305200
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    References listed on IDEAS

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    1. Hofstede, Geert, 1994. "The business of international business is culture," International Business Review, Elsevier, vol. 3(1), pages 1-14, March.
    2. Chiang, Flora F.T. & Birtch, Thomas A., 2005. "A taxonomy of reward preference: Examining country differences," Journal of International Management, Elsevier, vol. 11(3), pages 357-375, September.
    3. Marjaana Gunkel & Edward J. Lusk & Birgitta Wolff, 2009. "Country-Compatible Incentive Design," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 61(3), pages 290-309, July.
    4. Tymon Jr., Walter G. & Stumpf, Stephen A. & Doh, Jonathan P., 2010. "Exploring talent management in India: The neglected role of intrinsic rewards," Journal of World Business, Elsevier, vol. 45(2), pages 109-121, April.
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    Keywords

    Human Resource Management; International Business; Banking;
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