Understanding Salaries and Wages in Global Business

Understanding
Salaries and Wages

in Global Business
• In the world of business, salaries and
wages are key components of employee
compensation, directly affecting
organizational performance, talent
retention, and employee motivation.
Definition and Characteristics
Example:
• Example: A software engineer at a
Salaries: Wages: multinational corporation earns a
Fixed annual Compensation based salary of $70,000 annually, while a
compensation, paid on hourly or daily factory worker earns wages of
monthly. Ideal for rates. Common in
$15/hour, with overtime pay for extra
managerial or temporary or labor-
professional roles. intensive roles. hours worked.
Stability in payment. Flexible for employers
Encourages loyalty based on workload.
and consistent Encourages
performance. productivity by linking
pay to work output.
Factors
Influencing Pay
Structures
1. Market Conditions (Global Business Strategy,
Motohashi)
• Example:
A multinational may pay higher
salaries in cities like Tokyo or New
Companies in Global firms adjust York due to higher living costs
competitive pay based on compared to smaller cities.
industries often market-specific
offer higher pay factors (e.g., cost
to attract top of living, labor
talent. laws).
Internal Company Policies (Intelligent Business,
Trappe):
Job Roles and Responsibilities Key Components of Policies on Job
Roles:
• Job roles and responsibilities outline
what each employee is expected to 1. Job Description:
do within the organization, aligning
2. Organizational Structure:
their tasks with the company's
strategic objectives. 3. Continuous Updates:
Importance:
• Clarifies each position’s contribution
to organizational success.
• Reduces task duplication and
increases efficiency.
• Provides a basis for performance
evaluation.
Internal Company Policies (Intelligent Business,
Trappe):
Types of Performance Metrics:
Employee Performance 1.Key Performance Indicators (KPIs)
Metrics – Specific measures linked to the
• Performance metrics are indicators
used to measure and evaluate an employee’s role.
employee's productivity, efficiency, – Based on quantifiable data.
and goal achievement.
2.Soft Metrics:
Purpose: – Focused on soft skills like
• Ensure alignment between individual communication, teamwork, and
efforts and strategic goals. leadership.
• Identify areas for improvement and
– Evaluated through surveys, feedback,
recognize achievements.
• Inform decisions on promotions, and interviews.
training, and compensation. 3.Professional Development Metrics:
– Measures related to an employee’s
continuous improvement, such as
certifications or participation in
additional projects.
Global Trends in
Compensation
Performance-Based Pay:
Incentives and bonuses linked to individual or company performance.
Example:Tech companies like Google offer bonuses for meeting project milestones.
Flexible Pay Models:

Profit-sharing plans or stock options in startups.
Case Study:Tesla’s use of equity compensation to align employee interests with company growth.
Remote Work Adjustments:

Companies now adjust pay based on employee location due to remote work trends.
Example: A company may pay less for a remote employee in a rural area than for someone in a
metropolitan city.
Communication
of Pay Policies
Using concepts from Useful Phrases: Formal Business Presentations
(Wallwork), effective communication is crucial in explaining pay
policies.
Key Techniques: Scenario:

• Be transparent: Use clear language to • When presenting a new performance-
avoid misunderstandings. based bonus policy, emphasize
fairness:
• Show rationale: Explain how pay
structures align with company goals.
• Address concerns: Use empathetic “This initiative rewards our top-
phrasing to build trust. performing employees and encourages
innovation, ensuring we grow together
as a team.”
Steps to
Ensure a
Correct
Salary
Structure
CLASS WORK
A multinational company (McDonald’s) is facing criticism from employees

because salaries vary widely across its branches in different countries.
Employees in low-income regions feel undervalued.
1.Identify the challenges in implementing fair pay globally.
2.Propose solutions, referencing trends and strategies discussed in the
session.
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Understanding

Salaries and Wages

Flexible Pay Models:

Remote Work Adjustments:

Key Techniques: Scenario:

A multinational company (McDonald’s) is facing criticism from employees

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