Multinational organizations are trying to create global standards for compensation practices but many still have a long way to go. According to Mercer’s Global Compensation Strategy and Administration Survey, less than half of the respondents approach compensation from a global perspective.
Forty-five percent of participating organizations take an almost exclusively global approach to compensation design while 39% are continuing to take a local approach and 16%, a regional one.
According to Mercer, the key to developing global compensation programs is to start with an overall global strategy—which many organizations simply don’t have.
Eighty-four percent of respondents said they have established such strategies for their executive-level employees, but significantly fewer have done the same for other employer groups. While 53% of companies have global compensation strategies in place for managers, only 30% have them for professionals and a mere 26% have them in place 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 and global leader of the study. “However, this trend is changing rapidly, especially among U.S. multinationals.”
The survey included responses from 168 multinational companies based primarily in the U.S. and in Europe, spanning a variety of industries. The companies surveyed have, on average, 20,000 employees and revenues of between $1 billion and $5 billion.
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