Global integration versus Local adaptation

In this analysis, a strategic appraisal is conducted to assess whether it is best to globally integrate the HR policies or adapt to the local conditions with a strong focus on human resource compensations. Essentially, some of the determinants may include structural concerns and organizational structures, political factors as well as pressure in decision making about integration. Pressures for global integration and local labor conditions Consistency in human resource practices is a concern for many MNCs. The MNCs strive to ensure that all their operations are common in all their subsidiaries. Briscoe, Tarique and Schuler (2012) argue that “integrating HR policies to the local conditions help promote brand and output standards. ” The gross costs of taking up the alternative may create pressures on the management of pay and compensation systems of the organization.

As a result, the MNC may contemplate integrating its human resource strategies in the local market. The objective in such a situation would be to limit escalating costs of acquiring and maintaining labor in their international investments. The debate about fairness and equity among employees in the same cadre in the MNC has prompted global integration of human resource policies. Quinlan, Mayhew and Bohle (2001) argues that since “standard salaries, allowances, and other labor incentives may vary from country to country, it is impeccable for the MNC to decide whether it will peg compensation for employees of the same competence at the same level,” or respond to the “local conditions of remuneration. The MNC is obliged to assume local conditions of human resource management in those developing countries than they can integrate the HR policies in developed economies.

As a result, the MNCs have limited control over pay and compensation as regulatory conditions define pay and compensation levels of employees. Structural issues The variance in compensation expectations and workplace culture among countries determine whether specific policies will apply to given operating environments. The perception of incentive according to culture artifacts vary according to a “country’s social, cultural orientations (Taylor, Beechler and Napier, 1996)”. For example, Sweden is dominated by the feminine ideology which is opposed to individual incentives, while Japan is a collectivist economy which is indifferent to incentives. Other incentives for living standards also play a role in deciding whether adapting to local cultures may be an option. Kiessling and Harvey (2005) described that “many multinational organizations are harmonizing salaries and allowance between executives with the same portfolio across their global subsidiaries and the headquarters.

” Consequently the cultural reasoning associated with linking pay and compensation incentives offered to the executives at the MNC’s headquarter and the local executives is another question that is only defined by cultural ethos prevailing in a country. While the Americas and European MNCs may emphasize on aligning incentive in all their subsidies to the headquarters, adoption of such policy because of difference in cultural beliefs of the host country may implicate its implementation. According to Adler and Ghadar (1990), labor market competition and strategic alignment of pay to premeditated production objectives is “demarcated by the culture of expatriate pay differences among countries. and Ghadar, F. Strategic human resource management: a global perspective.  Human resource management: An international comparison, pp. Allen, D.

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