Cepeda 1
Case Three: Question block A: standardization vs local responsiveness of compensation
systems.
1- Should he move some of the existing pay elements across the T account in figure 2,
shifting them from globally standardized to locally customized?
I think that Wolfgang should move the existing pay elements across the T-account
shifting them from Globally to local compensation systems. This is because through global
consistency which includes elements of rewards based on extra incentives and allowances. This
incentives and allowances depend on the business itself as some employers determine the base
pay. Whereas, Local compensation offers base salary, intensive compensation risk benefit, and
retirement plans. Also, one important thing to note is that through localization compensation
reward systems can be put into place which not only motivates but encourages others to work
harder. Wolfgang should consider the localization which may allow higher fixed pay level in
Japan and higher variable pay in the US.
2- Should he add or delete some existing practices from the T account?
Yes, I think that Wolfgang can add extra things to the T-account specifically to include
inequality within the compensation system because some rewards should be based on
performance and not rank or tittle. I think that this issue is very important especially if one
person is doing much more work than others. Another issue that can be added would be to
specify performance pay for specialized or individualized task. This was there is no error or
miscommunication regarding task pay.
3- Should he change the weights or emphases (percentages) of existing elements of the
pay system?
I think that Wolfgang should change the weight of the existing pay-based system. First,
effective compensation systems lead to increased productivity and management accountability.
Cepeda 2
He should increase the income rate or increase maximum pay percentage. This is because of the
variable rates in the USA vs other countries. He should concentrate on rates of return by
employee (performance plus tenure) instead of locally adapting a variable pay and there he
should also ask to develop an individual incentive rewards plan in order to reinforce individual
performance levels and create friendly competition.
Question block B: job-based vs competency-based compensation
1- How can the firm communicate to the geographically dispersed executives the need
to acquire and maintain those management competencies that have been declined in
the competency set (in folder three)?
The way that the firm can communicate to geographically disperse executives is by adding
competency assessment in performance and appraisals, open communication and transparency
and closing working relations with HR representatives in other markets. Lastly, to consider local
context in developing and training.
2- Would a purely competency-based pay system be somehow more flexible?
A competency-based pay system is more flexible because regards are based on skills,
knowledge and experience. In fact, in some competency-based pay systems are beneficial in
some countries and this is because competitiveness in some countries bene t in terms of
increased productivity which in turn motivates its employees to learn new skills, create a flexible
workforce.
It would be flexible because it would reward employees based on their competence thus
rewarding them and motivating them to learn new skills, and it would create a flexible
workforce, as employees are multi-skilled.
Cepeda 3
3- But then again, what about the standardization Healthcare has just achieved
through standardizing the job descriptions across units?
The healthcare standardization was impractical and ineffective because it ignores cultural
differences and had lack of communication and participation. Though Variable pay-based
included the three competencies (business, people, personal) it is 35% of overall standardized
pay, whereas fixed pay is 65%. Standardizing expectations does not ensure a raise in
productivity. Methods proposed may be unrealistic or ineffective because of cultural
differentiation.
4- How would he take these three competency categories and use them to develop a
series of measurable, behavioral indicators to be used to assess an executive’s
contributions to Healthcare? In what sense should these new behavioral indicators
be customized to local (regional) contexts? How can Wolfgang go about this process
to ensure a balance of organizational standardization and local relevance?
The three competencies are business, people and personal. Wolfgang could use these
competencies to develop behavior indicators for each type of competencies. For example,
measurable behavioral business competencies can include having to seek, evaluate and
implement solutions, alternatively they can also be measured by competing tasks, assignments
and seeing feedback. For people competencies, people need to be able to demonstrate empathy
towards others and building relationships with employees and customer. Lastly, Personal
competencies can be measured by simply understating policy and procedure, anticipate and
understand the impact of planned outcome or result. These behavioral indicators should be
customized to cultural differences.
Cepeda 4
Wolfgang can ensure organization standardization and local relevance by providing all
information to HR managers, have all regional managers understand the competencies as well as
for feedback. He would need to have supervisor teams that are trained and are monitoring
through host countries the competency-based pay system. Wolfgang can commit his
headquarters to monitor each area quarterly and review behavioral indicators and information
about the effect standardized processes in that country.
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