Research Handbooks in Business and Management series
Edited by Frank Horwitz and Pawan Budhwar
Chapter 13: Compensation and total rewards: trends in emerging markets
Expatriate remuneration has traditionally been the focus of the literature on international compensation (Lowe, Milliman, De Cieri and Dowling, 2002). There is no doubt that the design of an expatriate’s compensation package is of the utmost importance in multinational corporations (MNCs) directly investing in emerging markets, given the visibility of these employees, their cost, and their strategic role in such enterprises (for a recent review of this topic, see Bonache and Stirpe, 2012). Nevertheless, this does not mean the subject in any way exhausts the field of international compensation for those corporations. Quite the contrary, in fact, as the bulk of compensation decisions and costs involve local or domestic personnel. The way of remunerating domestic personnel from emerging markets is a strategic decision for numerous reasons, including its impact on costs (Gerhart, Rynes and Fulmer, 2009), its influence on staff engagement and motivation (Prendergast, 1999) and its ability to attract and retain more highly skilled employees (Lazear, 1986). The compensation of domestic personnel from emerging markets (as opposed to expatriates) is therefore not only an important subject but also one that has been underexplored. Even when demarcated in this manner, the subject is vast, given the large number of areas that may fall within the category of ‘Compensation and Total Rewards’ for domestic personnel. This chapter will focus on the examination of a limited number of areas, specifically: issues related to monetary remuneration, individual pay for performance (IPFP), group incentives, and pay disparity.
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