Typware should offer an international compensation plan that is sensitive to the societal conditions of countries outside of Germany where its management personnel are employed. The rationale for this decision is three-fold. First, Typware made an autonomous decision to venture “aggressively into international markets – not only in France, Spain, Britain and the Netherlands, but in North and South America, China, India, Russia, Australia and Japan” (Fryer, 2003, p. 3). While Britain and the other European countries’ societal conditions would be similar to Germany’s, the remaining countries and continents are very different. One size does not fit all and trying to force one size to fit all does not equate fair compensation. Making the decision to aggressively expand carries with it the responsibility to pre-plan compensation strategy, including costs, prior to expansion. This does not appear to have happened, but nevertheless, the responsibility is not negated by this oversight.
If an international company needs and hires management personnel to represent them in various cultures and conditions, fair practice dictates that their unique needs be taken into consideration. The dictum of “what the market will bear” is true not only in sales but also in the negotiation of individual managerial compensation packages. It is a necessary cost of doing business effectively in multiple countries.
Second, compensation and benefits packages should reflect the value of the individual talent who inhabits a particular job. Pay grades for job levels that are considered subordinate may be more generalized, as the requirements for such positions are less and they are more easily replaced, when it becomes necessary due to attrition. This is not true in the upper echelon of a company that wants to remain a major player on the international scene. Executive management positions carry huge responsibility for decision-making that affects the solvency of a company like Typware. Such positions must be filled by the brightest and most innovative candidates and they must be retained, because longevity in key positions stabilizes a business. Losing such candidates to competitors can have more detrimental effect on Typware’s botton line than compensating them at a higher rate than preferred. The old adage that “sometimes you have to spend money to make money” was coined because it is too often true.
Third, due to the competitive global market, rates of exchange and differing other factors, the cost of living is literally higher for managerial personnel in various countries. Is it just compensation that a Typware manager in Tokyo pays twice as much for coffee than his counterpart in Germany, if they both receive the same remuneration? Additionally, the notion of “if an employee was not satisfied, he or she simply got a job elsewhere” (Fryer, 2003, p.3) is out of step with the twenty-first century view of humans as the most valuable resource a company possesses. Furthermore, if that dissatisfied employee happens to be one of Typware’s upper managers, with him or her goes a great deal of knowledge about Typware that might prove invaluable to its competition, who hires at the compensation level which Typware would not meet. Loyalties sometimes switch hands when more dollars and benefits are at stake.
However, this is not to say that Typware must offer a benefits package that meets absolutely every need that every upper manager has. Some conditions of society are universal and should be incorporated within the bounds of the employee’s salary and his discretion as to where that income is allocated. Education is one such consideration. It is not the responsibility of a company to pay for the education of its employees outright. A better, and more cost-effective, option is a scholarship plan with dollars invested based on student achievement and employee longevity.
In the particular case of Anne Prevost, my expert advice to Typware would be that it pays her the €244,000 she is asking. Anne is a valuable catch who “had lately been making inroads into many of Typware’s worldwide markets” and “had engineered a huge uptick in sales nearly singlehanded, much to Typware’s dismay” (Fryer, 2003, p.1). Currently, Anne resides in the enemy’s camp where she can continue to do damage to Typware’s revenue base. She has proven, demonstrated capability and other offers. Her considerable accolades include intelligence, strategic decision-making, finesse and understanding of global software, marketing creativity and success even under harsh economic circumstances. Even Typware’s Chief Executive Officer considers this woman to be the best candidate for a position within the company that is critical, and one that it has been attempting to fill for a long time. Anne Prevosit is reportedly growing impatient to conclude negotiations with Typware for the position and time is of the essence, so that her essential skills and talents are not lost to another employer.
Also, Anne is prepared to move her children to a new country and live and work in societal conditions which she and they have not formerly known. Therefore, her benefits package should be created with the sensitivity to this situation, but again, not in an all-out capitulation to every demand. She has already acquiesced that her children will attend a German school so that portion of her total compensation will not even need discussion. Two additional factors in the decision to negotiate her benefits as generously as is reasonable is that Typware currently pays females less than white males, and that one professional consultant group has already recommended that the company adopt a variable standard for creating a benefits package based on an employee’s location. Finally, I would not recommend that Typware pay Anne for the upkeep of her family member in assisted living. This should be her personal responsibility which she meets based on the decisions she makes on where to allot her income.
- Fryer, B. (2003). In a world of pay. Harvard Business Review.