Recruitmerny

Copy of chapter 3.2 (pages 96 to 104)

In The Corporate Guide to Expatriate Employment

Edited by Jonathan Reuvid

Published by Kogan Page, London in 2009

Part3 - Compensation, benefit and expatriate support

3.2 REMUNERATION STRATEGY FORMULATION AND DESIGN

Natarajan Sundar, Orgdesign Limited

In an increasingly competitive world, each organisation has to formulate a unique remuneration strategy aligned with its own business priorities and human resources agenda. The remuneration structure and the fixed vs. variable pay mix should address its specific challenges, and enable it to attract and retain required talent in the context of the relevant market and help drive performance. Short-term and long-term incentives should incorporate performance measures that reflect shareholder value creation for the company. A case study of Unilever at the end of this chapter illustrates various aspects of remuneration strategy formulation and design.

Remuneration, or the financial returns that people receive from their employers, is among the most important reasons why they work for an organisation.For the employers, remuneration is among the biggest costs. The way in which remuneration is determined and paid has a significant bearing on the quality of people it attracts and its performance. Even though it is a major cost, the challenge lies less in controlling it and more in deriving the maximum benefit for the individual and the organisation. Therefore, within broad limits of the prevalent norms and practices in the country and the industry, each company has to formulate its own unique remuneration strategy, structure and design. This chapter focuses on the financial rewards, fully mindful thatnon financial rewards, such as career, job satisfaction, training and felt fairness, are at least as important.

REMUNERATION STRATEGY

A good remuneration strategy has three basic policy objectives.

• Attract and retain the quality of people the...