“A Rewarding Life?”

“A Rewarding Life?” by Don Mackinley

My involvement in international human resources and reward and related matters essentially began in the late-1970s, almost as soon as I left university. My initial exposure was through various roles with Employment Conditions Abroad (ECA), a trade association, where I spent almost a decade of my working life. I then took on a number of regional and group remuneration and benefits roles (with Schering Plough and then Fisons plc initially and then Cadbury Schweppes plc [CS] which became Cadbury plc in 2008). Probably the most interesting aspect of my career development was that I was appointed to the most senior reward role in CS after only 6 months with the company and thus only about 4 years’ total specialist (and no HR generalist) experience in corporate environments. I have drafted this piece in a somewhat lighthearted Polonius style (ref: Shakespeare’s “Hamlet”) as some pointers for a newly appointed Head of Global/International Reward.

Incentives

  • An incentive is not a bonus (the former spells out that if “x” is achieved then “y” is awarded; the latter tends to be less explicit in its framing and outcome)
  • Have quantitative or at least measurable targets and the use of team, e.g. business unit level incentives massively reduce the amount of permutations…..and
  • Apart from “sales” arrangements, arguably too much “line of sight” can create more problems than it solves
  • Agree targets, weights, measures and communicate them with speed, ideally within the first few months of a business year
  • Keep post-hoc adjustments to results to a minimum and have a pre-agreed framework or guidelines for handling them
  • Long-term incentive plans are inherently unstable in a complex global economy; be prepared to agree measures and calibration with the RemCo and shareholders (after a battle), and then for what you have agreed to be hopeless, both as an incentive and recognition for whatever is achieved over the performance period
  • Remember, it is often the relativity of awards that give the potential for dissatisfaction and thus approvers should also have the prerogative to exercise discretion to ensure that egregious or unfair awards are not paid out
  • Designs which explicitly take from some participants and give to others will usually deliver more pain to the “losers” than “pleasure”, to the winners (Schopenhauer, the German Philosopher wrote in “On the Suffering of the World” – “A quick test of the assertion that enjoyment outweighs pain in this world, or that they are at any rate balanced, would be to compare the feelings of an animal engaged in eating another with those of the animal being eaten”….I strongly share the Schopenhauer perspective!
  • When cascading incentive plans internationally, make sure there is explicit agreement between the centre and the business on the calculation basis, e.g. annual(ised) base salary in some countries will consist of far more than 12 monthly salaries

International Reward

  • Regardless of the comprehensiveness of your policies, processes, procedures and checklists, you can rarely anticipate every issue that will arise from an international move, whether a secondment or transfer
  • Be prepared for some inconsistency in execution of a move, but try to work within some coherent principles (even if you need to augment current policies to accommodate them!)
  • Better to concede one off payments or benefits, than ongoing ones
  • International (i.e. off-shore) retirement benefits are often a nightmare from a personal income tax and administrative perspective and are best avoided if you can manage it if you wish to be fully compliant (consultants may try to convince you otherwise, but don’t listen)
  • Compliance in all aspects of international mobility is becoming both more difficult and yet more required; single and multijurisdictional tax and social security obligations, immigration and employment law are all increasing in complexity of impact as the international workforce becomes global in terms of home and host dimensions
  • Finally, income tax and social security obligations will often be driven by an employee’s own personal as well as employer circumstances in a country and operating by reference to free “Tax Guides”, rather than seeking professional advice, can be a false economy

Article by: Don Mackinlay, an independent advisor specialising in reward, HR and related activities.
6th April 2017

 

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