The paper "Practical Applicable Compensation System for the Healthcare Company" is a good example of a management case study. Compensation system within healthcare is not only an area of concern but also an emotive aspect. Healthcare uses a global compensation approach based on localized compensation. However, implementing the compensation system is extremely complex, time-consuming, and expensive for the company. Human resource managers of respective countries, on the other hand, support the localized system because it offers high returns and compensation to them. Considering that the current system is unsustainable, it becomes necessary to develop a friendly and sustainable compensation system that will enhance employee motivation and business development. Compensation and benefit designs Employees earn rewards in the form of compensation as a reward for their labour.
Such compensation involves financial pays such as salaries, wages, bonuses and incentives. Other forms of compensation are exempted from direct compensation where employees earn benefits such as retirement benefit plans, medical schemes leaves, employee in-services benefits, education, and workshops. Nonetheless, factors such as skills, experience, roles and difficulty of the job come to play when determining employee compensation.
Mainly, a just compensation system strives to find a balance between internal equity and external competitiveness. Analysis of healthcare global compensation system The aim of this paper is to suggest the practical applicable compensation system for the healthcare company. In a globalised system, compensation serves as the most critical facets of internationalization. As such, a good compensation system offers a firm with a competitive advantage. Nonetheless, compensation strategy heavily relies on national culture because employees tend to compare their earning with those of their counterparts in the nation while each nation has its own unique pay structures.
Thus, while striving to standardize compensation, best practices would call for respect of national culture and regional characteristics. Researchers argue that the best global compensation systems incorporate both aspects of localized and standardized compensation systems. Imagine you are a manager in the high-income country and you are being deployed in the low-income country for a managerial position. Will you be motivated to take this position in case of a localized compensation system? Building on the submission by Wolfsburg and the testimony from the various human resource managers, it is apparent that the hybridization of the standardized and localized compensation system is the best design that can be employed at healthcare.
This is because each system offers its unique benefits and disadvantages; hence, a hybrid of the two systems will yield the highest benefit. In this case, standardization will help determine standard pay for which healthcare employees will be compensated while localization practices will help attune such compensation to match the local needs. Localization involves basing the employees’ salary on the local (host country) salaries.
This method seeks to cater for the cost of living, including housing, taxation and dependents. The benefit of this system to Healthcare is to enhance administration and equity. However, this will push Healthcare to deal with diverse standards, multiple currencies, inflation and deflation rates, exchange rates, and tax systems of local countries. This means that there will be a lot of work for healthcare to meet localization compensation system. Healthcare will also require negotiated supplements and compensation based on host country economics, which will be competing against job responsibilities and performance. Therefore, localization would require tailoring compensation structure to each country (Mejia & Werner 2008).
The advantage for this approach is there is little variation if any in culture, laws, market characteristics, and institutions.
BOYETT, J.H., & BOYETT, J.T. 2004. The Skills Based Pay Design Manual. Lincoln NE: ASJA Press.
CHEN, S., & WILSON, M. 2003. Standardization and Localization of Human Resource Management in Sino-Foreign Joint Ventures. Asia Pacific Journal of Management, 20 (3), 397-408.
DING, D., FIELDS, D., & AKHTAR, S. 1997. An empirical study of human resource management policies and practices in foreign-invested enterprises in China: the case of Shenzen Special Economic Zone. .The International Journal of Human Resource Management, 8(5), 577-616.
FESTING M. & ENGLE D. A. (nd). Wolfgang’s balancing act: rewarding healthcare executives in dispersed yet integrated firm. 326-335
FUEHRER V. 2011. Competency based pay: a modular, flexible, and scalable business solution. WoldatWork Journal. Third Quarter. 5-16
LEAT, M., & EL-KOT, G. 2007. HRM Practices in Egypt: The Influence of National context. International Journal of Human Resource Management, 18 (1), 147-158.
LEDFORD, G., HENEMAN, R.L., & SALIMÄKI, A. 2008. Skill, knowledge, and competency pay. In L. A. Berger and D. R. Berger (Eds.), The Compensation Handbook (5th ed.). New York (NY): McGraw‐Hill
LEDFORD, G., HENEMAN. 2011. Skill-based pay. Society for Industrial & Organizational Psychology
MEJIA L. & WERNER S. 2008. Global compensation: foundations and perspectives. London: Routledge.
MANJUNATH V.S. & RAJESH CNB. 2012. Competency based compensation system: as a strategic HR. New Delhi: Tata McGraw-Hill publishing company limited
MAZER, M. AND W. NICHOLSON. 2004. Variable Competency Banding: Combining Variable Pay, Competencies and Broadbanding.” Workspan
WEICK, K., & ROBERTS, K. 1993. Collective mind in organizations: Heedful inter-relating on flight decks. Administrative Science Quarterly, 38, 357-381.
ZAIM, H. 2007. Competency Based Pay – A New Approach to Compensation Policy. Journal of Academic Studies 9(32): 115 – 133.