Global pay systems may simplify employee compensation at the administrative level, but the host of difficult problems that accompany them can create a great deal of extra work and tailoring at the executive level worldwide. The complexity of the global pay system in terms of ôpay mix, pay level, and the choice between global standardization and local adaptation of pay practicesö renders global pay a significant task that not just everyone is equipped to handle (Dowling). However, since approximately 85% of companies use global pay strategies, it is important for companies to come up to speed on how to implement them (Gurchiek).
A company that does business in many nations around the world pays its employees in each of those nations, and it must decide whether it should tailor salaries to local salary levels or try to achieve parity within the global company. For example, a U.S. programmer can expect to earn approximately double what a programmer in India would earn for the same job. Should the company pay the Indian worker according to Indian pay standards, i.e., half what it pays the U.S. worker? Or should it pay the Indian programmer commensurate with what it pays the U.S. worker to achieve pay parity within the company? A company that sees itself as one company with offices around the world needs to achieve pay parity within the organization and would have to pay the two programmers the same salary. A company that sees itself as having multiple subsidiaries around the world rather than branch offices of a sole company has the liberty to pay its remote employees in line with their local salary standards. When a company does pay the same salary for the same job regardless of location, it loses the benefit of owning offices in areas where salaries are lower. However, by providing pay parity, it also promotes movement within the company and finds it less onerous to convince employees to move to other offices around the wor...