Business Strategy Must Account for Local Practices
Multinational companies operating in AMEA often find regional nuances make it difficult to implement rewards and talent programs that are developed at company headquarters outside the region. The challenge for many HR professionals in Asia that work for multinational companies is helping their colleagues at headquarters understand the local practices and why they might deviate from home country practices.
When it comes to compensation planning, for example, Chinese local companies typically provide rapid advancement for new employees that are accompanied by high salary increases. The gap in pay between entry-level employees in China vs. mid-level career professionals is often much larger in China than the US because of higher salary progression. To illustrate this base salary progression, consider the following example in Figure C.
In India, we have found through our data analysis that pay differentials within the country are largely being driven by services vs. product companies as opposed local vs. multinational companies. In the US, on the other hand, there continues to be large pay differentials for similar jobs based on geographic location— with the San Francisco Bay Area setting the premium for technology companies.
Meanwhile, on the talent management side, many markets in Asia are still culturally centered on organizational hierarchy. In North America and parts of Western Europe there has been a greater focus on enabling individual contributors to make cross functional moves or lateral job changes that expand their skillset without employees feeling they must take on new management roles to grow in their career. This idea has not (yet) become widespread practice in much of Asia, although we do see some startups in the region experimenting with it.
Companies will benefit from revisiting their AMEA strategy in 2018 and beyond while taking into account fast-changing market dynamics in the region as well as local rewards and talent practices (which can vary widely within the region).