The effective reward and compensation strategies

Published 13 Mar 2017

The exodus of multinational companies’ production centres to China has resulted to serious human resources issues that need to be addressed before matters get out of hand. Specifically, companies have been faced with the dilemma of developing and institutionalizing competitive remuneration packages to their Chinese employees. In the free market economies where parent companies are located, remuneration packages are determined through competitions, whereas those in emerging China, with state controlled economy, lack proper market for determination (Ming 2003). This analysis shall therefore develop a system that will aid in the process of determining remuneration packages that would leave employees with motivation to work harder in respective companies’ duties. This dissertation is therefore an evaluation of how multinational companies opening facilities in China could use their blend their western organizational culture with Chinese business and cultural practices to establish and maintain highly motivated and thus productive labour force.

The firsts step would involve comparing best practices in western organizational culture. Specifically, the dissertation shall look into aspects that could successfully be applied in Chinese society. This will help avoid challenges, such as instituting programs that could be in conflict with the Chinese culture. Remuneration programs of companies that have had success with Chinese human resources would be investigated and most effective ones get incorporated into one framework. Reasons for choosing the specific groups incorporated in the resulting best practices framework will be explained accordingly. Weaknesses in any of the included practices shall be rectified.

After compiling the best practices instituted by western-based companies, especially the UK and the EU, the project will look into processes of developing an understanding of the traditional business reward system of Chinese society. These practices will be incorporated in the best practices explained above. This combination will therefore result to improved hybrid systems that will the best from the west and the best from Chinese society. Members of staff will therefore easily identify with the processes as they include practices they have practiced before. Including their culture in foreign companies’ organizational culture will leave a sense of pride that would breed job motivation. This strong foundation would further leave employees eager to learn new western business processes; individual companies will therefore have the much needed employee goodwill to introduce best practices in business management. Equally, employees would feel obliged to forward more Chinese cultural practices that when incorporated could improve respective companies’ working environments.

The project will further look into how similar processes have been done in other countries. This is in consideration that China is not the first country for western multinationals to establish manufacturing centres; the companies had been operating in other countries with much success (Yang 2006). Studying successful cases will lead into better understanding of best practices-local culture mix. For instance, it shall be possible to understand which of the two (western verses local) should form biggest chunk of the mix at the beginning stages. Still on this undertaking, the study shall embark on investigating the level of cooperation from local employees, and multinational management practices that resulted to higher degrees of collaboration. All these factors would be incorporated in the final report. Apart from success stories, the study shall highlight be some failures by multinational companies to develop competitive remuneration that motivates employees. This will be used to illustrate some of the factors that individual multinationals should avoid at all costs.

The resulting framework, which could also be regarded as recommendations, will be scrutinized to match with international standards, the goal being to establish competitiveness. In this regard, companies that get to practice these recommendations would succeed in being competitive in the Chinese labour market. Indeed, highly skilled Chinese employees would prefer working with companies that understands and takes pride with local culture and best practices, while also introducing more efficient ways of running operations in Chinese business environment. Comparing with international best standards would help in seeing weakness areas, which would be improved further. The final framework will therefore operate in accordance to international best practices.

The project’s report (dissertation) will further highlight on the vitality of incentives in implementing recommendations. Providing incentives to employees is usually included in best practices of maintaining highly motivated and productive labour force (Davidson 2001). The remuneration provided by the companies is the beginning point of ensuring success in achieving this goal. However, multinational companies’ management should understand that remuneration alone is not enough, and therefore embark on developing processes of improvising more ways of keeping employees satisfied with their duties and responsibilities. This is where respective companies’ organizational culture comes handy, as it can help improve Chinese employees’ job attitude in accordance to practices that have proved to work in the involved line of business.

Organizational culture is hereby taken to mean practices that align stakeholders’ vision, goals and general attitude to those of the organization (Ken 2004). In the case of western multinationals, organizational culture will help Chinese employees understand what is required of theme in respective company activities. Individual companies should, however, ensure developing processes that will aid orienting Chinese employees to organizational culture. In addition to the organizational culture that has been in operation for some time, respective companies should consider developing ways of incorporating some Chinese cultural and business practices, which could definitely serve as morale booster among Chinese employees.

Other than using organizational culture in keeping employees motivated, individual western multinationals should consider incorporating Chinese employees in decision-making processes. This would lead to individual employees feeling appreciated and their abilities to accomplish duties and responsibilities taken seriously. These employees would therefore be more inclined in undertaking their duties and responsibilities with greater determination. Applying this process throughout the organization would lead to companies having well-motivated employees and therefore set the right foundation for their human resources. The pay back would be a long-term high productivity that would leave competitors admiring the achieved success. Delegation of duty is another factor that could leave stakeholders more motivated to play their duties with greater efficiency. Chinese operations of the multinational companies should therefore be very independent from home office lest Chinese colleagues feel they are being used primarily for cheap labour and not other skilled duties. Employees should also be involved in the process of reviewing business management practices in China. This should take place after local management becomes well accustomed to respective multinational companies’ business practices, from where home office in western countries should secede tight control to Chinese management. Stakeholders in the multinational companies, together with Chinese colleagues, should understand that open communication forms the bedrock of success in such undertaking. Indeed, the collaborators from either side would be able to pass important business information and therefore improve operational efficiency.


  • Davidson, T 2001, Motivating Employees, OUP, Oxford.
  • Ming, C 2003, Succeeding in Chinese Business, CUP, Cambridge.
  • Ken, D 2004, Organizational Culture in Multinationals. Ashgate, Aldershot.
  • Yang, J 2006, China Opens Doors, Financial Times, London.
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