Sunday, April 20, 2014

GLOBAL HUMAN RESOURCES













Global Human Resources (GHR) is a must for all international companies.  It’s a rite of passage for up-and-coming executives, the first overseas assignment. But the conventional multinational approach—offering experienced managers plum overseas jobs with rich expat packages—is becoming less prevalent. The Great Recession has forced many companies to cut back on assignments abroad. Some firms are using shorter stints, often done far earlier in a manager’s career, to give workers global experience without requiring them to relocate. Others are pushing workers to really engage with the foreign culture they’re in, instead of living an insular expat lifestyle.

It’s no secret that many companies struggle with talent shortfalls. The problems start with senior leadership teams that lack international experience. Internal management pipelines are thin, forcing companies to poach talent from rivals, which invites all the problems of high turnover and salary inflation. Few have worked out how to reward and retain high performers in markets that are foreign to them. And although C-suite leaders may have a strategic vision of how talent should be cultivated, they aren’t always able to spread it through the ranks.

Companies in rapid-growth markets are well aware that these problems critically constrain their international expansion.  It makes sense that emerging multinationals are turning to the science pioneered by Western companies—the best practices of organizations that have been internationalizing for decades. Experience suggests, for example, that candidates for promotion to higher management positions must have done stints outside their home markets. This in turn suggests that the processes by which high potentials are developed and international assignments are given should be integrated. Other practices include aligning individuals’ career goals with overall business strategies, establishing uniform metrics for talent management, and investing in globally consistent learning platforms.

Unless a company also thinks about the art of global leadership, it will never reach its full potential on the world stage. This art means values and habits that are hard to measure or to instill through some step-by-step process but that show up unmistakably in great companies’ cultures, a commitment to inclusive leadership. Leaders who create high-performing teams that are greater than the sum of their parts value difference as opposed to merely tolerating it. They are curious about other cultures and know to check their own assumptions. They encourage discussion, actively engage conflicting points of view, and inspire teams to think creatively, all while pursuing a common mission.

Probably most leaders believe they are inclusive. Diversity, after all, is a fact of life for any global enterprise, and most everyone accepts the idea that talented people come from all backgrounds, genders, ages, and experiences. But in practice, it takes time to listen to people express ideas in unfamiliar accents or styles. It takes humility to accept that someone else might have a better idea. It takes patience to mediate a clash of cultural assumptions.

Just as companies adopt the tools and processes of world-class talent management, they must think about how to invest in these more subtle strengths. Learning the science of leadership will keep emerging global firms growing. But only by mastering the art will they become giants.


Frits van Paasschen, the CEO of Starwood Hotels, was talking to his wife, Laura, about China. With 70 properties in operation there and 80 more being built, the People’s Republic had just become Starwood’s second-largest market, after the United States. Van Paasschen jokingly said, “It’s almost like we should move our headquarters there.” Laura’s response, in a nutshell: Perhaps you should.

A year later, van Paasschen did just that—for a month. From June 8 to July 11, Starwood’s eight-member top management team worked out of Shanghai, doing business 12 hours ahead of, rather than behind, the company’s official White Plains, New York, headquarters. Starwood now plans to shift its base for a month every year to fast-growing markets such as Brazil, Dubai, and India. The end result of these relocations remains unclear: They may prove to be symbolic, they could be learning moments, or they might portend a permanent move of Starwood’s headquarters. Today they epitomize the mounting pressures on multinational companies’ organizational structures.

As emerging markets grew explosively in the first decade of the 21st century, multinationals raced to develop new strategies. However, changes in their organizational structures have been slow to follow, and people and processes are coping—but badly. Corporations are trying to shoehorn global operations into existing structures, which is in part why so many are unable to realize the full potential of emerging markets. In fact, 95% of senior executives say that they doubt their companies have the right operating model (of which structure is a key component) for today’s world. Organizational redesigns are complicated and politically messy, however, so responses have ranged from outright denial to grudging acceptance; only a few companies are actually trying to fix the problem.

The pressures on multinational structures seem likely to intensify. Businesses are increasingly seeking not just suppliers and raw materials in emerging markets such as China and India, but also customers. The recent recession has served as a catalyst: Many Western companies believe they have focused too much and for too long on the developed world. Moreover, multinational corporations are scouting for new products and services in developing countries—not just to break into them, but also to kick-start growth at home by offering more value for less money. GE’s recent reverse innovation success with its MAC 400 and 400i portable electrocardiography machines in India, for example, may seem simple, but most companies struggle to develop such innovations in developing countries or to transplant locally developed innovations worldwide. Such efforts sorely challenge established structures and processes.

At the same time, the nature of innovation is becoming more global because of technological advances. Organizations are figuring out how to break up and distribute, across nations and locations, tightly integrated tasks once performed at only a single site. This global division of R&D facilitates intrafunctional specialization among countries. The advantages include conducting work where the best expertise exists, at the lowest possible cost; exploiting time zone variation to operate 24/7; and mitigating risks by building redundancies across locations. The management dilemmas are, of course, substantial: How do you choose which processes to distribute and where to relocate them? How do you reintegrate them across borders? How do you get people to work effectively across organizational, national, cultural, and time zone barriers?

What’s emerging is a new structure, the T-shaped country organization. It helps to localize customer-facing operations even as it distributes back-end activities across countries. Showing the way are companies, such as GE, Intel, and AstraZeneca, that are adapting ideas from the Indian IT-offshoring industry and, in the process, rewriting the way corporations should think about structures.

Figuring out how to manage product lines, regions, and functions has been a perennial problem for multinational companies. Most started out by forming international sales divisions with country-specific subunits at home and by locating only customer-facing or front-end processes in each country.

Several companies later adopted transnational structures in order to exploit location-specific advantages in countries far from their home base. Each country’s operations specialized in part of the value chain (for instance, Germany focused on product engineering and Mexico on manufacturing) or, sometimes, product lines (Japan developed CT scanners, for example, and Europe X-ray machines).

The GHR Forum is a non-profit foundation best known for its annual international conference in Seoul, South Korea, which brings together opinion leaders, business executives, policy makers, intellectuals and journalists to discuss pressing issues facing the world, especially education, human resources development and talent management.

Throughout the forum, the GHR Forum produces a series of meetings, workshops and closed roundtables. For examples, International Education Minister Roundtables, University President Roundtables, Higher-Education Collaboration Meeting, Regional SME Meeting, UNESCO Ministerial Workshop, World Bank Policy-maker Workshop, UNESCO Technical and Vocational Education & Training Expert Meeting, Global HR/Education Index Reports, Global HR/Education Media Campaign, etc.

As globalization has rapidly changed our lives, the boundaries between countries have disappeared and movement of human resources from one country to another has become commonplace. Accordingly, international organizations, governments, corporations, and individuals are required to be globally competitive. The reason global competitiveness of human resources is a key issue is that now everyone, and not just a small number of elites in specialized fields, must compete to survive in the world. Because human resources are the foundation where the prosperity of individuals, businesses, society, and the world is built upon, the governments, businesses, and educational institutions must join efforts to improve the education, training, and utilization of human resources.

Global human resource management provides an organized framework for developing and managing people who are comfortable with the strategic and operational paradoxes embedded in global or international organizations and who are capable of managing cultural diversity. Because of cultural diversities and issues of convergence and divergence, it is impractical to develop a truly international approach to global human resource management. This means that organization structures, management styles, organization cultures and change management programs have to be adapted to the dominant cultural attributes of the host nation just as a careful balancing act is sought between being global and local needs.

Ask five Europeans how to do business in Europe and you'll most likely get five different answers. Of course, each diverse country comes with its own unique culture, heritage, lifestyle and work ethic. For instance, starting a meeting on time in Spain or Italy isn’t all that important, taking time to build relationships means more. But Germans tend to stick to a strict schedule, often foregoing small talk and getting right down to business. Northern European countries generally eat meals earlier than their southern counterparts and in the UK tea is popular, where Central Europe prefers coffee.

While the particulars vary, there are some commonalities you can count on. Whether you’re relocating for another position, meeting customers or working with your Europe-based team, here are five never-fail tips that will ensure business success across most EU member states.

Every meal is the most important one of the day. You know how business in the US is often conducted on the back nine of the nearest golf course? In Europe, it’s conducted over a plate. Much of the trust-building and even decision-making happens while eating and drinking. It’s a strategic sizing-up of one’s business partners, and it will often make or break the success of a project. So suck up your jet lag and put on something nice, because you’re going to dinner.

In the US, there’s a lot of focus on limiting meetings, having more concise meetings, keeping meetings from running over, and so on. Leave that thinking behind when you step off the plane. Europeans prefer to take their time and allow ample time for debate, digestion of ideas, reflection and processing—believing the art of discussion will lead to better results. So be patient and don’t micromanage your time. Otherwise you risk ostracizing business partners or worse, killing the deal altogether.

A European will measure your worth by how much you know about current events, the world, and historical happenings. A good businessperson is well-educated, intellectual and able to discuss topics of the day. Inform yourself before you go abroad so you can speak to the context you’re in. More importantly, bring something new to the table—don’t just repeat the latest headlines. Europeans value knowledge, and you’ll impress them greatly if they walk away feeling they learned something, even if it has nothing to do with the business at hand.

Most of us have heard the story about two European business executives from different footwear companies landing in Africa and reporting back two very interesting versions of the same scenario:  One said, nobody wear shoes, there is no market. The second one said, nobody wear shoes, there’s huge market. Does this story apply in today’s global market scenario? Maybe! However, a century of industrialized world has changed a lot and businesses today need to take strategic calls on which markets to divest or invest.

By 2030, almost 80% of the global middle class – about 3.9 billion people – will live outside Europe and North America. This development will lead to strong demand for advanced consumer products and services

Historically any big economic boom is led by a burgeoning middle class, baby boomers in America in the 70’s, almost a billion middle class between China and India in the 90’s and presently the regions of Africa, gulf, middle east, SEA and selected eastern Europe. If your business caters to the aspirational middle class population and has the IP and experience to market and sell beyond your domestic comfort zone then in a very short span of time you can triple or even quadruple your market size and carve out a leadership position in the years to come.

We humans share 99% or so of our DNA. This makes us fairly biologically identical, but culturally we might be poles apart and the living conditions between developed and developing world are starkly different. Inherently, SME’s from the developing/emerging world are attuned towards cultural diversity, red tape, corruption, policy barriers, varied politics, loose labor laws and paucity of financial and infrastructural resources. Emerging economy companies need to drive business efficiency from chaos, which leads to flexible approach in lot of organizational and operational functions. Although, growing companies invest considerable resources in structural efficiency they mostly retain their organic warrior flavor, which is essential for global marketplace.

Global business expansion keeps companies on their toes as they go about dealing with the complexities and challenges, which comes with it. Your business has a better chance of survival in long term if it spreads itself out in a stipulated time which can be leveraged at an opportune time.

Should you shake hands or kiss a colleague lightly on the cheek? Indulge in a few more drinks or hold back? Expect to have a dinner meeting or one at breakfast?

Depending on where in the world you’re working, the answers vary. “Conducting business abroad requires an extra layer of knowledge: that of the local business culture and its customs. While the global work environment is more fluid and interconnected than ever, localities retain their cultural nuances, both social and professional.

It pays to know if you’re in Brazil, that business meals can stretch for hours and be full of both professional and personal conversation—especially if you’re used to prompt business dinners focused strictly on work. And, how, exactly, should you respond during the frequent toasts made during business dinners in China. Who should you greet first, and how, when you first meet your Chinese colleagues?

And how about drinking in the context of work? There are three main styles of drinking, depending on where you are in the world: cultures where drinks flow freely in business, places where drinking is done in moderation and countries where there is little, if any, alcohol consumption in a professional setting.

In an increasingly global workplace, taking the time to understand the customs and professional expectations of a particular country or culture can make the difference between winning a deal and creating strong working relationships—or losing business and potentially creating mistrust among far-flung colleagues or clients.

As technology ever-decreases our global boundaries, leaders of enterprise find they are increasingly required to work across foreign markets, borders and cultures. While this presents opportunity, there are also challenges and risks!

Performing effectively in multicultural environments requires business leaders who are culturally diverse. This need poses a serious risk, as our own cultural programming and conditioning is, regrettably, often grossly underestimated.  In fact, it can be a very costly error to assume that executives or leaders who are successful in one country or culture will be successful in another

Global leaders work with cross-border and cross-cultural responsibilities. As a result, they need to: understand business from a worldwide rather than a countrywide perspective; balance potentially contradictory demands in a global environment; work harmoniously with multiple cultures at any given time; and find balance between global integration and national responsiveness.

Global leaders face a number of greater leadership demands than domestic leaders, including:  a broader knowledge to span functional and national boundaries; wider and more frequent boundary spanning in terms of travel and logistics; understanding a wider range of stakeholders; wide-ranging cultural understanding; more challenging and competing tensions, both on and off the job; ambiguity surrounding decisions and related outcomes and consequences; and far more challenging ethical dilemmas.

To competently manage these specific challenges, global managers must have greater aptitude than their domestic counterparts in emotional stability, decision-making, negotiation, and ability to learn more.

As organizations increasingly operate on an international scale, their ability to attract and develop leaders who can perform at a global level provides them with a distinct competitive advantage.

Business success relies largely on effective relationship management; leading people, influencing key stakeholders, communicating and negotiating with others. When working interculturally, global leaders must be aware of certain elements specific to each culture, in addition to organizational differences.

Culture is the collective programming of the mind that distinguishes the members of one group or category of people from another.  Culture is what determines the way we do things around here; the unwritten rules of the social game; and what we consider normal in any given society. Ultimately it’s the glue that holds societies together.

Culture is learned behavior centered on values and beliefs. It is also dynamic and changing. And, most of the time, it goes unnoticed until the unexpected happens or something goes wrong.  Global leaders should be fully aware of the most common cultural dimensions that can lead to miscommunication, potential conflicts and reduced performance.

Individualistic cultures (such as the USA, Australia, UK and Canada) emphasize the ‘I’ over the ‘we’, and the sense of identity is based on the individual. In these societies, people are encouraged to rely on themselves, and everyone has the right to a private life and opinions.

In collectivist cultures (such as Central America and most Asian countries, including Malaysia, Indonesia, Thailand, Singapore, Hong Kong, Japan and Philippines), the interest of the group prevails over individuals, and the sense of identity stems from group affiliation. In these societies: rules promote unity, brotherhood, and selflessness; harmony is highly valued; and decisions are made according to what is best for the group.

Individualistic societies use low-context communication. Messages are direct, clear and highly explicit. Individualistic cultures consider a lack of assertiveness and personal skills as a communication barrier, due to their support for greater individual initiative.

Collectivist societies use high-context communication. In this case, messages are often highly coded and implicit. Information is ‘hidden’ in the text and the situation carries most of the information and meaning. In such cultures, you’re expected to pick up the cues.

This cultural dimension explains why the Japanese may perceive Westerners as offensively blunt or uncouth. Conversely, Westerners may perceive Japanese to be aloof, diffident, secretive and interested with information.

Power distance and hierarchy refers to distribution of power and how members of a culture or society expect, or accept, such distribution. Therefore, understanding the cultural significance of power distance has strong implications for leaders and the leadership style they use.

In low power distance societies (such as Sweden, Netherlands, USA, Canada, Australia, Denmark and UK), power is expected to be distributed more equally. Status and formal position have limited influence. In these cultures, group participation is expected; individual autonomy is encouraged; work relations are more flexible; managers/leaders are more consultative; and subordinates work collaboratively with their bosses.

In high power distance societies (such as Malaysia, Indonesia, Philippines, India, China, South Korea, Arab countries, Panama and Mexico), people are willing to accept a less equal distribution of power. Hierarchy and authority levels are strictly marked, and in these societies: more autocratic or paternalistic attitudes are adopted; planning and organisational structures are more tightly controlled; employees accept being closely supervised and prefer the personal control of superiors; and subordinates expect bosses to take initiatives.

In today's world often corporate teams are spread across Americas, Europe and Asia this unique poses challenges in terms of understanding cultures, building new teams and running an organization that has seamless communication. It is true that many of us disregard the importance of how few individuals and a cohesive group of people help in shaping the future of a corporation. The business climate and workforce has changed a lot in last 20 years. It has become imperative to understand diversity and broaden our understanding of people across the world.

It is easier to run an organization across multiple countries which are fundamentally disjoint and have limited communication with each other, however that is usually not the best value for its employees and customers. In today's age of internet communication of data and voice, it is possible to build a seamless, globally unified work force.

It is often a non-trivial effort to choose the right leader for your overseas offices. Choosing the right leader who is aligned with your company vision and passionate about your business success is very important.  Appointing someone who has good network and influence in the market helps. Having the right leader also helps in building a successful team that can adhere to the company values and prevents an organization from becoming dysfunctional later on. A capable local leader helps in driving changes and fostering good communication to every employee in the organization. It is also true that a successful leader would hire capable teams locally and make good decisions.

Once we have the right leader, it is also important to empower and hold them accountable. Having areas of responsibility defined either by P&L or by product portfolio ownership helps in driving accountability. Having an overseas team which is just staff augmenting and has no clear accountability, fails to work in today's economy. The teams must be set so that they can add significant value and their work can relate to the success of its customers.

Cultural difference in various countries play an important role in global communication and working practices. Similarly it is true that based on local culture, education and social values the teams demonstrate unique strengths and behavior. Often engineers from places like Germany, Sweden or Israel are very detailed oriented and creative. The swedes often believe in collective decision making, which may sound odd to some of us, but it has its own merit. Aligning work based on the nature of workforce available can be very useful while creating global teams. The diversity in the workforce can be seen as a strength for the organization, if we know how to utilize it.

While starting an overseas office it is important to understand the nature of the workforce that is available. Certain countries have close proximity to good universities which allows opportunities to collaborate and also attract fresh talent. There are also local markets and product needs, where there is a need for domestic innovation to win customers locally.

Today understanding domestic needs for customers and transforming the business to produce such products and services is part of continuous innovation. Companies who fail innovate and transform will be unable to grow in emerging markets and be successful. In India and China the e-commerce market is growing rapidly it would be interesting to see whether global players like Amazon are able to compete with local innovative companies who understand the culture and have local execution strategy.

Certain countries in Europe have more experienced work force and many of them are very knowledgeable and can be utilized very well for certain types of jobs. There are cities in the world where there is a vibrant startup culture and to be successful in such markets it is important to be innovative and having a value proposition that can attract local talent. As explained above a cookie cutter approach does not work while planning work for global workforce.

Although labor laws are different across countries however, being able manage global performance and reward people uniformly is important. The organization must be perceived as fair by employees across the globe. Similarly it is important to understand differences in operating costs between offices using good analytics and optimize losses in any overseas operations. These days, it is quite common for managers to have overseas employees reporting directly therefore HR systems must cater to such global needs.

While choosing a labor location for your global work force, it is important to consider various factors such as quality of hires made, type of innovation made by the team, the market potential and competition. Cost of operation and labor is important but in long run its quality and value that really matters more than just cost.

As a leader it is important to listen to people from all corners of your organization. Often we get deeper insight into problems and issues by talking to engineers on the floor. People in overseas offices often have different challenges and listening to them allows a leader to improve communication and align work force globally. Every team usually has a few individuals who are key influencers, they usually bring high value and are well respected by others. It is important that the leader understand and identify these individuals globally and recognize and empower them. Often it is easier to drive global change if these influencers understand the motive and they lead it locally. Such individuals are often key any organization success and must be retained and given global opportunities.

Business leaders typically fail to adequately appreciate just how important it is to learn about what people in other cultures consider respectful, and what offends them. In the United States, having the right product or service at the right price usually trumps all. Not so in other countries, where you can kill deals by, depending on the region, bringing up business too quickly, handling a business card too casually, crossing your legs the wrong way, shaking someone's hand, or politely refusing a second drink. That sort of sensitivity has to be developed and applied to everything your company does.

Political corruption affects GHR.  Political corruption undermines democratic institutions, slows economic development and contributes to governmental instability. Political corruption attacks the foundation of democratic institutions by distorting electoral processes, perverting the rule of law and creating bureaucratic quagmires whose only reason for existing is the soliciting of bribes. Economic development is stunted because foreign direct investment is discouraged and small businesses within the country often find it impossible to overcome the start-up costs required because of corruption.

GHR must know how to handle corruption.  Corruption and the lack of transparency eats away like a cancer at the trust people should have in their government, at the potential for broad-based, sustainable, inclusive growth. Corruption stifles entrepreneurship and siphons funding away from critical services.  Poor fiscal transparency makes it impossible to hold governments accountable. And if these problems go on long enough, if they run deep enough, they literally can and have been shaking societies to the core.

GHR must obey the Foreign Corrupt Practices Act of USA and similar acts of EU, Japan, Canada, and Australia.  Nobody is allowed to corrupt a foreign official.  Anyone who doubts the power of frustrated citizens to rise up need not only look at the Middle East and North Africa, but increasingly across the globe because social media has given every citizen a tool in order to report and literally post in the matter of seconds the kind of abuses that have been, up until now, just taken for granted. So this is an integral part of national security.

We also know that corrupt practices contribute to the spread of organized crime and terrorism. They underwrite trafficking in drugs and arms and human beings. And we have a major stake in building up partners who can work with us to take on these transnational threats and to promote stability, who will work with us to champion an international standard of behavior that gives more people in more places the opportunity to fulfill their own God-given potential.

In China, the class system operates on several levels. At the top of the socio-economic scale are the princelings, children of important party officials, who have become multimillionaires by trading on their contacts. Then there are bureaucrats, who enjoy attractive lifestyles funded by the people's taxes and bribes. State-owned enterprises, meanwhile, benefit from monopolies or oligopolies and pay minimal dividends. The fruits of their economic activity are therefore largely enjoyed by those who run them. Basil Venitis, venitis@gmail.com, http://venitism.blogspot.com, @Venitis

Xi Jinping is himself a princeling, as a descendant of a revolutionary fighter and vice premier, and so are most members of the ruling Politburo Standing Committee.  Xi’s extended family has amassed total assets of two billion euros.

Most Chinese think political corruption is the biggest problem of China. Sinokleptocrat Wen Jiabao's relatives have accumulated three billion euros. Most of this wealth has been accumulated in areas of the economy over which Wen had direct authority. Wen family's investments span several sectors. Ping An, an insurance company, had benefited from reforms enacted in 2004 by a state body over which Wen had oversight.  A growing wealth gap is causing public discontent, as are the frequent corruption scandals involving government officials.

All South Africans know their politicians are very corrupt.  Huge military bribes were paid to Jacob Zuma, Thabo Mbeki, Schabir Shaik, Chippy Shaik and Joe Modise. Patricia de Lille has evidence of payments by warship supplier Thyssen-Krupp to ANC.  Italian submarine bidders Fincantiere were told they had won the contract, but were informed later that they had been dropped in favor of the Germans. They were offered the chance to better the Germans via an extra bribe of fifteen million euros!

Zuma was charged with fraud and bribery, but the charges were subsequently withdrawn by the National Prosecuting Authority of South Africa. ANC has also been criticized for its subsequent abolition of the Scorpions, the multidisciplinary agency that investigated and prosecuted organized crime and corruption, and was heavily involved in the investigation into Zuma and Shaik.

The most serious reason prompting Putin to hold on to power is the atmosphere of wealth and luxury to which he has become accustomed. Putin, the gay kickback billionaire, has at his disposal sixty planes and helicopters, twenty palaces, and ten yachts.  Putin’s Ilyushin airplane features a twenty-million-euro cabin fitted out by jewelers and a toilet seat that costs a hundred thousand euros!  Basil Venitis, venitis@gmail.com, http://venitism.blogspot.com, @Venitis

Russians think political corruption is out of control.  Russokleptocrats are in cahoots with Orthodox mafias and Orthodox oligarchs. The four main Orthodox mafias are the Tambov Gang, Siloviki Clan, Izmaylovskaya Gang, and Solntsevskaya Brotherhood. Their activities focus on political corruption, church corruption, protection money, blackmail, drugs trade, shipping, commodity trade, and natural resources. Orthodoxy's circle of tycoons, such as aluminum magnate Oleg Deripaska, banking magnate Vitaly Malkin, and shipping magnates, have been investigated by Europol many times. Russokleptocrats use the Orthodox Church to control Putinlandians and influence Orthodox Christians all over the world.


ROBBING THE TREASURY

BRIBES AND KICKBACKS GALORE!

WORLD’S RICHEST KLEPTOCRATS

Vladimir Putin, Czar of Putinland, 50 billion euros
Bhumibol Adulyadej, King of Thailand, 40 billion euros
Hassanal Bolkiah, Sultan of Brunei, 30 billion euros
Abdullah Al Saud, King of Saudi Arabia, 28 bilion euros
Viktor Yanukovych, ex-President of Ukraine, 25 billion euros
Khalifa Al Nahyan, President of UAE, 20 billion euros
Mohammed Al Maktoum, Emir of Dubai, 19 billion euros
Nursultan Nazarbayev, Dictator of Kazakhstan, 17 billion euros
Ali Khamenei, Dictator of Iran, 15 billion euros
Kim Jong-un, Dictator of North Korea, 10 billion euros
Jose Eduardo dos Santos, President of Angola, 7 billion euros
Hans-Adam II, Prince of Liechstenstein, 6 billion euros
Mohammed VI, King of Morocco, 5 billion euros
Sebastian Pinera, President of Chile, 4 billion euros
Hamad Al Thani, Emir of Qatar, 3 billion euros
Sonia Gandhi, Leader of India, 3 billion euros
Albert II, Prince of Monaco, 2 billion euros
Qaboos bin Said, Sultan of Oman, 2 billion euros
Teodoro Mbasogo, President of Equatorial Guinea, 1.9 billion euros
Bashar Al-Assad, Dictator of Syria, 1.8 billion euros
Ilham Aliyev, Dictator of Azerbaijan, 1.5 billion euros
Sabah Al-Sabah, Sheikh of Kuwait, 1.4 billion euros
Alexander Lukashenko, Dictator of Belarus, 1.2 billion euros
Recep Tayyip Erdogan, Caliph of Turkey, 1.1 billion euros
Jacob Zuma, President of South Africa, 1 billion euros


QUESTIONS

Would you consider working abroad?

What is the GHR Forum?

What was your first reaction to bow and kowtow?

Would you bribe a foreign kleptocrat in order to do business?

What do you think of the princelings?

Why PIGS and BRICS are considered very corrupt?

USA lets its states and cities go bankrupt, why not EU?

Which is your favorite global company?

Would you work in a theocratic regime?

Would you work in a kleptocratic regime?



PAYMENTS AND BENEFITS




A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. From the point of a view of running a business, salary can also be viewed as the cost of acquiring and retaining human resources for running operations, and is then termed personnel expense or salary expense.

Salary is typically determined by comparing market pay rates for people performing similar work in similar industries in the same region. Salary is also determined by leveling the pay rates and salary ranges established by an individual employer. Salary is also affected by the number of people available to perform the specific job in the employer's employment locale.

In the United States, the distinction between periodic salaries (which are normally paid regardless of hours worked) and hourly wages (meeting a minimum wage test and providing for overtime) was first codified by the Fair Labor Standards Act of 1938.  

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee's specific job duties and salary must meet all the requirements of the Labor Department's regulations.

Of these categories only Computer Employees has an hourly wage-based exemption ($27.63 per hour) while Outside Sales Employee is the only main category not to have the minimum salary ($455 per week) test though some sub categories under Professional (like teachers and practitioners of law or medicine) also do not have the minimum salary test.

A general rule for comparing periodic salaries to hourly wages is based on a standard 40 hour work week with 50 weeks per year (minus two weeks for vacation). (Example: $40,000/year periodic salary divided by 50 weeks equals $800/week. Divide $800/week by 40 standard hours equals $20/hour).

Perhaps the most important aspect of salary negotiation is the level of preparation put in by the prospective employee. Background research on comparable salaries will help the prospective employee understand the appropriate range for that position. Assessment of alternative offers that the prospective employee has already received can help in the negotiation process. Research on the actual company itself will help identify where concessions can be made by the company and what may potentially be considered off-limits. These items, and more, can be organized in to a negotiations planning document that can be used in the evaluation of the offers received from the employer.

Personality differences and negotiation mind-sets contribute to successful outcomes. Overall, individuals who are risk-averse (e.g., worried about appearing ungrateful for the job offer) tend to avoid salary negotiations or use very weak approaches to the negotiation process. On the contrary, those who were more risk-tolerant engage in negotiations more frequently and demonstrate superior outcomes. Individuals who approach the negotiation as a distributive problem (i.e. viewing the higher salary as a win for him and a loss to the employer) end up with an increased salary, but lower rate of satisfaction upon completion. Those who approach the negotiation as an integrative problem (i.e. viewing the negotiation process an opportunity to expand the realm of possibilities and help both parties achieve a win outcome) are able to both secure an increased salary and an outcome they are truly satisfied with.

Salary disparities between men and women may partially be explained by differences in negotiation tactics used by men and women. Although men and women are equally likely to initiate in a salary negotiation with employers, men will achieve higher outcomes than women. Studies have indicated that men tend to use active negotiation tactics of directly asking for a higher salary, while women tend to use more of an indirect approach by emphasizing self-promotion tactics (e.g. explaining the motivation to be a good employee).

Other research indicates that early-childhood play patterns may influence the way men and women negotiate. Men and women tend to view salary differently in terms of relative importance. Overall level of confidence in a negotiation may also be a determinant of why men tend to achieve higher outcomes in salary negotiations. Finally, the awareness of this stereotype alone may directly cause women to achieve lower outcomes. Regardless of the cause, the outcome yields a disparity between men and women that contributes to the overall wage gap observed in many nations.

Performance-related pay or pay for performance is money paid relating to how well one works. Car salesmen or production line workers, for example, may be paid in this way, or through commission.

Many employers use this standards-based system for evaluating employees and for setting salaries. Standards-based methods have been in de facto use for centuries among commission-based sales staff: they receive more pay for selling more, and low performers do not earn enough to make keeping the job worthwhile even if they manage to keep the job.

In addition to motivating the rewarded behavior, standards-based methods can provide a level of standardization in employee evaluations, which can reduce fears of favoritism and make the employer's expectations clear. For example, an employer might set a minimum standard of 12,000 keystrokes per hour in a simple data-entry job, and reassign or replace employees who cannot perform at that level.

Employees would be secure in knowing that their performance was evaluated objectively according to the standard of their work instead of the whims of a supervisor, or against some ever-climbing average of their group.

Cultural differences affect the kind of reward systems that are in use.  There is a connection among status-based reward systems (as opposed to achievement-based) and high uncertainty avoidance, individual performance based systems and individualism, systems incorporating extensive social benefits and femininity and employee ownership plans with individualism, low uncertainty avoidance and low power distance.


Employee benefits and benefits in kind (also called fringe benefits, perquisites, perqs or perks) include various types of non-wage compensation provided to employees in addition to their normal wages or salaries.  In instances where an employee exchanges (cash) wages for some other form of benefit is generally referred to as a salary packaging or salary exchange arrangement.

Examples of these benefits include: housing (employer-provided or employer-paid), group insurance (health, dental, life etc.), disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing, funding of education, and other specialized benefits.

The purpose of employee benefits is to increase the economic security of staff members, and in doing so, improve worker retention across the organization.  As such, it is one component of reward management.

The term perks or perqs is often used colloquially to refer to those benefits of a more discretionary nature. Often, perks are given to employees who are doing notably well or have seniority. Common perks are take-home vehicles, hotel stays, free refreshments, leisure activities on work time (golf, etc.), stationery, allowances for lunch, and—when multiple choices exist—first choice of such things as job assignments and vacation scheduling. They may also be given first chance at job promotions when vacancies exist.

Employee benefits in the United States include relocation assistance; medical, prescription, vision and dental plans; health and dependent care flexible spending accounts; retirement benefit plans (pension, 401k); group-term life and long term care insurance plans; legal assistance plans; adoption assistance; child care benefits and transportation benefits. Benefits may also include formal or informal employee discount programs that grant workers access to specialized offerings from local and regional vendors (e.g., movies and theme park tickets, wellness programs, discounted shopping, hotels and resorts, and so on). Companies who offer these types of work-life perqs seek to raise employee satisfaction, corporate loyalty, and worker retention by providing valuable benefits that go beyond a base salary figure.

Some fringe benefits (for example, accident and health plans, and group-term life insurance coverage up to US$50,000) may be excluded from the employee's gross income and, therefore, are not subject to federal income tax in the United States. Some function as tax shelters (for example, flexible spending, 401(k) accounts). Fringe benefits are also thought of as the costs of retaining employees other than base salary. These benefit rates often change from year to year and are typically calculated using fixed percentages that vary depending on the employee’s classification.

Normally, employer-provided benefits are tax-deductible to the employer and non-taxable to the employee. The exception to the general rule includes certain executive benefits (e.g. golden handshake and golden parachute plans) or those that exceed federal or state tax-exemption standards.

American corporations may also offer cafeteria plans to their employees. These plans offer a menu and level of benefits for employees to choose from. In most instances, these plans are funded by both the employees and by the employers. The portion paid by employees is deducted from their gross pay before federal and state taxes are applied. Some benefits would still be subject to the Federal Insurance Contributions Act tax (FICA), such as 401k contributions; however, health premiums, some life premiums, and contributions to flexible spending accounts are exempt from FICA.

If certain conditions are met, employer provided meals and lodging may be excluded from an employee's gross income. If meals are furnished (1) by the employer; (2) for the employer's convenience; and (3) provided on the business premises of the employer they may be excluded from the employee's gross income per section 119(a). In addition, lodging furnished by the employer for its convenience on the business premise of the employer (which the employee is required to accept as a condition of employment) is also excluded from gross income. Importantly, section 119(a) only applies to meals or lodging furnished in kind. Therefore, cash allowances for meals or lodging received by an employee are included in gross income.

There have been many changes in professional compensation. It was strongly tied to seniority. After all, seniority was a proxy for experience. Today, most firms consider seniority irrelevant—and occasionally something much worse. They believe pay should be based on performance and, more specifically, individual performance. That’s why at most firms, people are paid according to the size of their client billings and how good they are at bringing in new clients. Indeed, firms invest considerable time and effort to measure those results precisely.

Many companies prefer to stick with the old-fashioned way to pay. In addition to base salaries, professional firm give partners equal shares of the profit and another set of profit shares that are adjusted only for length of tenure as partner. There is no formal procedure for tracking the performance of country offices, let alone individuals. At the close of a given year, for instance, a ten-year partner in any office will receive a larger share of the firm’s profits than a five-year partner in any other office, even if the first office lost money and the second office broke billing records thanks entirely to the five-year partner’s billings.

Compensation systems often prompt people to ask how firms manage to hire stars, let alone keep them. They are shocked to learn that not only do firms attract outstanding consultants year after year, but their annual turnover among partners is very small. The reasons are simple, really. First, their approach to compensation forces them to hire consultants who have little interest in self-aggrandizement. They must hire people who are true team players, people who get more pleasure from the group’s success than their own advancement. These individuals by nature tend to be highly collaborative. They eagerly share information and ideas about existing and potential clients. Similarly, they pass around information about the executives who might best meet a client’s need.

Second, their seniority-based system requires them to find people who want to stay with a company for the long haul, for whatever reasons.  Even in the new economy, these men and women still exist. And thank goodness for that. Nothing benefits a client and its firm more than a consultant with a well-developed network of executive contacts and a finely honed intuition. By the time a consultant has worked more than a dozen years, he not only knows thousands of executives, he also knows the inner workings of hundreds of companies.

They hire professionals who are not only highly educated, but who are also trustworthy and humble and who want to work for one company their entire careers. They naturally collaborate. The clients are delighted with the results, billings rise, and the profit pool expands. In the end, everyone wins, from client to firm to individual professional.

The seniority-based system is as easy to administer as it is to understand. For partners, compensation comes in three ways: salary, equity stake in the firm, and profit shares. There is some variation among partner salaries across countries because of variations in the cost of living; people don’t expect to be paid the same base salary in Kuala Lumpur, say, that they would be paid in New York. But the distribution of equity and profits among the partners is consistent across the whole firm.

Some companies have changed the link between the bonus pay of salesmen and the volume of sales. But sales production is a well-established incentive plan used across a spectrum of industries.

But health industry, insurance industry, and pharmaceutical industry have a very special responsibility to patients and caregivers. They depend on them to do more, feel better, and live longer. It is that responsibility and the crucial importance of trust in their relationships that means they are judged to a higher standard than many other industries.

We have seen the good that these industries do in transforming the lives of patients living with diseases such as cancer, HIV, asthma, and diabetes. But we have also heard doctor complaints that the incentive systems are not focused on the interest of the patient.

Executives are, of course, concerned that some see perceived conflicts of interests in the way they run their business, particularly related to incentive plans for their sales professionals and the financial links they have with health care practitioners.

So, they realized that how they do their job is just as important as what they do. Ultimately every leader knows that you get the behavior you reward. Some executives have decided that bonus incentives for their sales professionals should be tied to the value they bring in ensuring that patients are appropriately treated with their medicines.


ASKING FOR A RAISE

People are most productive on Tuesday mornings.  This means waiting until you can get on your manager's schedule for a meeting at that time could help you. You want your boss clear-headed and feeling productive. If you focus on meeting at a time where he is more likely to be in a better mood, he may also be more positive and proactive about helping you map out a goal for your raise. Never set a meeting of this type on a Monday. Many people aren't in good moods on that day.  Basil Venitis, venitis@gmail.com, http://venitism.blogspot.com, @Venitis

One of the things we recommend to every working person is an annual Roadmap meeting. That's a meeting where you sit down one-on-one with your manager and talk about your plans for yourself and his plans for you.

A Roadmap meeting is a great way to compare your own vision for your future with your manager's vision for you. If you're dead-set on becoming a manager of other people net year, for instance, and your manager doesn't see that in the cards, you'll know that it's time to get your resume out of mothballs.

If you're going to stay at your job this year and the salary is not exciting, here are ten other ideas to run by your manager at your annual review meeting or a Roadmap meeting after your review. To set up that Roadmap meeting, you'll send your manager an email message or stop him or her in the hallway. "I'd like to sit down with you and compare notes on my goals for the next year," you'll say.

If your salary is unexciting and your manager's cash-dispensing hands are tied, you can choose several low-cash or no-cash alternatives.  Sometimes your manager can't give you a salary increase but can set up a bonus program associated with the performance of your job in general or a specific project you're working on. If cash is your number one priority, ask your manager whether you can sweeten your paycheck via a performance bonus by hitting agreed-upon milestones.

Department managers and financial folks often prefer to pay bonuses over salary increases because a bonus doesn't figure into your base salary moving forward. Also, bonuses don't interfere with company-wide salary grade levels the way salary increases can.

If you haven't belonged to a professional association before, maybe now is the year to dive in! Decide which professional association would benefit you the most learning-wise and contacts-wise and pitch your boss on paying your annual dues. Maybe your new association connection will prove to be a terrific channel for your company's message!

Extra vacation time doesn't cost your company hard dollars, and when cash is tight hard dollars are on everyone's mind. Now is a great time to ask for much-needed vacation time to compensate you for your effort and results when your paycheck isn't increasing.

When your manager says "I have a big project for you" or "I'm relying on you to get this done," think about where and when you work best. If you do your best work in your pajamas and in your home office, make a deal: I'll guarantee a great result on your favorite project if I can work from home on Fridays or come in at ten a.m. instead of nine to avoid rush hour traffic. If you don't ask, you'll never get what you want.

A high-impact and high-profile assignment is probably worth more to your resume and your career overall than your annual raise is. Ask your boss for a particular high-priority assignment you're interested in. Include that project in your Roadmap meeting to make sure you and your manager are on the same page vis-a-vis your priorities.

If you're languishing in the professional-development salt mines, ask your boss to put you in touch with professional mentors as a substitute for the raise you didn't get. Your boss is probably not a great mentor for you because of your boss-subordinate relationship.

Some people couldn't care less about titles, but many other people have spent time in a job or two where a bigger title would have helped tremendously, not only with external contacts but with internal ones as well. Your boss might be game to improve your title in lieu of your expected salary increase. If you job-hunt any time soon, the upgraded title on your resume will help you get interviews for higher-level opportunities.

EMPLOYEE DUALIZATION

Employee dualization strengthens the divide between insiders in secure stable employment and outsiders in temporary precarious employment, such as adjunct professors or new mafia members. Colleges rely on the existence of adjuncts ready to forgo wages and employment security in exchange for the prospect of uncertain security, prestige, freedom and reasonably high salaries that tenured positions entail.  Basil Venitis, venitis@gmail.com, http://venitism.blogspot.com, @Venitis


QUESTIONS

What is the difference between salaries and wages?

What is employee dualization?

How salary is typically determined?

What is FLSA?

Are gender salary disparities objective?

Is pregnancy a problem in salary negotiation?

What is your favorite perk?

How would you ask for a raise?

Is status very important to you?


What do you think of the career roadmap meeting?