Compensation systems for executives in different cultural context

Essay by sophiebeastUniversity, Bachelor's May 2012

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Saint Petersburg State University

Graduate School Of Management

Compensation systems for executives in different cultural context


Zvereva Sofya

Saint Petersburg


Table of contents

3Compensation system, its functions �

31. General concept of system �

42. Executive compensation system �

7Cultural aspect �

71. Japan �

82. USA �

10Conclusion �

11Reference list �


Compensation system, its functions

1. General concept of system


Thus, the subject of this work is compensation system. All methods of stimulation used in the organization are part of the reward system. The system includes rewards that the organization can offer to an employee in exchange for his work for the benefit of the organization. With the rewards managers can influence behavior of employees, make them act in some specific way or carry out tasks. However, some authors (e.g. Shapiro and Henderson) divide rewards into compensation and non-compensation. Compensation component is understood as material benefits (wages, etc.),

while non-compensation part - the intangible rewards, praise, encouragement, positive effect on self-esteem, etc.

Next I would like to elaborate on the material part of remuneration, i.e. on a compensation system of the organization. It is based on three components:

Basic part. This includes the basic wage rate, which is determined by each organization depending on its internal characteristics and rules, reigning in the macro environment (industry, country)

Variable part. It includes various bonuses, allowances, which provide main stimulation functions.

The social package, which is formed on the basis of organizational social policy.

First of all compensation system is the main way to have an impact on staff motivation and as a consequence on the performance of their work. In addition, compensation is also intended to achieve several important goals (Shekshnia, 2002):

Involving staff in the organization. One of the main principles...