New markets require reward compromises

EB Connect 2013: Moving into new markets, whether developing or developed, requires compromises from all parties involved, according to John Beadle, global practice leader, performance and reward at Rio Tinto.

Speaking at Employee Benefits Connect 2013 on 1 March, Beadle said that while employers moving into new markets may want consistent reward strategies across the organisation, it is critical to understand local business needs, and that importing a mono-culture into multiple countries may not work.  

But he added just adopting the local culture does not work either, and that no matter how strong a corporate culture is, compromises need to be made.

Beadle explained that compromises can be reached by addressing some of the assumptions made about reward in new markets.For exampleactions that are taken for granted in Western cultures, such as paying salary into a bank account, will need to be addressed in locations such as Mongolia, where a fledgling banking system means it is not unusual to hand out cash to employees.

Beadle also cited the example of rolling out an employee assistance programme (EAP) in new markets: “We thought it was a great global programme that would be easy to introduce to diverse markets. Not true.” 

One of the problems is that in some cultures, a man will not talk to a woman on the telephone, so employees may hang up if a voice of a different gender answers when they call the EAP.

Beadle added that giving employees cash may be enough in the early stages following an organisation’s entry into a new market, but there will come a time when employers will want to bring in additional benefits, such as a pension. He said: “Going too fast and trying to replicate corporate structures will bring problems and could destroy the business case for going to that market.”