Compensation of IT companies

Tuesday, October 07, 2008

Weak dollar to impact MNC’s pay packet

Fluctuations in foreign exchange value of global currencies, especially the US dollar, which is weakening against its rivals, following the financial turmoil in the US have severely impacted the compensation packages of overseas employees working with MNCs, a latest survey says.

The currency fluctuations affect all elements of compensation and consequently the attraction and retention of key employees, according to a survey by global HR consultancy Mercer. It further added most multinational organizations have not implemented solutions for mitigating the impact of currency fluctuations on current compensation programmes for overseas employees.

Nearly half of responding multinational companies (47 per cent) have agreed that the depreciating value of the US dollar has had a moderate to significant impact on their compensation programmes, the survey revealed.

“Foreign exchange fluctuations can have a substantial impact on compensation programmes. As the war for talent becomes worldwide, specifically for high-performing executives, organizations need a competitive compensation strategy that appropriately responds to shifts in currency for key employees around the globe,'' Mercer Principal Rebecca Powers said.

Compensation components, including equity-based long-term incentive plans, base salary and global mobility policies are impacted the most by currency fluctuations, specifically the declining value of the US dollar, the survey revealed

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