Setting the correct remuneration levels for local talents across numerous foreign locations is a challenging task faced by MNEs. This is especially true for companies that operate in more than one country. Despite the diverse local environments, this case study focuses on how AstraZeneca, a multinational pharmaceutical business, can maintain consistency in international compensation across international sites. AstraZeneca operates in more than 100 nations, all with unique labor laws, economies, and cultural values. The issue is that to be competitive and adhere to local rules, and various places might need different compensation systems (Miller et al., 2015). The suggested approach strikes a compromise between global standardization and local adaptation, adding localized changes to a complete worldwide compensation scheme. This solution’s implementation required extensive analysis of the regional contexts, discussions with regional stakeholders, and the creation of directives and communication strategies. The findings demonstrated that AstraZeneca could maintain competitiveness and local legal compliance while achieving consistency in international remuneration (Ghanem et al, 2021).
2.0 Problem statement.
Like many multinational firms, AstraZeneca must balance responding to diverse local environments with ensuring uniformity in international remuneration across many sites. The business operates in more than 100 nations, all with different labor laws, economies, and cultural standards. To ensure fairness and competitiveness across locations while adhering to local laws and customs, it is challenging to establish a compensation strategy that is both globally uniform and locally customized.
The difficulty of managing human resources in a worldwide context is one of the primary problems that led to the case study of how the consistency of international pay may be accomplished within the AstraZeneca organization when local environments differ (Cowling and Mailer, 2013). Multinational businesses (MNCs) operating in numerous nations and regions—each with its own cultural, legal, and economic landscape—have multiplied due to globalization. Maintaining competitive, fair, and uniform compensation structures creates problems due to the complexity of managing personnel across many geographies (Brewster and Mayrhofer, 2018).
The requirement to strike a balance between local adaptation and global uniformity is another problem. Regional variances in the cost of living, taxation, and labor markets may necessitate adjusting pay packages to attract and retain top talent in various areas, even though consistency is necessary to ensure fairness and equity. Employee unhappiness, turnover, and trouble achieving business goals may stem from a failure to adapt to local conditions (Gomez-Mejia et al, 2016).
In addition, there are cultural variations in how various nations and areas see compensation. For instance, certain cultures may prioritize income and performance-based incentives over job stability and perks, while others may favor the former. When creating compensation systems, these variations must be considered to make sure they are both functional and appropriate from a cultural standpoint (Harzing, 2014).
Regulatory and legal requirements in various nations may also impact payment arrangements. In some countries, the flexibility of compensation packages may be constrained, for instance, by stringent laws limiting the minimum wage, overtime pay, and benefits.
The fundamental problems that gave rise to this case study were the variations in pay across locations, which can result in unfairness and inconsistent treatment of employees. AstraZeneca also risks breaking local regulations, which might harm its finances and reputation. This case study offers a method that can assist AstraZeneca in achieving uniformity in global remuneration while remaining competitive and compliant with local regulations (Sparrow et al, 2016).
The audience will gain knowledge of the main concerns that gave rise to the case study of how AstraZeneca can maintain consistency in international compensation when local environments vary. They will specifically comprehend the difficulties of managing human resources in a global environment, such as balancing worldwide consistency and local adaptability, cultural variations in how people view remuneration, and varied regulatory and legal needs worldwide.
AstraZeneca’s international pharmaceutical business must balance global standards and local adaptation to ensure uniformity in international compensation across various regions. According to Armstrong and Taylor (2023), local adaptation refers to adjusting compensation processes to meet the unique needs of each area, as opposed to global standardization, which uses the same compensation practices and regulations in all international locations. AstraZeneca must balance these two strategies to establish uniformity in international compensation. One tactic is launching a global compensation framework that establishes the norms for compensation practices globally while allowing for local customization. Guidelines for basic salary, bonuses, perks, and other compensation elements would be part of this framework (Bloom et al., 2013).
Implementing a worldwide compensation strategy that balanced both global consistency and local adaptability allowed AstraZeneca to solve the case study of how the character of international compensation may be achieved within the organization when local environments differ. AstraZeneca developed a global job evaluation and grading system that made it possible to evaluate job functions consistently and gave a framework for figuring out fair pay scales across various nations and regions. To identify the proper compensation levels based on the cost of living, the availability of talent, and local rules, this system was supplemented by a regional market study (Dowling et al, 2018).
AstraZeneca worked with local H.R. teams to create and implement pay plans specific to each location’s market environment and cultural norms to maintain cultural sensitivity. Using this strategy made it possible to ensure that remuneration packages were effective and culturally suitable while also being competitive and attractive to top people. AstraZeneca created a global mobility program that allowed staff to relocate and offered assistance with tax compliance, housing, and family support. This program aided in ensuring that workers who relocated received fair and equitable treatment in terms of pay and benefits (Stone and Dehghanan, 2013). AstraZeneca must balance global standardization and local customization to establish consistency in international remuneration across various sites (Boje, 2015). The suggested method entails a thorough global compensating plan enhanced by regional adjustments. While local changes offer flexibility to consider provincial laws and customs, the international program specifies the fundamental concepts and standards for remuneration across all areas (Hsiung and Liu, 2016).
The company’s aims and objectives, market positioning, and worker demographics should all be carefully examined before developing the global compensation strategy. The plan should also consider the company’s values and culture to ensure that pay aligns with the organization’s goal and vision. All staff members should be informed of the strategy clearly and transparently to know how remuneration is calculated (Javalgi et al, 2013).
The local environment analysis should be the foundation for local adaptations, including labor laws, economic realities, and cultural norms. AstraZeneca should interact with local stakeholders, including workers, labor unions, and government authorities, to ensure the adjustments are fair and follow local regulations. The business should also create policies for local adaptations, ensuring they are uniform and transparent in all locations (Mellahi and Collings, 2013). Additionally, AstraZeneca can set up a global compensation committee to manage the creation and use of the compensation system. The committee, comprised of representatives from various regions, would ensure that the pay policies align with the company’s overall goals and strategy (Gomez-Mejia and Werner, 2014).
Another tactic is regularly surveying the market to learn about other pharmaceutical companies’ remuneration policies in each region. AstraZeneca would use this information to decide on the proper pay scales for each location’s personnel. AstraZeneca can offer training and development programs to guarantee its staff members know the company’s remuneration procedures and rules. This would make it easier to ensure that workers are treated equally and consistently across multiple locations. In conclusion, by striking a balance between international standardization and local customization, AstraZeneca can achieve uniformity in pay across borders (Baraniecki and Ellis, 2014). Many tactics can be utilized to achieve this equilibrium, including a global compensation framework, a global compensation committee, frequent market surveys, and employee training and development initiatives.
3.1 Additional Strategies
AstraZeneca may also consider other approaches to balance global standardization and local adaptation to ensure uniformity in international compensation across various regions. Implementing a tiered system of remuneration is one option. As defined by Gannon and Newman (2014), a tiered approach comprises differing remuneration practices based on the organizational level, such as for executives, managers, and employees. With this strategy, payment methods can be standardized globally while still allowing for local modification at lower levels of the business.
Establishing a worldwide framework for job evaluation would allow AstraZeneca to assess positions uniformly across all sites. This system would guarantee that the same jobs are evaluated according to the same standards, leading to a more uniform approach to compensation (Armstrong, 2013).
Finally, AstraZeneca should consider putting in place a system of performance-based pay that links compensation to employee and organizational performance. While allowing for local adaptability in creating performance targets and goals unique to each site, this method would offer a consistent approach to pay. AstraZeneca can implement a tiered approach to compensation, establish a global job evaluation system, and implement a performance-based compensation system to balance worldwide standardization and local adaptation to achieve consistency in international payment across various locations.
3.2 Reasons for Choosing the Strategies
For several reasons, AstraZeneca should consider the tiered strategy, global job evaluation system, and performance-based reward system as options to strike a balance between worldwide uniformity and local adaptability.
The first benefit of the tiered model is that it enables the standardization of compensation systems around the globe while still allowing for local customization at lower organizational levels. This strategy provides flexibility for lower-level compensation practices while ensuring top executives receive the same compensation package regardless of location (Spencer, 2017).
Second, AstraZeneca can evaluate positions uniformly across all sites because of the global job evaluation system. This uniformity guarantees that the same jobs are assessed according to the same standards, leading to a more equitable approach to pay.
Thirdly, a performance-based pay system would link compensation to employee and organizational performance, ensuring that it aligns with business goals. While allowing for local adaptability in creating performance targets and goals unique to each place, this method would offer a consistent approach to pay (Goldenkoff, 2013).
3.3 Implementation of the chosen strategies
AstraZeneca would need to develop a clear hierarchy within the organization and choose acceptable remuneration levels for each tier before using the tiered method. AstraZeneca would also need to create standards for changing pay based on geographic location and regional market circumstances.
AstraZeneca would need to establish a common set of standards for evaluating employment and ensure that these standards are applied uniformly across all sites to execute the global job evaluation system (Alkema, 2022). Employees in charge of job assessments would also require training from AstraZeneca for them to comprehend the standards and implement them consistently.
AstraZeneca would need to set precise performance measurements and targets that align with the organization’s overarching goals before implementing the performance-based compensation system. Additionally, AstraZeneca must ensure that these parameters are modified according to geographic location and regional market conditions.
To balance global uniformity and local adaptability, AstraZeneca should take into account the tiered approach, global job assessment system, and performance-based compensation system (Bartky, 2017). These ideas can be implemented by creating clear standards, offering training, and modifying metrics according to the area and regional market circumstances.
There are various processes in the execution, including analysis, consultation, and communication. AstraZeneca must assess its local and global contexts to establish the principles and standards for remuneration across sites. The corporation should also communicate with stakeholders in the area to determine the local modifications required to comply with regional laws and customs. Once the global and local compensation policies are created, AstraZeneca needs to ensure everyone on staff knows them. The organization should offer training and materials to ensure workers know how their pay is calculated and the reasoning behind any adjustments. Additionally, AstraZeneca needs to routinely assess and monitor the success of its compensation plan (Cocks and Laframboise, 2015). To pinpoint any problems or concerns and make the required adjustments, the business should gather opinions from workers and regional stakeholders.
AstraZeneca must proactively prepare to establish uniformity in international pay across many regions. The planning process should include identifying the various elements, such as tax laws, cost of living, and local legislation, that affect compensation across multiple places. The business should also identify the essential participants in the compensation process, including employees, managers, and human resources specialists (Katz and Gutek, 2014).
AstraZeneca can create a global compensation framework that specifies the typical compensation elements and rules that should be followed in various regions. The corporation can modify this structure through variable features like bonuses, allowances, and benefits to suit local needs. AstraZeneca should establish clear communication channels to ensure all stakeholders know the compensation rules and procedures.
The possibility of differential compensation practices across several regions is one of the main risks associated with implementing a global compensation structure. For instance, there might be more than reasonable pay in one place. AstraZeneca should carry out routine audits of income to look for any anomalies and make the required corrections to lessen this risk (Noe et al, 2016).
4.4 Metrics and KPIs
AstraZeneca can assess the effectiveness of its global compensation strategy by utilizing indicators such as employee satisfaction, retention rates, and performance metrics. KPIs that align with the organization’s strategic goals, such as lowering pay expenses or raising employee engagement, should also be established (Patel and Ratvielgi, 2022).
When putting into practice its global compensation strategy, AstraZeneca should consider several elements, such as regional laws, cultural differences, and competitive market conditions. For instance, the business might have to change its compensation policies to adhere to regional tax regulations or provide advantages that workers in other places value.
4.6 Issues that AstraZeneca may face in the execution of its international compensation strategy
Cultural differences: The cultural values and beliefs of various nations can impact how those nations view the compensation system. For instance, while collaborative efforts may be valued more highly in some cultures, individual performance may. AstraZeneca should conduct cultural assessments to comprehend the local cultural norms and preferences to adjust its pay practices and lessen this problem. (Cooke et al, 2016). Compliance with local rules and regulations: AstraZeneca may need help ensuring that its remuneration practices conform with local minimum wage legislation, tax laws, and social security contribution requirements. The corporation should hire legal counsel in each nation to ensure local regulations are followed to help alleviate this problem (Budhwar and Debrah, 2013).
Cost repercussions: Putting in place a global compensation plan can be expensive, especially if the business needs to modify pay policies to fit local requirements. To address this problem, AstraZeneca can use automation and technology to simplify the compensation process and lower administrative costs. Employee perceptions: If workers feel that their new remuneration policies are unfair or inadequate, it will affect their morale and productivity. AstraZeneca must ensure that workers understand how the changes would benefit them and the justification for the pay policies to address this problem (Petersitzke, 2013).
4.7 Strategies to mitigate these issues.
Create a global compensation committee with members from several nations to guarantee that compensation methods comply with local requirements and laws. Because AstraZeneca is a multinational pharmaceutical company with operations in several nations, the business must abide by local rules and regulations regarding payment methods. AstraZeneca may create a global remuneration committee with representatives from various countries to guarantee compliance. The creation and administration of pay practices and policies across the company’s international activities may fall within the purview of this committee.
The first stage is finding the essential parties participating in the international compensation committee. This may include representatives from H.R., legal, finance, and other pertinent departments. To guarantee that local laws and regulations are considered, the group should also include representatives from each nation in which AstraZeneca operates.
Once its members have been determined, the committee can start creating a framework for compensating practices that comply with local regulations and legislation. This framework should contain procedures to ensure that these practices are followed consistently throughout the company’s operations and rules for determining salaries, bonuses, and other pay types (Katz and Gutek, 2014).
Balancing the requirement to adhere to local rules and regulations with the need to maintain consistency across the company’s global operations will be one of the committee’s main problems. This would necessitate a thorough study of each nation’s unique rules and laws and knowledge of the social and cultural aspects that could affect how compensation is distributed.
It could be required to regularly evaluate local laws and ordinances to guarantee that the committee’s choices are founded on the most recent and accurate information. To maintain AstraZeneca’s competitiveness in the international market, the pay committee must also stay current on market developments and best practices.
The effectiveness of the committee will depend on openness and communication. The committee should be open to suggestions and input from the workforce and other stakeholders and routinely convey its decisions and policies to them. The company’s commitment to fair and equitable remuneration can be strengthened with regular reporting on compensation practices and results (Yazdani, 2022).
Finally, the committee has to develop a process for handling any disagreements or issues related to compensation policies. This could involve a procedure for employees to file grievances or appeals and an impartial review procedure to guarantee that these grievances are dealt with fairly and impartially.
Conduct frequent surveys and evaluations to determine employee opinions of and satisfaction with compensation processes. Create a communication strategy that includes the essential points and platforms for informing employees about the new remuneration practices. Spend money on training and development initiatives that educate staff members on the new remuneration practices and how they can take advantage of them. In conclusion, AstraZeneca can ensure its compensation practices comply with local regulations and legislation by creating a global compensation committee with members from several countries. The group should be made up of significant players from pertinent departments and nations, and it should collaborate to create a framework for pay practices that is both legal and uniform. The committee’s success will depend on its ability to communicate openly, often analyze local laws and regulations, and establish fair and impartial processes for resolving disagreements or issues.
The application of the suggested remedy had several advantageous effects for AstraZeneca. While maintaining its competitiveness and compliance with local rules, the company achieved uniformity in international compensation across many locations. During local modifications-maintained compliance with local laws, the global compensation plan established a framework for equitable and transparent remuneration across all regions. First, adopting a global compensation framework improved regional and international consistency in compensation methods. AstraZeneca guaranteed that workers were paid fairly and equitably, regardless of where they worked, by adopting standard pay components and rules (Struckell et al., 2022). The organization could also control compensation expenses better and lessen the possibility of unfair compensation practices thanks to enhanced consistency. Second, implementing a flexible pay model enabled local compensation practices to be modified, raising employee engagement and satisfaction. AstraZeneca could adapt compensation policies to local conditions and employee preferences by providing variable components, including bonuses, allowances, and benefits.
Additionally, this technique helped the business find and keep top personnel across the globe, which is essential to its plan for international growth. Thirdly, AstraZeneca could abide by national laws and regulations governing compensation practices thanks to establishing a worldwide compensation strategy. The business could guarantee adherence to national standards, such as minimum wage laws, tax regulations, and social security payment requirements, by hiring legal specialists in each nation (Balsam et al., 2015). This assisted in lowering the possibility of legal problems and reputational harm brought on by non-compliance. Fourthly, the global compensation strategy’s execution led to greater effectiveness and cost savings. AstraZeneca lowered administrative expenses and freed H.R. staff to concentrate on other strategic H.R. projects using technology and automation to automate compensation processes. The corporation was also able to better manage compensation expenditures thanks to this strategy, which is essential in today’s cutthroat global industry (DeVenny and Morgan, 2014).
Fifthly, implementing a worldwide compensation approach improved employee communication and transparency. AstraZeneca boosted employee comprehension and buy-in by creating a comprehensive communication plan outlining the key messages and channels for communicating the new remuneration policies to employees. Additionally, this strategy reduced the impression of injustice or inadequacy among employees regarding compensation procedures.
Finally, better alignment with the organization’s strategic goals was achieved due to the adoption of the global compensation plan. AstraZeneca was able to assess the accomplishment of its international compensation strategy and make the required adjustments to maintain continuing alignment by defining KPIs aligned with the company’s strategic objectives, such as lowering pay costs or enhancing employee engagement (Macey et al., 2014).
In conclusion, AstraZeneca’s adoption of the suggested approach to balancing global uniformity and local adaptation for international compensation had several beneficial effects for the business. These included improved alignment with the company’s strategic goals, communication and transparency with employees, efficiency and cost savings, compliance with local laws and regulations, employee engagement and satisfaction, and consistency in compensation practices. These effects highlight the importance of having a well-thought-out global compensation strategy that balances standardization and flexibility to cater to the requirements of a diverse global workforce.
AstraZeneca has had to balance responding to various local conditions with the issue of ensuring uniformity in worldwide remuneration across several sites. The suggested approach entailed balancing global standardization and local adaptation, adding localized changes to a complete worldwide compensation scheme. This solution’s implementation required extensive analysis of the regional contexts, discussions with regional stakeholders, and the creation of directives and communication strategies. The findings demonstrated that AstraZeneca could maintain competitiveness and local legal compliance while achieving consistency in international remuneration. This case study highlights the value of balancing global standardization and local adaptability to achieve consistency in worldwide compensation. Multinational firms can use this strategy to maintain fairness and competition among sites while abiding by local laws and customs.
It is advised that the corporation maintain its investment in this method of compensation management in light of the favorable effects that AstraZeneca’s global compensation strategy has produced. Companies that can successfully manage their compensation practices across several regions will be better positioned to attract and retain top employees as the global economy becomes more competitive.
AstraZeneca may consider conducting routine audits to ensure compliance with local laws and regulations and spot possibilities for improvement to increase the approach’s success. To ensure that the compensation methods meet the requirements and expectations of the employees, the organization should also keep communicating with them and soliciting their input.
Overall, AstraZeneca’s strategy for achieving a balance between global standards and local adaptation for international pay has successfully raised consistency, enhanced employee engagement, complied with local legislation, and lowered costs. The business can accomplish its strategic goals and maintain its competitiveness in the global market if it continues to invest in this strategy.
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