International rewards systems: to converge or not to converge?
An analysis of the business and academic literature presents a confusing picture for the practitioner. We see evidence both of international convergence around best practice coupled with an increasingly sophisticated awareness of the distinctive nature of rewards policies and behaviour across countries. Therefore the agenda being pursued by HRM academics now focuses on the need to understand and integrate knowledge about three sets of factors (Sparrow and Hiltrop 1997): those that lead to distinctive national patterns of HRM; those that are making national business systems (and the HRM policies they encourage) more receptive to change; and the processes through which new policies and practices are being delivered. In order to review the issues associated with this debate, this chapter is split into three main sections, each of which addresses a fundamental question:
Factors that create distinctive national rewards systems
The reasons for confusion among international managers and academics about the role of national culture in the rewards field are obvious. Sparrow and Hiltrop (1997) noted that when considering HRM from a European perspective four clear sets of cross-national factors could be seen to shape policy and practice at the organizational level. HRM practices (with rewards policies and practices being just one example) are located within an external environment of national culture value systems, varying institutional influences and factors, powerful but distinctive national business systems, structures and labour markets, and variations in the role and competence of HRM decision-makers. Not surprisingly, the scope for national differences in rewards systems is broad. Each set of factors in turn includes a number of influences that may be seen to shape organizational policy and practice or employee behaviour. The most important institutional influences and their impact on rewards systems behaviour are shown in Table 6.1.