The Right Perks
Global hiring means getting a handle on how different cultures view salaries, taxes, and benefits
Business Week by Jena McGregor
January 17, 2008
Brazilian supermodel Gisele Bundchen may be able to decide, as she did recently, that she would rather be paid in euros than once-mighty dollars. But for most mere mortals toiling away in cubicles around the globe, pay and benefits are a decidedly local affair. In Latin America, for instance, past financial crises mean employees aren't much interested in deferred compensation plans such as 401(k)s, which are common in the U.S. Why be rewarded in stocks and bonds that could collapse?
As expat packages decline and global growth requires attracting local talent, employers that ignore local quirks do so at their own risk. Peter D. Acker, a global rewards consultant for Hewitt Associates, reports that he sees companies extend their stock-option plans around the world, thinking everyone will love them. But local tax treatments for such options mean that's often not the case. Other companies, he says, have rolled out bonus plans in China that focus on individual performance, only to find that rewarding group achievements might have been a better cultural fit.
Using data from benefits consulting firm Mercer, we compiled snapshots of pay and perks in 10 countries, including benefits ranging from company-owned ski chalets in France to bodyguards and bulletproof cars for top executives in Brazil:
Data: Data are provided by Mercer, except where noted. Cost-of-living rank is based on Mercer's 2007 survey of the comparative cost of cities for expatriates. Salaries represent midpoint annual base salaries, using exchange rates from local currencies to U.S. dollars on Jan. 14. Days off combine minimum vacation days required by law and public or nationally recognized holidays for employees working five days a week after 10 years' service. China and the U.S. do not mandate vacation days nationally, but 15 days is common in the U.S. for employees with 10 years of service and 12 days is average in China, though numbers vary from city to city. Mercer notes that in Mexico, many companies supplement required public holidays with an additional 4 to 6 days.
India
Cost-of-living rank (Bangalore): 134
Salary, head of sales & marketing: $56,171
Salary, data-entry operator: $1,913
Projected average pay increase for 2008:14.1%
Days off: 31
Local perk: CEOs might grumble about rising health-care costs for U.S. workers. But at least they don`t have to pay for employees` aging parents, which is common for companies operating in India. Rosaline Chow Koo, Mercer`s head of health and benefits consulting in Asia, says this is one reason health-care spending is rising swiftly: "It`s growing so much faster than wages that it`s become a hot issue."
Hong Kong
Cost-of-living rank: 5
Salary, head of sales & marketing: $149,905
Salary, data-entry operator: $16,139
Projected average pay increase for 2008:3.8%
Days off: 26
Local perk: In recent years, Hong Kong workers have been asking for traditional Chinese medicine coverage as a supplement to regular health insurance. The plans, which cover everything from herbal therapies to fees for Chinese medicine practitioners, are offered by 55% of employers, says Mercer`s Chow Koo.
Philippines
Cost-of-living rank (Manila): 137
Salary, head of sales & marketing: $95,286
Salary, data-entry operator: $6,829
Projected average pay increase for 2008:7.4%
Days off: 19
Local perk: For years, many Filipinos received bags of rice as a benefit. Employers later converted the sacks to "rice allowances" paid in cash and now offer "flex" packages, where less tradition-minded workers can exchange the cash for perks such as free mobile phones.
China
Cost-of-living rank (Shanghai): 26
Salary, head of sales & marketing: $92,402
Salary, data-entry operator: $4,034
Projected average pay increase for 2008:7.5%
Days off: 23
Local perk: Companies operating in China are required by the government to chip into a housing fund that`s available to their Chinese employees, who also make contributions. When employees are ready to buy a home, they can draw from the funds to help. About 20% of multinationals currently chip in more to the housing fund than required, according to Mercer.
Japan
Cost-of-living rank (Tokyo): 4
Salary, head of sales & marketing: $148,899
Salary, data-entry operator: $30,933
Projected average pay increase for 2008:2.5%
Days off: 35
Local perk: Japanese workers often receive "family allowances" (kazoku teiate) on top of their pay from employers, depending on the size of their family. Stemming from the country`s tradition of lifetime employment, the stipends are most prevalent among native companies and range from about $100 to $300 a month. Some employers have been recasting them as incentives for workers to have kids in order to combat Japan`s declining birthrate.
Mexico
Cost-of-living rank (Mexico City): 104
Salary, head of sales & marketing: $163,591
Salary, data-entry operator: $11,017
Projected average pay increase for 2008:4.8%
Days off: 23
Local perk: Some companies having difficulty luring qualified expats to polluted Mexico City offer "pollution-escape trips," or all-expenses-paid getaways to the Pacific or Gulf coasts. One local holiday quirk: Mother`s Day is on a weekday, and employees get a day or a half-day off to take Mom out to lunch, prompting massive traffic snarls.
Brazil
Cost-of-living rank (Rio de Janeiro): 64
Salary, head of sales & marketing: $208,691
Salary, data-entry operator: $11,829
Projected average pay increase for 2008:5.0%
Days off: 40
Local perk: It`s more of an essential safety precaution than a perk, but to foil kidnappers, top executives in Brazil are chauffeured in bulletproof cars and followed by bodyguards. (This benefit also shows up in Mexico.) "It`s kind of a strange way to think about it," says Hewitt`s Acker. "But if your executive is kidnapped for a month, your business really suffers."
United States
Cost-of-living rank (New York): 15
Salary, head of sales & marketing: $229,300
Salary, data-entry operator: $35,400
Projected average pay increase for 2008:3.7%
Days off: 25
Local perk: To get a handle on those fat pay packages, U.S. CEOs commonly receive financial-planning benefitsaveraging about $20,000 a year, reports executive pay consultants Pearl Meyer & Partners. The money helps pay their cadre of accountants, estate lawyers, and financial planners. The benefit is much rarer elsewhere. And unique to the U.S.`s litigious society, Mercer says, are group or prepaid legal services, which some companies offer employees. As with group health insurance, employees pay premiums to get free or discounted access to attorneys for needs such as wills, adoptions, or real estate transactions.
Russia
Cost-of-living rank (Moscow): 1
Salary, head of sales & marketing: $117,135
Salary, data-entry operator: $10,325
Projected average pay increase for 2008:10.2%
Days off: 39
Local perk: Company-sponsored mortgages are seen as an attractive perk in Russia, where consumers have traditionally had less access to credit and where the cost of living is high. Companies who offer this perk secure the loans, says Hewitt`s Acker, and in some cases, help employees pay more favorable rates. Corporate help for loans occurs in other emerging markets, such as India and Brazil.
France
Cost-of-living rank (Paris): 13
Salary, head of sales & marketing: $188,771
Salary, data-entry operator: $28,857
Projected average pay increase for 2008:3.0%
Days off: 40
Local perk: As if the high number of days off were not enough, some French employers offer the use of company-owned ski chalets and beach houses to employees for a nominal fee. Such perks are also occasionally seen in Germany, says Charles Nelson, who leads Mercer`s health and benefits practice in Britain and Ireland.
