What are the biggest challenges companies face today with regards to compensation?

What are the biggest challenges companies face today with regards to compensation?

Compensation issues are at the forefront of companies and these are significantly affected by many factors such as taxation. The biggest challenges faced by companies regarding compensation arise from the passage of the Tax Cuts Jobs Act, particularly, the repeal of non-taxable moving expenses. The changes meant that moving expenses paid to or on behalf of the employee are now considered taxable events (Michigan, 2018).

Secondly, employees that conduct the move by themselves because they have been granted work permits may not be as productive because they still focus on their families and the move itself (Michigan, 2018). With this, companies find themselves struggling to establish whether an employee is worth a certain paygrade or not (Bonaimé et al., 2019).

What Companies That Are Considering Going Global Today Need to Consider

Companies that are going global need to determine what the particular position for which pay is to be determined pays locally. Employee pay for these companies should not be based on an established paygrade but on the value of the job (Michigan, 2018). Paying the employees based on established paygrade may be undervaluing or overvaluing the job which may be a costly decision to the company.

In order for companies to ensure that their compensation packages are fair and equitable across the globe, they should benchmark the decision and establish paygrades that are within the market range of the job location. Benchmarking is important as it will enable companies to offer paygrades that are in tandem with the perceived value of a specific position (Patnaik & Suar, 2019). In benchmarking, companies can be able to compare market trends for salary ranges and align them with the company’s pay philosophy (Bana, 2019). This is also influenced by the industry and geographic location.

What does it mean to have a global economy?