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Feature:

The Great Global Talent Race: One World, One Workforce

  

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1. Legal Limits to Harmonization



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Legal Limits to Harmonization


Multinational companies have made great strides in establishing compensation and performance management systems that cover all employees. But the are limits due to international labor laws.
By Fay Hansen
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ultinationals have made huge strides in establishing global compensation and performance management systems with similar salary structures and evaluation criteria for all employees. "It is bad human resources policy to discriminate among similarly situated employees based on arbitrary factors, and in today’s global workplace, ‘home country’ increasingly is becoming an arbitrary factor," says Donald C. Dowling Jr., international labor and employment counsel for Proskauer Rose in New York City.

    The collaborative nature of knowledge work makes it even more important to establish consistent systems. "With projects and work teams now spanning international borders, it makes less sense to apply different policies and practices for employees who function as co-workers even through they may work in different countries," Dowling notes.

    "Obviously, there are differences in the labor markets and employment laws, so there will always be major differences in the amounts that employees are paid and the benefits they receive, but the trend is toward harmonizing plans unless there is a business case for using different plans," Dowling says. "Large multinationals are far along in the process."

    Still, detailed labor laws and regulations abroad set limits on harmonization.

    Dowling warns that U.S.-based workforce management executives tend to underestimate the complexity of foreign labor laws. "U.S. laws in other areas—for example, environmental laws—are usually far more complex than in other countries," he says. "But with labor law, the situation flips. Labor laws abroad are far more complex than in the United States."

    Ongoing globalization and the attempt to establish global compensation and performance management systems require a new multijurisdictional approach to labor law that transcends reliance on local counsel in each corporate location. The largest U.S.-based multinationals have developed in-house international HR legal expertise, according to Dowling. "The same talent is now evolving in law firms," he says. "These multi-jurisdiction practitioners can work with a network of local attorneys to resolve both international and local legal issues."
 
LABOR-LAW CLIMATES
Main indexes for measuring the flexibility of labor laws, with higher values indicating greater rigidity on a scale of 0 to 100. (The greater the amount of regulation, the higher degree of difficulty of the following tasks.)
  Difficulty of hiring Difficulty of changing work hours Difficulty of firing Firing costs
(in weeks of pay)
U.S. 0 0 10 8
Canada 11 0 0 28
Mexico 67 60 90 83
Brazil 67 80 70 165
U.K. 11 40 10 25
Germany 44 80 40 80
Russian Federation 0 60 20 17
Japan 33 40 0 12
India 11 40 40 90
S. Korea 33 20 90 79
Note: Based on full-time nonunion (unless mandatory), nonexecutive male who is not a member of a protected minority group and who works at a manufacturing firm with 200 employees.
Source: World Bank

Workforce Management, April 10, 2006, p. 23 -- Subscribe Now!


Fay Hansen is a contributing editor for Workforce Management. To comment, e-mail editors@workforce.com.

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