Drawing on the work of Hofstede, describe how it is possible to link cultural clusters and compensation strategies.

Question

What will be an ideal response?

Answer 1

Drawing on the work of Hofstede, it is possible to link cultural clusters and compensation strategies. Each cluster requires a different approach to formulating an effective compensation strategy: (1) In Pacific Rim countries, incentive plans should be group-based. In high-masculinity cultures (Japan, Hong Kong, Malaysia, the Philippines, Singapore), high salaries should be paid to senior-level managers; (2) In EU nations such as France, Spain, Italy, and Belgium, compensation strategies should be similar. In the latter two nations, however, significantly higher salaries should be paid to local senior-level managers because of the high masculinity index. In Portugal and Greece, both of which have a low individualism index, profit-sharing plans would be more effective than individual incentive plans, while in Denmark, the Netherlands, and Germany, personal-incentive plans would be highly useful because of the high individualism in these cultures; and (3) In Great Britain, Ireland, and the United States, managers value their individualism and are motivated by the opportunity for earnings, recognition, advancement, and challenge. Compensation plans should reflect these needs.