Pay System Comparison between American and Indian Companies



Despite the fact that a lot of studies about human resource management (HRM) puts into practice in either American or else India can be found, most of these are public focused. Comparative studies concerning these two culturally different countries along with investigating similarities or differences between human resource management practices are insufficient. However, we found that Lawler, Edward, (2009), disclosed for companies in the American as well as other similar industrialized Western countries, performance-based payment systems have long been the undisputed way to take in compensation. This paper aims to investigate effective payment system practices of American along with other Indian companies. At the same time, also we find with the purpose of compensation may be adjusted according the business needs, goals, and available resources a mechanism by which a person attempts to make up for some real or imagined failing of personality or behavior by developing or stressing another indication of the personality or by substituting a different set of behavior.

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When we have to go deep in such situation that Unites States companies spend more on compensation than their offshore competitors does not necessarily give them at a significant cost disadvantage, but it does unnecessarily lower earnings and may lower shareholder value. A more serious problem exists as per Suri, Shweta, (2007), in United States corporations with compensation costs that are too high relative toward their universal in addition to their domestic competitors. They certainly are wasting money.

For most of American companies, the challenge is to find the right combination of base pay, besides bonuses, as well stock, in addition to deferred compensation as per Ahn, Hee Tak, (1996), that will attract and sustain top performers no easy undertaking. Indeed, packages often need to be complicated along with carefully designed in order to be effective. On the other hand Majumdar ,Shyamal, (2009) found that It takes a pretty multifaceted collection of short as well as long-term incentives, which requires cash as well as stock vehicles tied toward the staff as well as the company's business.

Literature Review:

Pay system is a management instrument that enables such business firm to control personnel cost, besides increase employee morale, in addition to trim work force turnover as per Ahn, Hee Tak, (1996). A regular pay system provides a wealth of productive individuals for their contributions toward the success of such business firm. In this regards we got to know that Lawler, Edward, (2009), illustrated that United States has the limitation of collective bargaining in addition to consent toward labor regulation. Most of theses business firms comprise to stand for all the way through the outcomes of cooperative bargaining accordingly parting them with extraordinarily little flexibility toward implement performance based pay. Therefore, business enterprise's pay structure is a clear indication of such compensation philosophy and strategy. However, we can find in many areas of developed logically and communicated effectively, some business enterprise's pay structure is a instrument that staff may perceive and understand. Moreover, we can say when it is said that this is important because recent studies show that understanding a business enterprise's compensation strategy guide employees' satisfaction with their compensation.

Moreover, Majumdar ,Shyamal, (2009) said that the biggest challenge such a business firm might encounter when inventing a pay package distresses how it might have an effect on staff motivation. In some respects, as per Suri, Shweta, (2007), the way in which compensation affects initiative is quite painless as well as straightforward: Individuals tend along with honor also how valued the award might be.

Alternatively, we noticed that such a thing was illustrated by Lawler, Edward, (2009), boards should develop principles in addition to objectives to take decisions.

Also there are another point has to be clarified that pay should agree that of competitors. As per the illustration of Erwee, Ronel, (2008), It ought to reproduce performance comparative toward the rivalry higher when a business firm carry out others as well as lower when it under such performance

On the other part of the same story, American companies, in contrast, had severe pay scales, no matter how well or badly they were performing. Seeing that it has been known widely through Lawler, Edward, (2009), that they desired a better amount of elasticity in return. Moreover, we note also that United States managers use performance appraisals more extensively to assess current along with future training needs of their employees.

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Nevertheless, some American companies expend energy toward periodically sidestep the hard labor acts to make additional wage elasticity, but the majority are ensnared in contractual requirements that govern the terms of payment, besides wages along with other employee benefits. For example as per Majumdar ,Shyamal, (2009) employers are obliged to pay extra Christmas pay toward all employees moreover employees are entitled toward 30 days paid Holiday leave every year.

The Indian Situation:

The compensation strategies of the American along with Indian companies fund performance based pay practices toward some extent. Although as per Erwee, Ronel, (2008), This leads toward differences in income between high as well as low performers. Also here we can add that Lawler, Edward, (2009), said Indian firms tend to have a relatively higher performance attitude furthermore American over as well as above Indian managers prefer pay practices that foster personal along with group performance.

Therefore, we can say that due to economic development Indian corporations not only generate more jobs but also facade a higher level of staff wearing away. More than a few business firms, specially in communication in addition to information technology based industries are bound to give attractive compensation packages above industry averages to retain their skilled workers. Additionally, Majumdar ,Shyamal, (2009) illustrated that the entry of foreign firms, with superior compensation puts into practice encourage local enterprise firms to go after outfit.

However, such Human Resources policies of Indian private sector organizations increasingly use cash payments as wages. We found in this regards as per Ahn, Hee Tak, (1996), that Indian managers, less individualistic in order to protect for reviewing the performance of individuals to settle on their eventual profitability. Such companies are utilizing performance appraisals to find out income levels as well as identify strengths along with weaknesses of employees in order to develop career development in addition to treatment under-performance through adequate training programmes. Since Further, as per Erwee, Ronel, (2008), performance appraisals in this article also fulfill some extra purposes. For instance, they do something as a way for staff to express their feelings along with concerns toward their immediate supervisors moreover to facilitate discussions between individuals as well as decision makers.

Also here one more thing that can be added that one issue is the effect of the employee rank in Indian corporations. It may be linked toward collectivist cultures where elders are treated with respect as well as regards, irrelevant of their personal in addition to professional traits. Seniority in collective cultures could argue team harmony. However, Majumdar ,Shyamal, (2009) disclosed that the most of the Indian firms activate in non government sectors facing fierce competition like the American companies and yet adhere toward such this pay policy.

Conversely, the current international financial crises have been hit the pay system at India; job loss as well as pay cuts; employees all over India take something to cheer about. As Suri, Shweta, (2007), sad that the corporate finance recovering after the lousy economy slowdown, the companies are gearing to pay their employees with bonus in addition to pay hikes.


A conclusion is that performance appraisals along with pay practices do not differ significantly in the individual Indian as well as American companies, as per Ahn, Hee Tak, (1996), moreover that their managers believe these Human Resources practices as of key importance in both countries.

On the other words, in a thriving the India country economy, business may be underneath difficulty to improve their benefit packages to attract and retain a skilled workforce. However, Lawler, Edward, (2009), find out that in the slower growing United States economy, where unceasing unemployment is apparent in all phases of jobs as well as professions, however, managers cannot be self-satisfied about performance appraisals or even pay observation.

As we can add here that he straightforward conclusion is the one reached through some Indian companies: performance stranded pay is a meager in shape for Indian business culture. We wonder to find that Erwee, Ronel, (2008), if such raised problems are distinctly different from the problems that outbreak some American companies: poor system implementation in addition to management.

Finally, as mentioned earlier, a well-structured along with handling performance associated compensation plan is a successful state as per Suri, Shweta, (2007),: The structure functions further professionally, at the same time as the staff take pleasure in additional enjoyable work, furthermore perhaps more enjoyable earnings.

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