Bronwyn Fryer

Renate Schmidt, the head of human resources, stood frowning in front of her office window, gazing across the Stuttgart hills and the green Swabian Alps from her lofty perch on the 15th floor of Typware’s headquarters. It was late afternoon, and the gathering humidity lay over the hills. Thunderheads were threatening in the distance. Those clouds look like I feel, she thought. About to burst.

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Reprint: R0311A 

J&#252;rgen Mehr, the European head of marketing for German software giant Typware, is irate about the salary demands of the American executive he wants to hire. Anne Prevost, the executive in question, is the marketing director at a U.S. software company that has been making forays into Typware&#8217;s markets. She engineered a huge uptick in sales for her company, and now she is ready to jump ship&#8212;provided Typware makes her a good offer. Anne understands the global software industry, and she even speaks German. She would be a brilliant catch. But the salary she wants is nearly as much as J&#252;rgen makes.
Since 1996, Typware has ventured aggressively into international markets. The consultants who helped negotiate compensation for overseas employees recommended variable standards depending on the employees&#8217; location. In the majority of cases, the pay package is more than sufficient.
Nevertheless, individual expatriate packages are becoming increasingly complicated. Per diem expenses vary according to country; each case is &#8220;special.&#8221; At Typware, salary and benefit disparities among the managerial ranks are becoming the rule rather than the exception.
HBR senior editor Bronwyn Fryer explores the question of what kind of international compensation approach Typware should adopt. Commentators George T. Milkovich, the Catherwood Professor at Cornell University; Jeffrey Alan Thinnes, the managing director of Manugistics Central Europe, a U.S. software subsidiary based in Germany; Joseph Yaffe, a partner with the global law firm Latham &#038; Watkins; and Dietmar Kokott, the senior vice president of global human resources, executive management and development, at BASF Group, offer expert advice on this fictional case study.

In a World of Pay

Reprint: R0311A Jürgen Mehr, the European head of marketing for German software giant Typware, is irate about the salary demands of the American executive he wants to hire. Anne Prevost, the executive in question, is the marketing director at a U.S. software company that has been making forays into Typware’s markets. She engineered a huge uptick in sales for her company, and now she is ready to jump ship—provided Typware makes her a good offer. Anne understands the global software industry, and she even speaks German. She would be a brilliant catch. But the salary she wants is nearly as much as Jürgen makes. Since 1996, Typware has ventured aggressively into international markets. The consultants who helped negotiate compensation for overseas employees recommended variable standards depending on the employees’ location. In the majority of cases, the pay package is more than sufficient. Nevertheless, individual expatriate packages are becoming increasingly complicated. Per diem expenses vary according to country; each case is “special.” At Typware, salary and benefit disparities among the managerial ranks are becoming the rule rather than the exception. HBR senior editor Bronwyn Fryer explores the question of what kind of international compensation approach Typware should adopt. Commentators George T. Milkovich, the Catherwood Professor at Cornell University; Jeffrey Alan Thinnes, the managing director of Manugistics Central Europe, a U.S. software subsidiary based in Germany; Joseph Yaffe, a partner with the global law firm Latham & Watkins; and Dietmar Kokott, the senior vice president of global human resources, executive management and development, at BASF Group, offer expert advice on this fictional case study.

In a World of Pay

Summary.

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