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Cultural Characteristics Are Important in Establishing a Core Compensation Program

Updated on September 17, 2016

For a country of your choice, conduct research into the cultural characteristics that you believe should be important considerations in establishing a core compensation program for a U.S. company that plans to locate there. Discuss these characteristics. In addition, discuss whether you feel that pay-for-performance programs are compatible. If compatible in any way, what course of action would you take to promote this compatibility? If not compatible, why not?

When establishing a core compensation program for a U.S. company that plans to locate to a different country it is important to conduct research into the cultural characteristics of that country. A company must first understand the culture of the country they are moving too prior to establishing a core compensation program for the company. For instance, if a U.S. company planned to relocate to India then there would be a number of cultural characteristics that the company would have to account for when beginning a core compensation program.

Different states in India each have different official languages yet the central government only recognizes Hindi as the official language of India (Kwintessential, 2016). It would be important for the company to know which languages would be the most prevalent in the state the company would be located in. In India it is a gesture of respect to have documents translated in to a person’s native language. The core compensation program should be translated into the languages that the Indian employees or associates grew up knowing. This would also help to avoid misunderstandings due to a misinterpretation of the English language on behalf of the Indian speaking employees.

The company should also have an understanding of how hierarchy works in India so as to account for that in the establishment of the core compensation program. In India society typically operates within a framework of strict hierarchy that defines people's roles, statuses, and social orders (Kwintessential, 2016). It would also be important for the company to understand Indian etiquette in order to have the compensation programs creation process progress smoothly. One example of the difference between Indian and American etiquette is the handshake; in India deals are typically finished with the Namaste instead of a handshake. The Namaste is when the palms are brought together at chest level with a slight bow of the head. Indians should also always be addressed using their appropriate formal title even if you know the personally acquainted. Lastly, Indian culture places great value on trust; Indian businesses prefer to deal with those that they have a trusting relationship with even at the expense of lucrative deals. In order to have a good working relationship with Indian employees, associates, and partners, it is important that the company shows strong business acumen, exhibit traits of trust and honor.

In India the employees typically desire many of the same things employees in America desire: competitive pay, career advancement opportunities, and better balance between work and leisure time (Vorhauser-Smith, 2013). A pay-for-performance program would go over well in an Indian based U.S. company because Indian culture values hard work and companies in India that offer competitive salaries are typically the companies that most Indians desire to work for. A pay-for-performance program would help an Indian based U.S. company to attract and retain talent by showing that the company values hard work, skills, and experience. In order to promote the compatibility of the pay-for-performance program the company should provide all employees with pamphlets written in each employee’s native language. The pamphlets would provide information about the program so that all employees would be aware of what the program entails. The company should also take steps to showcase employees who are rewarded for their performance so as to demonstrate to other employees that the program does reward performance and that it is not just for show.


Kwintessential. (2016). Doing Business in India. Retrieved from

Vorhauser-Smith, S. (2013, September 6). 6 Things You Should Do To Retain Talent In India. Retrieved from


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