Compensation: Developing Countries Require Diverse Pay Benefits, Skills-Based Hiring, Experts Say

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By Lien Hoang

March 30—Multinational employers operating in developing countries should tailor employment benefits to suit the local culture and hire people based on skills, not sectoral backgrounds, compensation experts said at a March 26 seminar in Ho Chi Minh City.

One of the biggest mistakes multinational companies make is to squeeze their global workforce into a one-size-fits-all package of pay and benefits, according to Mary Benette Santiago, a compensation specialist at consultancy Birches Group, which hosted the seminar.

“What they miss when I talk to headquarters is, compensation makeup is very important,” Santiago said.

In some countries, base salary should make up almost the entire package, Santiago noted, while other markets call for more benefits like transportation or holiday bonuses.

Besides pensions, life insurance, housing and meals, businesses have been experimenting with less traditional benefits. Some employers in Asia give their staff sacks of rice for Lunar New Year bonuses, for example, while Muslim workers may get medical coverage for multiple wives or bonuses during several Islamic holidays, and a Vietnamese firm allows staff at partner companies to buy goods on credit with zero interest. Kurt Wallace, director of workforce consultancy Professionals Ltd. in Ho Chi Minh City, said he provides employees with counseling, especially to deal with the stress of relocation.

Generalists Versus Specialists

An important strategy in recruitment is to look at the candidate's actual skill set—be it secretary, driver, supervisor or other transferable role in a company—rather than judging candidates based on the sectors in which they've worked, i.e., a bank looking only at candidates with banking backgrounds or a manufacturer only those who have worked at a factory.

“As a company, we are not competing with similar companies,” Wallace said. “We're competing with anyone with that skill set.”

Employment consultants recommend this skills-based approach when hiring in developing countries because the dynamic nature of these markets means talent comes and goes, and economic growth rates create a lot of opportunities for candidates to jump from one business to another. At the same time, human resources are still maturing, so there's a limited pool of top recruits, which allows them to be generalists in different professional sectors.

“I think there are more specialized roles in developed countries than in developing countries,” said Jed Medida, business development associate at Birches Group. “So you're more of a generalist than a specialist in a developing country.”

Pay Diversity

This dearth of qualified job seekers changes the pay structure in developing countries. Birches Group presented data showing there's a wider span in these markets, meaning the salary difference between a company's highest- and lowest-paid managers, for example, is wider than in advanced economies. That's because the excess demand for talent requires companies to be more flexible in the pay packages they offer.

There's horizontal, as well as vertical, pay diversity. Birches Group divides businesses into various grades, so that cleaners and security guards would be at the opposite end of C-suite executives. The average company has 12 to 14 grades, Santiago said, in ascending order of compensation, although Indian firms are broken into 20 grades, which she said suggests status is more important in that country.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at

To contact the editor responsible for this story: Rick Vollmar at