In a World of Pay

The case illustrates a German software company’s inability to effectively compile a fair compensation package for the hire of an American expert. It revolves around the pay package that is to be offered to a new expatriate who has been chosen to join Typware, a German software giant. Jurgen Mehr, the European head of marketing for Typware, is irate about the salary demands of the American executive he wants to hire.

Anne Prevost, the expatriate 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. Thomas Gutschein, the CEO of Typware, has made it clear that Anne is a necessary strategic acquisition. Renate Schmidt, the head of human resources at Typware, faces a dilemma of how much to offer Anne. She has no reference in determining a fair package as this is first time Typware is hiring an outsider to work at their German headquarter.

For Typware, she is undoubtedly a brilliant catch. But the salary she wants is nearly as much as Mehr’s. Typware faced a similar situation sometime back when their German CIO threatened to quit after finding out that his Japanese counterpart makes twice as much as he does. Typware has been venturing aggressively into international markets since 1996. The consultants who help negotiate compensation for overseas employees recommend variable standards depending on the employee’s location.

However, individual expatriate packages have become increasingly complicated and over the past decade many executives have received up to 30 percent extra salary based on geographical circumstances. The situation thus demands the formation of a proper pay structure that will be acceptable not only to Anne, her peers and her superiors but will also rationalize the pay structure for one and all. The case concludes with expert advices from four commentators.