Total expenses for managerial remuneration in foreign manufacturing subsidiaries during the COVID-19 pandemic: a pilot exploration of applied policies
| DOI | https://doi.org/10.1108/ER-01-2022-0016 |
| Published date | 05 July 2022 |
| Date | 05 July 2022 |
| Pages | 1504-1515 |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
| Author | Igor Gurkov |
Total expenses for managerial
remuneration in foreign
manufacturing subsidiaries during
the COVID-19 pandemic: a pilot
exploration of applied policies
Igor Gurkov
Department of Strategic and International Management,
National Research University Higher School of Economics,
Moscow, Russian Federation
Abstract
Purpose –This study aimed to reveal the policies applied to determine the total expenses for managerial
remuneration in manufacturing subsidiaries during the COVID-19 pandemic.
Design/methodolog y/approach –The author a nalyzed the annual fin ancial reports of Ru ssian
manufacturing subsidiaries containing data on managerial remuneration and compared the dynamics of
annual revenues and the amount of annual managerial remuneration.
Findings –The author identified four types of policies regarding the total amount of managerial
remuneration. In a minority of cases, when revenues decreased, the share of the total amount of managerial
remuneration in total revenues also decreased. The author also observed “payment for efforts”; although
revenues decreased in 2020, the share of the total amount of managerial remuneration in total revenues
increased. In 17% of cases, when revenue increased, the share of the total amount of managerial remuneration
in revenue also increased. Finally, in 50% of cases, the COVID-19 pandemic served as a pretext to generate
savings from the reduction in the total amount of managerial remuneration despite the increase in revenues.
Originality/value –This is the first study to use real financial reports to evaluate the dynamics of the total
amount and share of managerial remuneration in revenue during a crisis.
Keywords Managerial remuneration, Financial analysis, COVID-19 pandemic
Paper type Research paper
Introduction
The COVID-19 pandemic caused disruptions in the business activities of multinational
corporations (MNCs) globally; these disruptions included nonsynchronous lockdowns in
many countries and subsequent partial detuning of “global factories”in different industries,
restrictions on workforce transfer between countries [1], shifts in consumer spending [2], and
revision of investment plans of corporate customers.
Apart from the major problems brought about by the pandemic (e.g., maintaining and, if
necessary, rebuilding relations with customers, suppliers, investors, national governments,
and other stakeholders), MNCs had to deal with another issue: adjusting management
compensation systems in foreign subsidiaries to stimulate subsidiary managers to reach
“stretch goals”. According to Sitkin et al. (2011),“stretch goals”are organizational goals that
are extremely difficult and novel and thus have an objective probability of attainment that
may be unknown.
ER
44,6
1504
This work was supported by the grant 2021.003NP.1 of the Graduate School of Management, National
Research University Higher School of Economics, Moscow. The author is extremely grateful to Galina
Balashova and Alexandre Arshavsky for the technical assistance during the paper preparation.
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/0142-5455.htm
Received 12 January 2022
Revised 25 April 2022
16 June 2022
Accepted 16 June 2022
Employee Relations: The
International Journal
Vol. 44 No. 6, 2022
pp. 1504-1515
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-01-2022-0016
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