How do firms deal with the kinds of situations posed by Mark and Oleg in the Opening Profile? Of course, there is no one set of solutions that can be applicable in any country. The variables are many - including local market factors and pay scales, government involvement in benefits, the role of unions, the cost of living, and so on.
In Eastern Europe, for example, people in Hungary, Poland, and the Czech Republic spend 35 to 40 percent of the disposable income on food and utilities, and that may run as high as 75 percent in the CIS. Therefore, East European managers need to have cash for about 65 to 80 percent of their base pay, compared to about 40 percent for U.S. managers (the rest being long-term incentives, benefits, and perks). In addition, they still expect the many social benefits provided by the “old government.” To be competitive, MNCs can focus on pro viding goods and services that are either not available at all or extremely expensive in Eastern Europe; such upscale perks can be used to attract high- skilled workers.
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