Professional Documents
Culture Documents
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Allowances
Compensation Benefits
Economic Conditions
Standard of Living
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Expatriate Costs
Expatriate costs may pose a multiple-fold expense in relation to employees who are not sent as expatriates to foreign destinations, and are usually significantly higher than the compensation accorded to HCNs and TCNs Example: a Chinese manager with 15 years experience costs less than USD 70,000 per annum, while a US expatriate manager with corresponding expertise would cost his or her organization USD 300,000 per year
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In addition, the organization may render financial assistance to the spouse for her or his loss of income as a result of the transfer of the expatriate
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Calculating International Compensation There are two basic approaches used to determine an international compensation package:
The Going Rate Approach The Balance Sheet Approach
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DISADVANTAGES ADVANTAGES Equality with local nationals Simplicity Identification with host country Equity amongst different nationalities Variation between assignments for the same employee Rivalry between expatriates of same nationality in getting assignments to some countries Potential reentry problems in the home country
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Logic of the Balance Sheet Approach The balance sheet approach to international compensation is a system designed to equalize the purchasing power of employees at comparable position levels living abroad and in the home country, and to provide incentives t offset qualitative differences between assignment locations
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