Introduction

International Compensation is provision of monetary & non-monetary rewards which includes base salary, benefits, perquisites ,long & short term incenties valued by employees in accordance with their relative contributions to performance. International Compensation seeks to achieve the companys goal which are follows:1. Attract individuals who are competent & interested in International Assignments. 2. Provide a consistent & reasonable relationship between the pay levels of employees at the headquarters, dometic affiliates & foreign subsidiary. 3. Facilitate movement of expatriates from one subsidiary back to home country. Compensation is the amount of remuneration paid to an employee by the employer in return to the employees service to the company.

Complexity in International CompensationCompensation management function is more critical & complex over other function of HRM. The key factors responsible for the complexity are discussed below:a. The salary & benefits level vary from country to country. b. Cost of living varies widely among countries . c. Varying requirents of providing housing & medical facility for employee family members. d. Foreign exchange rates fluctuate widely. e. Varying tax rates. f. Varying rates of inflation & deflation among the developed countries g. Varying local conditions in host countries in terms of cost of living. h. MNCs face dichotomy with regard to maintains of consistency of pay for those employees who move from one country to another country within the service of the same mnc.

varying requireme nt for facility

varying cost of living

exchange rate fluctuatio n

employee expectation

complexity of compensatio n managment

varying tax rates

consistency & equity

varying inflation rates

country perspectiv e

varying local condition

Factors that affect International Compensation:MNMmmmmmmmmm

MNCs Internal environment factor:1. Goal orientation & companys objective. 2. competitive strategy 3. organization culture. 4. Human resource structure 5. employee-employer relationship. MNCs external environmental factor:1. 2. 3. 4. 5. Parent country Labour market Industry type Competitors strategy Home & Host country government roles.