The expatriate employee is paid according to prevailing salary levels, structure, & administrative guidelines of the home country. Show
expatriate-type benefits in recognition of foreign status Approaches to International Compensation- There are two basic approaches to determine the international compensation package: 1. Going Rate ApproachThis is based on local market rates. It relies on comparisons of surveys of the local nationals, expatriates of same nationality and expatriates of all nationalities’ pay packages. In this approach, the compensation is based on the selected survey comparison. The base pay and benefits may be supplemented by additional payments for low pay countries. The advantages of the Going Rate Approach are,
The disadvantages of Going Rate Approach are,
2. 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 to offset qualitative differences between assignment locations. The balance sheet approach is widely used by international organizations to determine the compensation package of the expatriates. The basic objective is the maintenance of living standards of the home country plus financial inducement.
The advantages of the Balance Sheet Approach are:
The disadvantages of the Balance Sheet Approach are:
Go back to Tutorial Go to Home Page Get industry recognized certification – Contact usIn which approach the base salary for the international transfer is linked to the salary structure in the host country?Balance Sheet Approach:
The balance sheet approach is widely used by international organizations to determine the compensation package of the expatriates.
Which approach links the base salary for expatriates to the salary structure of the relevant home country?Companies take one of the following approaches to establish base salaries for expatriates: The home-country-based approach. The objective of a home-based compensation program is to equalize the employee to a standard of living enjoyed in his or her home country.
What is the most common approach to determine expatriate pay?The most common approach to expatriate pay is the balance sheet approach, which aims to develop a salary structure that equalizes purchasing power across countries so expatriates have the same standard of living in their foreign assignment as they had at home.
What are the main approaches to compensate expatriate employees?Organizations typically use one of four approaches to determine this.. The Home-country Approach. ... . The Balance Sheet Approach. ... . The Host-based Approach. ... . The Global Market Approach.. |