Professional Documents
Culture Documents
International Compensation
International Compensation
International Compensation
introduction
Organizations typically offer a
variety of returns, both financial
and non-financial, with the
expectation that they will
somehow contribute to
organization effectiveness
a wide variety of total returns are
offered. These can include total
remuneration (cash, allowances,
and long-term incentives) as well
as employment security
conditions, flexible work
schedules, opportunities to learn,
and so on
Compensation
Among all the set of HR problems more vexing
is the international compensation plan
Compensation, as Geringer and Frayne (1990)
have defined it, includes those rewards
monetary and non-monetary, direct and
indirect,that an organization exchanges for
the contributions of its employees, both job
performance and personal contributions
International Compensation.
International compensation management is
the most time consuming and strategically
important HRM activity in multinational
enterprises
Compensation is one of the most visible
aspects
Knowledge required
Mechanics of compensation such as
employment and taxation law, customs,
environment, employment practices,
familiarity with currency fluctuations, and
the effect of inflation on compensation all
within the context of shifting political,
economic, and social conditions
Complexities of Intl.Compensations.
Country perspectives
Varying Local conditions
Varying inflation rates
Varying Tax rates
Fluctuations in Exchange Rates
Varying Requirement of Facilities
Varying cost of living
Employees expectations
Consistency and Equity requirement
The objective is
the three primary objectives of international
compensation plan are no different than a domestic-
only plan
to attract, retain, and motivate those employees qualified
for overseas employment
Facilitate the transfers between foreign affiliates, home
country and host countries operations.
Maintain consistent relationship between the
compensation of employees of affiliates both at home and
abroad.
Maintain compensation that is concurrent with
competitors in the industry.
employees to achieve competitive advantage
The process.
HR managers first take
local practices into consideration, and
then investigate what is possible and practical
from the host-country perspective
Balancing the centralised and decentralised
benefits incentives and pensions given the
technical capabilities of the HRIS programmes
The approaches to Intl.Compensation
A preferred approach might be
to first identify pay and benefit practices that are
desired by employees in the respective nations
and cultures.
Once employee needs and desires are
appropriately identified, then the mechanics of
selectively adopting existing programs to a
variety of operations might be addressed
and the need to develop new programs
identified.
Two main approaches of Intl Compensation.
1. Balances sheet approach(home country approach)
2. Going rate approach(host country approach)