Professional Documents
Culture Documents
Int Compensation MGT
Int Compensation MGT
International Compensation
Management
IBUS 618 Dr. Yang 1
Chapter Objectives
In the introductory chapter we described IHR managers as
grappling with complex issues:
Manage more activities from a broader perspective,
Be more involved in the lives of their far-flung
employees
Balance the needs of PCNs, HCNs and TCNs
Control exposure to financial and political risks and
Be increasingly aware of and responsive to host-
country and regional influences.
In this chapter, all of these issues and concerns are brought
out in a discussion of compensation issues. (cont.)
IBUS 618 Dr. Yang 2
Chapter Objectives (cont.)
Examine
Examinethe
thecomplexities
complexitiesthat
thatarise
arisewhen
whenfirms
firmsmove
movefrom
from
compensation
compensationat atthe
thedomestic
domesticlevel
leveltotocompensation
compensationin inan
an
International
Internationalcontext.
context.
Detail
Detailthe
thekey
keycomponents
componentsof ofinternational
internationalcompensation.
compensation.
Outline
Outlinethe
thetwo
twomain
mainapproaches
approachesto tointernational
international
compensation
compensationand andthe
theadvantages
advantagesand anddisadvantages
disadvantagesof of
each
eachapproach.
approach.
Examine
Examinethe thespecial
specialproblem
problemareas
areasof oftaxation,
taxation,valid
valid
international
internationalliving
livingcost
costdata
dataand
andthetheproblem
problemof ofmanaging
managing
TCN
TCNcompensation.
compensation.
Examine
Examinethe therecent
recentdevelopments
developmentsand andglobal
global
compensation
compensationissues.
issues.
IBUS 618 Dr. Yang 3
Introduction
Global compensation managers
increasingly deal with two areas of
focus.
They must manage highly complex and
turbulent local details, while
Concurrently building and maintaining a
unified, strategic pattern of compensation
policies, practices and values.
Allwithin
Allwithin the
the context
context of
of shifting
shifting political,
political,
economic
economic andand social
social conditions.
conditions.
IBUS 618 Dr. Yang 5
Objectives of International
Compensation
Should be consistent with the overall strategy,
structure and business needs of the multinational.
Must work to attract and retain staff in the areas
where the multinational has the greatest needs
and opportunities, hence must be competitive and
recognize factors such as incentive for foreign
service, tax equalization and reimbursement for
reasonable costs.
Should facilitate the transfer of international
employees in the most cost-effective manner for
the firm.
Must give due consideration to equity and ease of
administration.
15
4. Benefits
In addition to the already discussed benefits,
multinationals also provide vacations and special
leave.
Annual home leave usually provides airfares for families to
return to their home countries.
Rest and rehabilitation leave, based on the conditions of the
host country, may provide the employee’s family with airfares
to a more comfortable location near the host country.
Emergency provisions are available in case of a death or
illness in the family.
Employees in hardship locations often receive additional
leave expense payments or rest and rehabilitation periods.
Advantages
Advantages Disadvantages
Disadvantages
Equity withy local Variation between
Equity withy local Variation between
nationals
nationals assignments
assignmentsfor for
Simplicity same
sameemployee
employee
Simplicity
Identification with Variation between
Identification with Variation between
host
host country
country expatriates
expatriatesofof
Equity among same
samenationality
nationalityin
in
Equity among different
different
different differentcountries
countries
Potential re-entry
nationalities
nationalities Potential re-entry
problems
problems
Home- and
Premiums and
Host-Country Income
Incentives
Income Taxes Taxes
Income
Income Housing Taxes
Taxes Housing Housing
Housing
Goods and Goods and
Goods and Goods and
Services Services Services Services
Reserve Reserve Reserve Reserve
Host-Country Home-Country
Home-Country Host-Country Costs Paid by Equivalent
Salary Costs Company and Purchasing
from Salary Power
Facilitate and
andlocal
localnationals
Facilitatere-entry
re-entry nationals
Easy Can
Canbebecomplex
complexto
Easyto tocommunicate
communicateto
to to
employees administer
administer
employees
May entail difficulty to
May entail difficulty to
attract
attracthuman
humancapital
capital