Try the new Google Books Show
Check out the new look and enjoy easier access to your favorite features Get the latest global mobility news, event invitations, and articles from Mercer. sign up now
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 What 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.
What is the host based policy approach for international compensation?The host-based approach uses the market rate of the host country to determine the salary on offer. This could be the salary which local employees receive or, particularly in countries with large expatriate populations, it could be based on the salary received by other expatriates in that country.
What are the approaches of international compensation?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.
What is the most common approach to international compensation?Home-based approaches have been traditionally the most commonly used to compensate international assignees. Assignees on a home-based approach retain their home-country salary and receive a suite of allowances and premiums designed to cover the costs linked to expatriation.
|