What are the main approaches to compensate expatriate employees?
There are a few methods commonly used to determine global expatriate compensation. These include: home-based approach (also known as the balance sheet approach), the host-based approach, and the global market approach.
What are the four elements of expatriate compensation?
Under this system, the employee’s base salary is broken down into four general categories: taxes, housing, goods and services, and discretionary income. The host-country-based approach. With this approach, the expatriate employee’s compensation is based on local national rates.
What is the most common approach to designing expatriate compensation?
How should we compensate an employee on a foreign assignment?
- The most common approaches taken by organizations are the balance sheet (or buildup system), negotiation, localization, lump sum and cafeteria plans.
- A home-country salary (base salary plus incentives) is determined for the expatriate.
What is balance sheet approach of expatriate compensation?
Like in a Balance sheet, the sum of items on the left-hand side (LHS) will equal the sum of items on the right-hand side (RHS). Similarly, the Balance Sheet approach of compensation is aiming to balance the host vs. home costs for income taxes, social security, goods and services, and housing.
What is compensation management PDF?
Compensation management is the process of establishing and. maintaining an equitable wage and salary structure, an equitable cost structure. It involves job. evaluation, wage and salary survey, profit sharing and control of pay costs.
What is a compensation structure?
A compensation structure, also known as a salary structure, is a framework that a business uses to determine compensation. A good structure sets pre-existing guidelines to delegate these pay increases in a fair, unbiased manner, as opposed to using inconsistent factors like negotiation or previous salary history.
What is balance sheet approach example?
An accounting term that describes a situation where debits and credits must match. The balance sheet approach is used to set expatriate compensation. There the goal is to protect or equalize an expatriate’s purchasing power while on assignment abroad.
What are the components of compensation?
Components of compensation include the following four items:
- Base pay, either an hourly wage or salary. Base pay is frequently a major decision factor for most employees in deciding to accept the job.
- Wage and salary add-ons.
- Incentive pay for performance.
- Benefits.
What are three different forms of compensation?
Here are the three most popular types of compensation packages and a few notes on who might be most attracted to them.
- Straight salary compensation.
- Salary plus commission compensation.
- Straight hourly compensation.
How do you design a compensation structure?
Salary structure: How to create a compensation structure
- Establish value for each position in your company.
- Consider your company’s competitive posture.
- Define compensable leverage for your company.
- Look at external inequalities.
- Develop a salary structure for your organization.
- Get your current employees up to par.
What is balance sheet approach in compensation?
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.
How to plan for Global expatriate compensation?
It should be planned to achieve the mobility and staffing goals of the organization. There are a few methods commonly used to determine global expatriate compensation. These include: home-based approach (also known as the balance sheet approach), the host-based approach, and the global market approach.
What are the allowances paid to expatriates?
Allowances Various allowances are paid to expatriates depending upon the assignment. They include: (a) The cost-of-living allowance (COLA): It involves a payment to compensate the differences in expenditures between the home country and the foreign country.
What is the best pay structure for expatriate employees?
Approximately 76% of long-term assignments use a home-country pay structure for their expatriate employees. Large multinationals often offer employees a lump sum relocation payment, in addition to the home-country base salary, to spend how they choose. 2. The Balance Sheet Approach
What is the balance sheet approach to international employee compensation?
The balance sheet approach provides international employees with an expatriate compensation package that equalizes cost differences between the international assignment and the same assignment in the home country of the individual or the organization.
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