Comparative International Compensation
Introduction Increasingly, today, globalization is a reality for organizations of almost any size. Only the smallest companies seem unaffected by the disappearance of global boundaries among organizations, markets, and people. Globalization has increased awareness of and concern for creating internationally equitable compensation systems in many companies. The complex nature of international compensation dictates that it receives special attention from organization operating in a multi-national environment. It is crucial that organizations understand the kind of employees employed by international firms, the elements that comprise an international compensation system, and the special problems associated with returning citizens on overseas assignments to their home corporation.
An expatriate, sometimes referred to as an expat, is a citizen of the country in which the organization's headquarters is domiciled. For example, an American working for U.S. subsidiary or branch located in Thailand is an expatriate. An organization may elect to send a domestic employee or manager to an overseas assignment for any number of reasons: to broaden an employee's or manager's perspectives relative to international operations, to start or staff new ventures, to train local employees, to utilize specific expertise possessed by the employee, to protect the organization's interests, to help develop the employee or manager, to assist in the transfer of technology or skills, or to market products. Evidence suggests that American firms use expatriates to a much lesser extent than do Japanese firms.
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
An expatriate, sometimes referred to as an expat, is a citizen of the country in which the organization's headquarters is domiciled. For example, an American working for U.S. subsidiary or branch located in Thailand is an expatriate. An organization may elect to send a domestic employee or manager to an overseas assignment for any number of reasons: to broaden an employee's or manager's perspectives relative to international operations, to start or staff new ventures, to train local employees, to utilize specific expertise possessed by the employee, to protect the organization's interests, to help develop the employee or manager, to assist in the transfer of technology or skills, or to market products. Evidence suggests that American firms use expatriates to a much lesser extent than do Japanese firms.
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