What is the most common approach to expatriate pay?
The most common approach to expatriate pay is the balance sheet approach, which aims to develop a salary structure that equalizes purchasing power across countries so expatriates have the same standard of living in their foreign assignment as they had at home.
What is the most common approach to expatriate pay quizlet?
The most common approach to expatriate pay is the balance sheet approach. This approach aims to equalize purchasing power so employees can enjoy the same living standard in their foreign posting that they had at home.
What type of approach is commonly used to determine expatriate compensation?
Negotiation is most often used for special situations or in organizations with few expatriates. This approach involves basing the expatriate’s salary on the local (host country’s) salaries. It is easy to see that the same position in different countries may have quite different salaries.
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.
How do you compensate expatriates?
Approaches to Global Compensation
The main compensation items for expatriates involve base pay, cost-of-living adjustments, housing allowances, home leave, education assistance for dependents and premium pay.
Why expatriate are paid more?
The Relative Hardship difference between Home and Host Country. For example, ,moving to a country where more day to day hardship will be experienced, would normally result in more pay to compensate for the hardship. The Exchange Rate difference between the Home and Host Country.
What is a foreign service premium?
Expatriate or foreign service premium.
This add-on to regular salary is designed to induce a candidate and his family to leave familiar working and living conditions and to continue employment in another country. This type of premium may be needed when shifting an employee from a short-term to a long-term assignment.
What are the approaches of compensation?
05 MayThree Expatriate Compensation Approaches
- Home-Based Approach. The home-based, or balance sheet approach, is the most popular of these approaches and used by more than 85% of U.S. multinational companies. …
- Host-Based Approach. …
- Global Market Approach.
What are the various approaches to compensation?
The Four Major Types of Direct Compensation: Hourly, Salary, Commission, Bonuses. When asking about compensation, most people want to know about direct compensation, particularly base pay and variable pay. The four major types of direct compensation are hourly wages, salary, commission and bonuses.
What is the going rate approach?
The going rate method aims to treat the expatriate employee as a citizen of the host country, encouraging a “when in Rome, do as the Romans do” mentality (Sims & Schraeder 2005). Thus, the two approaches have different foci and hence also different advantages and disadvantages (see the following table):
What is the home based approach?
What is the home-based approach? The aim of the home-based approach is to maintain assignees’ home country purchasing power, so they are no better or worse off while on assignment in the host country, than if they had stayed at home.
What is the host based approach?
Host Based Approach
In this approach, the assignee transfers to the host country payroll and receives their base and incentive pay based on local compensation regulations. Many companies continue to cover the employee’s defined contributions or benefit pensions throughout the assignment.
What are the six most common allowances for expatriates?
Cost – of – living allowance ( COLA ) 2 . Housing ( to live with equivalent to home country standard of living ) 3 . Home leave ( to keep the home country ties alive ) 4 . Education ( of children ) 5 .
What is a typical expat package?
While less common, one might also find the expat package includes the cost of membership to a local golf club, yacht club, gym, etc. – and include subscriptions to magazines, newspapers and trade journals of choice. Standard benefits such as bonuses, annual leave, medical leave and insurance should always be available.
What is a good expat package?
A typical expat package will often include travel costs for you and your family to visit loved ones back home. Most packages usually cover the cost for a flight home once a year, although you may be able to negotiate for more depending on your personal circumstances.
What is expatriate pay?
Expatriate Compensation By: Sonali Srivastava. Definition An individual living in a country other than their country of citizenship, often temporarily and for work reasons. An expatriate can also be an individual who has relinquished citizenship in their home country to become a citizen of another.
What are the major components of expatriate compensation?
7 Key Components of an International Compensation
- Base salary.
- Foreign Service inducement/hardship premium:
- Allowances:
- Education Allowances for Children:
- Relocation Allowances and Moving:
- Tax Equalization Payments:
- Spouse Assistance:
What is the balance sheet approach?
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 four major categories of outlays incurred by expatriates in the balance sheet approach?
Taxes. Housing – including rent, bills, utilities, etc. Goods and services – including expenses such as food, clothing, recreation, medical care, and transport. Reserve – including savings, benefits, pension contributions, education, etc.