International compensation
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International Compensation. Nancy Johnson April 2005. Definitions. Host country nationals (HCN) Local citizens working for a foreign company Expatriates People working for a company from their native country but in another country Third party nationals

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International Compensation

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International compensation

International Compensation

Nancy Johnson

April 2005


Definitions

Definitions

  • Host country nationals (HCN)

    • Local citizens working for a foreign company

  • Expatriates

    • People working for a company from their native country but in another country

  • Third party nationals

    • People working for a company with ownership and at a location which is different than their own country


Set expatriate pay level

Set Expatriate Pay Level

  • Exercise: You are a Compensation Executive with an American Company making $100,000 per year. You are married with a husband and two children. Your company has asked you to live and work in:

    • London, England

    • Beijing, China

    • Cairo, Egypt

    • Montreal, Canada

    • San Palo, Brazil

    • Sydney, Australia

    • Baghdad, Iraq

  • Describe what factors you would consider in deciding how and what types of factors are important to your relocation?

  • Exchange Rate


Financial

Financial

  • Currency

  • Inflation

  • Foreign Service Premiums

  • Hazard Premiums

  • Mobility Pay – incentive to change assignment

  • Taxes


Fringe

Fringe

  • Housing allowances

  • Tax

  • Local customs

  • Education

  • Security

  • Extra paid time off to return home

  • Rest & relaxation leave


Balance sheet approach

Balance Sheet Approach

  • Standard of living comparable to US

    • Ties to US

    • Don’t want to assimilate into local culture

    • Short assignment

    • Return home to US following assignment

    • Income protection

      Try to stay comparable in housing, goods & services, discretionary income, & taxes


Considerations for other employees

Considerations for Other Employees

  • What is the proper role for the balance between HNCs and TCNs?

  • Strategies

    • Think global, act local

    • One size fits all

      • Facilitates moving between countries

    • Think & act globally & locally

  • Legal differences

  • Cultural differences


Summary

Summary

  • Internal, external & individual equity become far more complicated in international compensation

  • Many more comparisons are made and the change in exchange rate and so forth become far more complicated


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