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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

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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