Submitted by: Submitted by SilviaMayer
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Category: Business and Industry
Date Submitted: 02/27/2013 10:10 PM
IHRM WA02 342933 Silvia Mayer
International Compensation
International compensation is defined as the provision of monetary and non-monetary rewards,
including base salary, hardship premium, allowances and benefits on an international level. While
global compensation used to cover mainly only expatriate payments, it is nowadays seen in a much
broader range, namely as for example basis of corporate control and instrument to create an
international corporate culture. This broader approach also increases the complexity of international
payments since national and corporate values of the compensation system have to be included in a
universal, international frame with usually different values and rules. Local cultural aspects have to be
considered while an overall universal compensation strategy has to be generated and maintained.
Moreover international compensation requires knowledge of currency fluctuations, the effect of
inflation on compensation and information about local laws of employment and taxation.
As for the objectives regarding international compensation, one has to consider both the company’s
objectives and the employee’s objectives. The firm wants to implement a compensation strategy that
can be integrated in the overall corporate strategy and that attracts and retains personnel through a
competitive compensation policy. Moreover it should enable an easy transfer of expatriates and a
simplified administrative system. The objectives of the employee differ of course from the company’s
ones. For example the employee needs to have a housing, education for his/her children and financial
security in form of living costs & benefits. To bring these competing objectives together is another
complex and challenging task for IHRM personnel.
In order to develop a consistent international compensation strategy, you also have to choose among
your key components like for example base salary, hardship premium, allowances and benefits. For...