Management Challenges Concerning International Benefits & Compensation
Let’s learn more about management Challenges concerning International benefits and compensation
- HR managers focus on their strategic objectives to develop a comprehensive compensation plan, in terms of considering base pay, short and long-term incentives, benefits and growth opportunities
- The objective of this kind of strategy is to ensure that both TNC/MNCs‘long and short-term objectives coexist in the compensation system without overlap, which would duplicate a single pay plan for the same objectives.
- The purpose of the planning is also designed to ensure that the compensation system attracts and retains the desired employees and that it motivates them to do those things that support the business plan
- The compensation costs of a family with children are shifted to hardship allowance for schooling, childcare, increased residence cost and all fringe benefits associated with supporting a family life cycle
Designing the Compensation Program
- Balance business objectives with the compensation programs such as base salary, taxes, allowances, cost-of-living allowances (COLAs), housing and reimbursable expenses.
- The levels of salary and types of fringe benefits paid to the three primary labor pools of international managers are well documented. What has not received adequate attention is the difference among PCNs, HCNs, and TCNs.
- For example, executives, middle managers and supervisors who are expatriate managers in international assignments, receive a variety of “package” of benefits
- In addition to salary, taxes and benefits, international managers also receive different allowances as part of their overall compensation to accept an overseas position
- The most noticeable differences among the three labor pools of international managers are
Overseas premiums –
- The foreign service premium is based on the expatriate‘s level in the company, the family size, and the location
- Another type of premium is the hardship allowance and home leaves. The U.S. Department of State established a hardship list in 1996 to help organizations providing expatriate managers hardship allowances as a percentage of their base salary
- Housing allowances –
- Entails substantial additional costs
- TNC/MNCs differ in policies regarding employee contributions to housing
- Cost-of-living allowances –
- Provided to help PCN or TCN enjoy a standard of living abroad that is comparable to what they would enjoy in the home country
- Tax equalization –
- PCNs pay no more income tax and no less than if he or she stayed home
- Repatriation allowances –
- Paid on return of employee to his/her country of origin to live there permanently
- Performance-based bonuses
Additional Payments and services
- Lifestyle enhancement services
- Provision for employee & family to learn the local language
- Education & training of employee & family on local culture, customs and social expectations
- Counseling services for employee & family
- Assistance in finding a home at the foreign work site / school & suitable education programmers for children & dependents
- Company car, driver, domestic staff, child care
- Use of Fitness facilities / subsidized health care services
- Assistance in finding suitable & acceptable employment for spouse
- Assistance in joining local civic, social, professional organizations
- Allowances & Premiums
- Foreign service premium & tax equalization allowance
- Temporary living allowance
- Hardship premium
- Currency protection
- Mobility premium
- Home-leave allowance
- Stopover allowance
- Completion of assignment bonus
- Assignment extension bonus
- Emergency loan
Extended work-week payment
