International Compensation Management

International Compensation Management- The escalating pace of globalization is increasing the need for organizations to develop effective international compensation programs. Though globalization is not a new phenomenon, it is the rapid pace of escalation that has focused attention on international issues in both the business press and the executive suite. In these turbulent and increasingly global competitive markets, no function is under greater scrutiny than the human resource function. Despite the need to attract, motivate, and retain an effective workforce in a variety of foreign locations, the international compensation literature has focused primarily on a small percentage of the international workforce: the expatriate manager. It is important that international compensation scholars begin to extend this focus beyond the expatriate to inform organizations regarding the cross-cultural use and motivational utility of various compensation practices on the larger workforce.

There are two basic approaches to determine the international compensation package:

• Going Rate Approach: This is based on local market rates. It relies on comparisons of surveys of the local nationals, expatriates of same nationality and expatriates of all nationalities’ pay packages.
• Balance Sheet Approach: The Balance Sheet Approach to international compensation is a system designed to equalize the purchasing power of employees at comparable position levels living abroad and in the home country and to provide incentives to offset qualitative differences between assignment locations.

The module includes:

• Approaches to international compensation
• Components of an international compensation
• Designing international compensation plans
• Concept of variation
• Cultural issues
• Repatriation issues

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