Components of International Compensation

Components of International Compensation- Designing and developing a better compensation package for HR professionals for international assignments requires knowledge of taxation, employment laws, and foreign currency fluctuation by HR professionals. Moreover, the socioeconomic conditions of the country have to be taken into consideration while developing a compensation package. It is easy to develop the compensation package for the parent country national but difficult to manage the host and third-country nationals. When a firm develops international compensation policies, it tries to fulfill some broad objectives: The compensation policy should be in line with the structure, business needs and overall strategy of the organization.

• The policy should aim at attracting and retaining the best talent.
• It should enhance employee satisfaction.
• It should be clear in terms of understanding of the employees and also convenient to administer.
• The employee also has a number of objectives that he wishes to achieve from the compensation policy of the firm He expects proper compensation against his competency and performance level. He expects substantial financial gain for his own comfort and for his family also. He expects his present and future needs to be taken care of including children’s education, medical protection, and housing facilities. The policy should be progressive in nature.

7 Key Components of an International Compensation

1. Base salary
2. Foreign Service inducement/hardship premium:
3. Allowances:
4. Education Allowances for Children:
5. Relocation Allowances and Moving:
6. Tax Equalization Payments:
7. Spouse Assistance:

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