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Compensation Management - Calculating Expatriate Base Pay

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Explain the three different methods that U.S. companies use to calculate expatriates' base pay.

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This solution discusses different methods that U.S. companies use to calculate expatriates' base pay. APA formatted references are included.

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U.S. companies that are multi-nationals may treat all expatriates as if they worked in and were citizens of the United States. In this manner all people working in a country receive the same compensation package. This can be problematic from a sense that taxes vary from country to country. To adjust accordingly, companies may participate in a Salary Build-Up approach in which taxes of the host country and an international premium for hardship are calculated and an expatriate's pay is adjusted accordingly.
Another method is the cost of living allowance, in which an American may be given an allowance so that his or her family can retain their standard of living up to American norms. This allowance is a percentage of base pay ...

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Sally Baldwin, Ed.D
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  • BA, University of Southern California
  • MSS, United States Sports Academy
  • Ed.D, Boise State University
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