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Balance sheet approach to international compensation packages

Explain the "balance sheet approach" to international compensation packages. Why is it so important?

Discuss the pros and cons of aligning the expatriate compensation package with the host country colleagues compared to the home country colleagues.

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Explain the "balance sheet approach" to international compensation packages.

The balance sheet approach is one in which the employee who is posted abroad is maintained in the salary structure he enjoyed at home. In addition, he is systematically paid allowances so that he can maintain the same standard of living he enjoyed at home.

Why is it so important?

This is important because of the analytical and systematic approach of the balance sheet method. The base salary is analyzed into four main categories. One is the home country equivalent purchasing power. In this analysis, it is shown that those employees that have been posted abroad have purchasing power equivalent to those in the home office and those that have been posted abroad may also earn incentives. Typically, the ...

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