Compensation Plan for International Personnel

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Write a paper describing in detail the most important elements of the compensation and benefit programs for individuals moving "in either direction." Explain in detail some of the challenging issues and prospects of doing business abroad. Issues will include dealing with international travel, cultural issues, currency fluctuation, and global unrest. Prepare a series of options for management to consider, including a final recommendation for a plan. Feel free to choose the international countries in which the organization operates.

The challenges and issues associated with establishing international compensation packages are predicated upon ensuring that the organization can effectively balance their business objectives with the appropriate compensation in regard to the base salary offered to the employee, taxes that will be paid by the company, allowances associated with the cost-of-living, and other expenses that the company must account for and reimburse the employee for taking the position overseas such as education expenses for their children. To accomplish these objectives, there are various methods used by businesses to calculate the appropriate pay, most effective way to contain costs associated with international compensation packages for employees,

The facts that any organization must face are that it is very expensive to send expatriates overseas to work as the costs can constitute up to five times the amount it would require to keep the person in their home country as expatriate's salaries, allowances, and taxes constitute much higher fees than for non-expatriates. Therefore, it's imperative to attempt to cultivate the most cost-effective program possible for international compensation packages. To cultivate the most effective policy, the organization must analyze all of these variables and ensure that they coincide with the business objectives of the company for the most effective international compensation package.

The organization must first detail and outline their strategic objectives in reference to how long the company seeks to employ the employee overseas, whether the expat will be transnational in regard to moving across different countries while on assignment, or if the expat will only be on a short assignment overseas. In essence, the organization must determine the mobility aspects of the international staffing before they can establish an effective international compensation policy.

After the organization has effective determined their goals and mission in regard to mobility and staffing, it's imperative to utilize a variety of different methods to effectively calculate the appropriate compensation, and these methods will be briefly discussed in this summary. Some of the most widely-used methods include the Balance-sheet, Host-based approach, Host approach, and the international approach. In regard to U.S. companies, the majority of organizations that develop international compensation packages choose the balance-sheet approach, which begins with the home country's salary as the foundation of the compensation package.

As I previously stated, companies must ensure that they ascertain the level of mobility that expats will engage in while on international assignment, and the primary reason that the balance-sheet approach is so effective is placated upon the fact that this approach facilitates mobility while aiding in ensuring that the expat is ...