The workplace has changed the last years. The employees enjoy more career opportunities. Their acceptance of an international assignment depends on a large degree on the organisation’s compensation policy. The expatriate compensation policy should follow the same principles as the domestic compensation in order to attract, retain and motivate employees to fulfil the expectations of the company within a determined budget (Jagatsing, 2000). The expatriate defined means “an employee of one company who is sent for a limited period of time from his or her place (country) of domestic employment to a place of assignment, for the purpose of working for and providing services to a receiving company.” (ASN, Services for Expatriates, March 2004). Compensation is “the total remuneration, in cash or in kind, payable by an enterprise to an employee in return for work done by the latter during the accounting period.”(United Nations Statistic Division, March 2004).
The difficulties of the compensation of an expatriate lie in different economic systems, development models, political and institutional contexts, different pension systems, taxation issues and different cultures and traditions. Expatriate compensation is very complex and a challenging issue. Black (1991 in Suutari and Tornikoski, 2001) argued that 77 per cent of the expatriate managers were dissatisfied with their salaries and their compensation package. Considering these difficulties and differences in the international context the Human Resource Manager has to ensure that the compensation is fair and that it is also cost-effective in today’s global market place.
Inhaltsverzeichnis (Table of Contents)
- Introduction
- Difficulties for multinational companies in utilising expatriates
- The taxation issues
- The relationship between the salary level and the local salary/cost-of-living level
- Currency rate risks and differences in prosperity and spending power
- Social security and pension issues
- Spouse related and family issues
- Conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This paper aims to illustrate the difficulties multinational companies face in utilising expatriates by focusing on compensation as an element of the expatriation process. It seeks to explain how these issues can be addressed, exploring various aspects of compensation and its impact on expatriate satisfaction and company success.
- The challenges of expatriate compensation in different economic and cultural contexts
- The importance of attractive and fair compensation for expatriate employees
- The impact of taxation issues on expatriate compensation and company costs
- The relationship between expatriate salary and local salary levels and cost of living
- The role of currency rate risks and differences in spending power in expatriate compensation
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: This section introduces the concept of expatriate compensation and its importance in attracting, retaining, and motivating employees. It highlights the complexities of international compensation due to diverse economic systems, cultures, and legal frameworks.
- Difficulties for multinational companies in utilising expatriates: This section explores the challenges faced by companies in managing expatriate compensation. It discusses the concept of isomorphism and its influence on compensation policies, focusing on the pressures from home country, host country, corporate culture, and global market trends. It outlines various difficulties faced by companies, including taxation, salary differences, currency fluctuations, and social security issues.
- The taxation issues: This section delves into the complexities of taxation for expatriates, highlighting the varying tax systems across countries and the challenges of ensuring fair and cost-effective compensation. It emphasizes the need for employers to neutralize these variations by managing tax obligations and providing clear information to expatriates.
- The relationship between the salary level and the local salary/cost-of-living level: This section examines the issues surrounding salary levels for expatriates, discussing whether to retain home country or host country salaries and the implications for expatriate satisfaction and company costs. It highlights the importance of maintaining a fair and equitable compensation structure while considering the specific circumstances of each individual and assignment.
- Currency rate risks and differences in prosperity and spending power: This section explores the challenges posed by currency fluctuations, differences in prosperity levels, and spending power on expatriate compensation. It discusses the need for companies to develop strategies to mitigate these risks and ensure fair compensation for expatriates across different locations.
Schlüsselwörter (Keywords)
The key terms and focus topics of this paper include expatriate compensation, multinational companies, international human resource management, taxation, cost-of-living, currency rates, social security, and cultural differences. The paper also explores concepts like isomorphism, expatriate satisfaction, and fair and cost-effective compensation strategies.
- Quote paper
- Manfred Daberto (Author), 2003, Selecting compensation as an element to illustrate the difficulties multinational companies face in utilising expatriates, Munich, GRIN Verlag, https://www.grin.com/document/85970
