Approaches for international remuneration
Determine the total package in money value that covers the base salary, and all kinds of allowances and benefits
Employee is provided with freedom of allocating the money and deciding up on the type and quality of housing, medical, conveyance etc.
MNCs segment the countries and/ or cities into clusters based on the cost of living and other factors like hardships and danger issues that affect the
They then determine more or less the same compensation package for each job within the same cluster of cities
Total salary level is determined by the organisation and the employee is given an option to decide the cash component and benefits component in the international remuneration package.
Double Home Country Salary & Living Compensation at the Host Country
MNCs determine the package in such a way that the expatriates get compensation best domestic salary plus living host country compensation.
Double home country salary would be the double of the best salary that a best candidate gets in the home country for a similar job.
Provides the opportunity for best performers to earn high salary irrespective of nationality including host country nationals, and a minimum guaranteed base salary irrespective of performance
Determines the uniform pay scales for such jobs throughout all the countries where they operate.
This approach is based on the concept of national pay scales within a country
Determine the international remuneration package through mutual negotiations between the employees and the employer
Salary level in host country
Also referred to as localisation approach. International Remuneration is based on salary for similar jobs in comparable organisations in the host country.
4 Balance Sheet Approach categories
Goods and services
Objective of international remuneration package
Increase employees’ motivation
Financial protection to employees
Reduce the employee grievance
Establish that the package is both competitive and is always better than other packages.
Assist the employees and their family to adapt to the new environment
Improve organisational performance
Provide consistency in pay
Recruit and retain competent employees
Items included in the international remuneration package
Factors to consider when designing a international remuneration package
National culture of the country
Capacity to pay
The laws and regulations of the country
payment or compensation received for services or employment. This includes the base salary and any bonuses or other economic benefits that expatriates receives.