Description
Setting the expatriate compensation structure is a complex undertaking for a company’s HR experts. Having expatriates is difficult, but having a bad expatriate compensation plan and structure is even disastrous. After analysis of issues and considerations in expatriate compensation, the biggest challenge appears to be the equality problem. The discrepancies in compensation that exist between the locals and the expatriates due to use of different compensation structure are a major challenge in most multinational companies. The HR is faced with a hard decision to make, choosing between the two options. The department has to choose between using the host country’s compensation policies, where the expatriate’s salary is based on the legally instituted salary structure in the host country, or use the home country’s pay structure. Using the host country’s compensation plan may discourage the expatriates because they may earn less than the expatriates working in other companies, especially if the host country pay policies are lower than those of the home country. Most multinational operating in the developing nations always finds themselves in this limbo. On the other hand, using the home country’s policies may affect the local managers as they will feel that they are not paid equally compared to their counterparts from other countries. In this regard, the company must find a balance between the two scenarios.
