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International Compensation

International Compensation. Nancy Johnson April 2005. Definitions. Host country nationals (HCN) Local citizens working for a foreign company Expatriates People working for a company from their native country but in another country Third party nationals

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International Compensation

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  1. International Compensation Nancy Johnson April 2005

  2. Definitions • Host country nationals (HCN) • Local citizens working for a foreign company • Expatriates • People working for a company from their native country but in another country • Third party nationals • People working for a company with ownership and at a location which is different than their own country

  3. Set Expatriate Pay Level • Exercise: You are a Compensation Executive with an American Company making $100,000 per year. You are married with a husband and two children. Your company has asked you to live and work in: • London, England • Beijing, China • Cairo, Egypt • Montreal, Canada • San Palo, Brazil • Sydney, Australia • Baghdad, Iraq • Describe what factors you would consider in deciding how and what types of factors are important to your relocation? • Exchange Rate

  4. Financial • Currency • Inflation • Foreign Service Premiums • Hazard Premiums • Mobility Pay – incentive to change assignment • Taxes

  5. Fringe • Housing allowances • Tax • Local customs • Education • Security • Extra paid time off to return home • Rest & relaxation leave

  6. Balance Sheet Approach • Standard of living comparable to US • Ties to US • Don’t want to assimilate into local culture • Short assignment • Return home to US following assignment • Income protection Try to stay comparable in housing, goods & services, discretionary income, & taxes

  7. Considerations for Other Employees • What is the proper role for the balance between HNCs and TCNs? • Strategies • Think global, act local • One size fits all • Facilitates moving between countries • Think & act globally & locally • Legal differences • Cultural differences

  8. Summary • Internal, external & individual equity become far more complicated in international compensation • Many more comparisons are made and the change in exchange rate and so forth become far more complicated

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