Expatriate Compensation

INTRODUCTION

This course provides the groundwork you need to plan and manage compensation for employees on long-term international assignments. These are assignments that typically last from two to five years.

First, we will introduce you to staffing with a look at which employees are best to send on international assignments. Then we will discuss how to design the international assignee’s package, which may cost as much as three times the amount of an employee's normal home country compensation, including:

• base pay
• variable pay
• benefits
• immigration
• relocation
• home and host country housing
• overseas expenses and allowances
• taxation methodology

The overall expense of a global mobility program is a key challenge for global mobility managers along with immigration requirements and taxation issues.

Because of the high cost, organizations more and more are emphasizing the need to control global mobility program expenses. Accordingly, assignments should be highly responsive to the business needs of the organization and the global mobility program must provide the guidance, policies, and standards that support this effort.

The term, “keeping the employee whole,” is a common goal of long-term expatriate assignments. Organizations will never be able to keep an employee 100 percent whole, but programs can be designed to attempt to maintain an employee’s lifestyle throughout an assignment. Employees should understand that the goal of the global mobility program is to protect them financially as if they never left their home country, but they should not expect to receive a windfall either. Ideally, the long-term international assignment should be as cost neutral as possible to the employee. Localized employees are different. For them, the objective is a permanent relocation to a new country, which includes a transfer to the new country payroll, benefits, taxes, and government programs.

This course also discusses the impact of currency rates, inflation, and taxation on an employee’s purchasing power. Then the balance sheet approach for long-term expatriates is introduced as a methodology to manage costs since relocating an employee on a long-term international assignment can be a very expensive decision.

Finally, you will get a chance to try your hand at setting an international assignee’s compensation.