International Compensation Management

Presented by- Mr. Ronnie JosephS. Radhakrishnan

KapilShekhar

Sarath

International compensation is

understood as provision of monetary

and non-monetary rewards, including

base salary, benefits, perquisites, and

long and short-term incentives, valued

by employees in accordance with their

relative contributions to performance.

Introduction

ObjectivesAttract individuals who are

competentFacilitate movement of

expatriatesProvides reasonable relationship

between the pay levelBe cost-effectiveConsistent with the overall

strategy

Theories of compensationContingency theoryResource-based theoryAgency theoryEquity theory

Compensation strategy

Employee inputs and preferences

Business and operating inputs

Industry and Labor market practices and

trends

Compensation philosophy and objectives, based on the above three factors

ASSESSMENT

DESIGN

Base pay delivery

Fringe benefits

Compensation administration

Organization performance or variable pay, non-monetary and other monetary rewards and recognitions

Components of compensation

salary

benefits

Long-term benefits

allowances

incentives

taxes

International compensation

Long-term benefits-

employee stock option plan (ESOP)

restricted stock unit (RSU)

employee stock purchase plan(ESPP)

Variables influencing compensation

MNC INTERNAL ENVIRONMENT

•GOAL ORIENTATION•CAPACITY TO PAY•COMPETITIVE STRATEGY•ORGANISATIONAL CULTURE•INTERNAL WORKFORCE COMPOSITION•LABOUR RELATIONS•SUBSIDIARY ROLE

MNC EXTERNAL ENVIRONMENT

•PARENT NATIONALITY•LABOUR MARKET CHARACTERISTICS•LOCAL CULTURE•HOME AND HOST COUNTRY GOVERNMENTS’ ROLES•INDUSTRY TYPE•COMPETITORS’ STRATEGIES

Staffing orientatio

n

International

compensation

strategy

Compensation packagesGoing Rate ApproachBalance Sheet ApproachInternational Citizens’ Approach

A Balance Sheet Approach

Income taxes

Housing

Goods and servicesReserve

Home-country salary

Home and host country income taxes

housing

Goods and servicesreserve

Home-country Costs

Income taxes

Housing

Goods and servicesReserve

Host-country costs paid by organization and from salary

Income taxes

HousingGoods and ServicesReserve

Home-country equivalent purchasing power

Compensation administration

Compensation

Administration

Establish Salary Bands

Salary Increases/Reviews

Starting Salary for

New Employees

Linkages to Performance Appraisal

Developing rates of

pay for jobs

Issues in international compensationImpact of human resources

demand-supply equationUse of global compensation and

benefits consultantsUse of SurveysOutsourcing Compensation

Conclusion