In: Operations Management
You need to send expatriate managers to two countries in Asia - Thailand and Japan. You choose two candidates who work at the same level and get similar compensation package in the U.S. How would you design the expatriate compensation packages for the managers in each country so that they find it fair and acceptable offer? What kind of issues can come up when cosnidering this issue?
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Expatriate compensation can be called a good compensation package that an expatriate or migrant can consider it fair but also it is very essential that it should be cost-effective for that particular organization.
If I need to send Expatriate manager to two countries and I chose two candidates who are actually working at the same level then for this I would design a compensation package with the help of these given approaches.
Home-based approach- It is also called the Balance sheet approach. It is one of the most famous approaches which is used by the US. It basically provides the package to the expatriate which makes sure that there is no difference in the cost between international-based assignments and home-based assignments. Next one is
Global market Approach- I find this approach also very much suitable because all the assignees are on an equivalent compensation scale. This Global market approach is much more inclusive.
I would design the expatriate compensation packages for the managers in each Country so that they find it fair and acceptable by providing the normal salary and various benefits like Base salary, allowances like home allowance, travel allowance, Relocation allowances which cover the moving or shipping charges and also lease-related charges and related to tax equalization payments.
The issues which can arise while considering this can be like variations of difference in the legal system of laws, tax policies can be different, the standard of living can be different and also issues related to pension or social security or currency rate risk can also arise.