Question

Assignment Scenario:

The Vice President of Human Resources for the international position you pretended to apply for in the International Job Search experiential exercise is trying to determine the appropriate compensation for the job. Based on the key components of an international compensation program mentioned in your textbook, you are being asked to develop a compensation package for the position you pretended to apply for. Explain the rationale for your design. Your recommendations must include numerical data, percentages, etc. based on the text and research, and must include your response to the following instructions:

1. a) Identify and describe the compensation approach you believe is best for the position you have applied for? (Going Rate Approach or the Balance Sheet Approach) b) Keeping the international firm’s location in mind, detail the advantages and disadvantages of this approach as they relate to the position you applied for.

1. a) How much of a base salary will you propose for the position? b) What percentage of base salary will the inducement comprise?  Be specific – express the computations in percentage (%) and in the currency amounts (Pesos, Euros, Etc.) from the region for which you have applied.

Answer 1

a) The first basis would be the living standard of country for which the position is being applied for . If the destination country has a higher living standard than the home country , then Going rate approach woule be logical and convincing .e.g. if in my country the salary for the advertised position is $10,000 per annum and in the destination country , a similar position carries a salary of $20,000 per annum, then it would be not right to settle for $10,000 and not fair too .

However , if the destinaton country has a lower living standard then a mixed approach of Balance sheet approach and Going rate approach would be smore suitable . On the other hand if the destination country salary is only $5,000 per annum , then the base has to be at least $10,000 to start with as it would at least ensure that I maintain my present lifestyle .

b) The above description details the philosophy of the base salary and advantages and disadvantages of the different pay structures .

The base salary has to be at least 25% higher than my current base salary plus an incentive component based on target achievement which should not be higher than 20% of the total salary . hnce the broad structure shall be 80% fixed and 20% variable (incentive based ) . So if my current salary is $10,000 per annum with a fixed 80% and variable 20% component , then the structure in the destination country shall be at least $12,500 with base salary : $10,000 (25% higher than home country ) + variable 20% .i.e. 2500

All other emoluments like displacement allowance , medical , school displacement etc also needs to be considered and has to be at least on par with the home country and ideally should be bettered .

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