Define and describe the balance sheet approach used by many firms to calculate the compensation they...

Define and describe the balance sheet approach used by many firms to calculate the compensation they wish to offer to their expatriates.

Expert Solution

Ans : * Expatriate Compensation – A good compensation package is one that is considered fair by an expatriate, but it must also be cost-effective for the organization. It should be planned to achieve the mobility and staffing goals of the organization. There are a few methods commonly used to determine global expatriate compensation. These include: home-based approach (also known as the balance sheet approach), the host-based approach, and the global market approach. And one of the greatest challenges is determining which method is best for your organization.

* Balance sheet approach, is the most popular of these approaches and used by more than 85% of U.S. multinational companies. The balance sheet approach provides international employees with an expatriate compensation package that equalizes cost differences between the international assignment and the same assignment in the home country of the individual or the organization. The balance sheet approach is based on some key assumptions and is designed to protect expatriations from cost differences between their home and host countries.

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