Components Of The Compensation Program - 1463 Words

Components of expatriate compensation After the preliminary consideration, the basic structure of international compensation programs is similar to the structure of domestic compensation programs (Martocchio, 2015). The main component includes base pay and employee benefits. The nonperformance-based incentive and allowance differ international compensation packages from domestic compensation packages. In the following section, I will focus on the difference part between expatriate compensation and domestic compensation. There are three different methods to calculate expatriates’ base pay. (Martocchio, 2015) concludes that the first method is the home country-based pay method which compensates expatriates the amount they would receive from similar work in the United States. The home country-based pay method is most suitable when expatriate assignments are short in duration and local nationals performing comparable jobs receive substantially higher pay. The second way is the host country-based method which compensates expatriates based on the host countries’ pay scales. Companies can determine the base by various standards, including job evaluation techniques, market pricing, and jobholders’ past relevant work experience. The host country-based method is most suitable when assignments are of long duration because expatriates tend to judge their pay compared with their local coworkers rather than their counterparts at home country. 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