Compensating Global Employees

Abstract

It is widely recognized that compensation and reward systems are key elements in attracting, retaining, and motivating a labor force. In order to achieve these objectives, the system of compensation should be well adjusted to key contingency factors of the firm, as well as the expectations and characteristics of the labor force. Designing a pay system is always a challenging process, but doing so in MNCs is particularly complex and difficult. A set of situational factors not normally encountered in a strictly domestic situation must be taken into account when designing the compensation package of an expatriate. The first is host country approach. The second is global approach. The third is home country approach. The topic of expatriate compensation provides an excellent opportunity to analyze the issue of justice. Thus, the difficulty involved in finding a satisfactory compensation system may explain why expatriate compensation literature has been dominated by interests of practitioners and has been characterized by an operative focus.

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