International compensation

3 important questions on International compensation

What are the key components of a compensation program for expatriates?


  • base salary
  • foreign service inducement and hardship premium - compensate for challenging locations
  • allowances
  • benefits - health care, pension, life insurance

What are the six common allowances?

  • cost-of-living allowance - family size is important
  • housing allowance - maintain home country living standards
  • home leave allowance - trips back home
  • education allowance
  • relocation allowance - moving and shipping
  • spouse assistance

What are the three approaches to international compensation of expatriates?

  • the going rate approach - salary structure in host country
  • the balance sheet approach - base salery is maintained (fixed)
  • (local plus approach - reduced package)

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