Page 144 - DMGT548_GLOBAL_HRM

Neetu Singh, Lovely Professional University
Unit 8: International Compensation

Unit 8: International Compensation Notes

CONTENTS
Objectives
Introduction

8.1 Compensation
8.2 Approaches to International Compensation
8.2.1 Going Rate Approach

8.2.2 Balance Sheet Approach
8.2.3 Differentiating between PCNs and TCNs
8.2.4 International Living Costs Data
8.3 Key Components of International Compensation Programme
8.3.1 Termination of Contract

8.4 Executive Compensation
8.4.1 Components of Executive Compensation
8.4.2 Strategies for the Growth of Executive Compensation

8.5 Summary
8.6 Keywords
8.7 Review Questions
8.8 Further Readings

Objectives

After studying this unit, you will be able to:

 Describe approaches to International compensation
 Identify the components of International compensation

 Design the International compensation program
 Explain executive compensation
Introduction

Compensation tends to vary widely around the business world due to the economic differences,
differences in development levels, political factors, traditions and culture. A comparison between
U.S. and Chinese worker compensation showed that average wage of the Chinese worker is
only about 3 to 5% of that of U.S. worker, Chinese are not required to pay income tax, insurance
premiums, or pension plan payments. Chinese housing costs only about one dollar a month, so
the difference in net income is not as large.

Employee benefits vary by country. Benefits and employee perks constitute a much greater
share of the overall compensation package in Europe than in America. Cross-cultural differences
impact the importance of benefits. Like, vacation time is not an important benefit to the Japanese

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