This document discusses factors to consider when negotiating an expatriate compensation package. It defines an expatriate as an individual living and working in a country other than their home country, often temporarily. Expatriate compensation packages typically include a base salary, cost-of-living allowance, housing allowance, education allowances for children, relocation assistance, tax equalization payments, and sometimes spouse assistance. When negotiating a package, important factors to consider include the nature of employment (e.g. local contract vs long-term expat package), contract duration and termination notice terms, and what country's laws will govern the contract.
Staffing recruitment and selection of INTERNATIONAL HUMAN RESOURCES MANAGEMENTAparrajithaAriyadasa
In staffing in international business, HR managers must determine when or where to expatriation. Expatriate workers are frequently assigned to key positions in overseas operations. Human resource managers must also decide on the issue of compensation. The compensation of expatriate workers must be examined along with compensation of local workers and the compensation of workers in the home country. Differences in compensation packages have significant implications on staffing success, expatriate performance and business performance. HR managers must also address the issue of repatriation. Repatriation happens when the worker needs to come back to the home country, usually to continue working for the company. Repatriation also happens when the expatriate worker retires. These issues have significant effects on the perspectives and performance of expatriate workers and local workers, and the effectiveness of IHRM in staffing.
Staffing recruitment and selection of INTERNATIONAL HUMAN RESOURCES MANAGEMENTAparrajithaAriyadasa
In staffing in international business, HR managers must determine when or where to expatriation. Expatriate workers are frequently assigned to key positions in overseas operations. Human resource managers must also decide on the issue of compensation. The compensation of expatriate workers must be examined along with compensation of local workers and the compensation of workers in the home country. Differences in compensation packages have significant implications on staffing success, expatriate performance and business performance. HR managers must also address the issue of repatriation. Repatriation happens when the worker needs to come back to the home country, usually to continue working for the company. Repatriation also happens when the expatriate worker retires. These issues have significant effects on the perspectives and performance of expatriate workers and local workers, and the effectiveness of IHRM in staffing.
In this presentation, we will understand the challenges of international performance management, analyze the areas in terms of skill and other traits, understanding the conflicting role expectation and analyze the variety of appraisers in international performance appraisal.
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Compensation Dimensions (Payment for Work and Performance, Payment for Non-working Days, Loss of Job Income Continuation Benefit, Disability Income Continuation Benefit, Deferred Income, Spouse/Family Income Continuation Benefit, Health, Accident and Liability Protection, Income Equivalent Payments)
Objectives of international compensationWhen developing internat.docxhopeaustin33688
Objectives of international compensation
When developing international compensation policies, an MNE seeks to satisfy several objectives. First, the policy should be consistent with the overall strategy, structure and business needs of the multinational. Second, the policy must work to attract and retain staff in the areas where the MNE has the greatest needs and opportunities. Thus, the policy must be competitive and recognize factors such as incentive for foreign service, tax equalization and reimbursement for reasonable costs. Third, the policy should facilitate the transfer of international employees in the most cost-effective manner for the firm. Fourth, the policy must give due consideration to equity and ease of administration.
The international employee will also have a number of objectives that need to be achieved from the firm's compensation policy. First, the employee will expect the policy to offer financial protection in terms of benefits, social security and living costs in the foreign location. Second, the employee will expect a foreign assignment to offer opportunities for financial advancement through income and/or savings. Third, the employee will expect issues such as the cost of housing, education of children, and home leave to be addressed in the policy.
If we contrast the objectives of the MNE and the employee, we of course see the potential for many complexities and possible problems, as some of these objectives cannot be maximized on both sides. The 'war stories' about problems in international compensation that we see in HR practitioner magazines is testimony to these complexities and problems. McNulty et al. also allude to these problems in their studies of expatriation, particularly in the Asia Pacific region.16
However, if we take away the specialist jargon and allow for the international context, are the competing objectives of the firm and the employee fundamentally different from that which exists in a domestic environment? We think not. We agree with the broad thrust of an influential article by Milkovich and Bloom17 which argues that firms must rethink the traditional view that local conditions dominate international compensation strategy. This is again another application of the ongoing balancing act between global standardization and local customization. We will return to these issues at the end of the chapter after we have covered some of the technical aspects and complexities of compensation in an international context.
KEY COMPONENTS OF AN INTERNATIONAL COMPENSATION PROGRAM FOR EXPATRIATES
The area of international compensation is complex primarily because multinationals must cater to three categories of employees: PCNs, TCNs and HCNs. In this section, we discuss key components of international compensation as follows.
Base salary
The term base salary acquires a somewhat different meaning when employees go abroad. In a domestic context, base salary denotes the amount of cash compensation serving as a b.
In this presentation, we will understand the challenges of international performance management, analyze the areas in terms of skill and other traits, understanding the conflicting role expectation and analyze the variety of appraisers in international performance appraisal.
To know more about Welingkar School’s Distance Learning Program and courses offered, visit:
http://www.welingkaronline.org/distance-learning/online-mba.html
Compensation Dimensions (Payment for Work and Performance, Payment for Non-working Days, Loss of Job Income Continuation Benefit, Disability Income Continuation Benefit, Deferred Income, Spouse/Family Income Continuation Benefit, Health, Accident and Liability Protection, Income Equivalent Payments)
Objectives of international compensationWhen developing internat.docxhopeaustin33688
Objectives of international compensation
When developing international compensation policies, an MNE seeks to satisfy several objectives. First, the policy should be consistent with the overall strategy, structure and business needs of the multinational. Second, the policy must work to attract and retain staff in the areas where the MNE has the greatest needs and opportunities. Thus, the policy must be competitive and recognize factors such as incentive for foreign service, tax equalization and reimbursement for reasonable costs. Third, the policy should facilitate the transfer of international employees in the most cost-effective manner for the firm. Fourth, the policy must give due consideration to equity and ease of administration.
The international employee will also have a number of objectives that need to be achieved from the firm's compensation policy. First, the employee will expect the policy to offer financial protection in terms of benefits, social security and living costs in the foreign location. Second, the employee will expect a foreign assignment to offer opportunities for financial advancement through income and/or savings. Third, the employee will expect issues such as the cost of housing, education of children, and home leave to be addressed in the policy.
If we contrast the objectives of the MNE and the employee, we of course see the potential for many complexities and possible problems, as some of these objectives cannot be maximized on both sides. The 'war stories' about problems in international compensation that we see in HR practitioner magazines is testimony to these complexities and problems. McNulty et al. also allude to these problems in their studies of expatriation, particularly in the Asia Pacific region.16
However, if we take away the specialist jargon and allow for the international context, are the competing objectives of the firm and the employee fundamentally different from that which exists in a domestic environment? We think not. We agree with the broad thrust of an influential article by Milkovich and Bloom17 which argues that firms must rethink the traditional view that local conditions dominate international compensation strategy. This is again another application of the ongoing balancing act between global standardization and local customization. We will return to these issues at the end of the chapter after we have covered some of the technical aspects and complexities of compensation in an international context.
KEY COMPONENTS OF AN INTERNATIONAL COMPENSATION PROGRAM FOR EXPATRIATES
The area of international compensation is complex primarily because multinationals must cater to three categories of employees: PCNs, TCNs and HCNs. In this section, we discuss key components of international compensation as follows.
Base salary
The term base salary acquires a somewhat different meaning when employees go abroad. In a domestic context, base salary denotes the amount of cash compensation serving as a b.
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Components Of International Compensation program For assignmentBiswasbusiness.com
Components Of International Compensation program
this is the basic knowledge for peoples.......................Improve organizational and employee productivity without increasing base pay fixed costs using incentive programs that organize improvements in employees, work unit, and organizational performance.
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This PPT is from the INSZoom Immigration Conference 2015 - Bengaluru. The presentation was provided to the audience by Satya Prakash and Steve Rao of Sapient Corporation.
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Memorandum Of Association Constitution of Company.pptseri bangash
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A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
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Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
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Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
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Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
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Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
2. Definition
An individual living in a country other than their
country of citizenship, often temporarily and for
work reasons. An expatriate can also be an
individual who has relinquished citizenship in
their home country to become a citizen of
another. If your employer sends you from your
job in its New York office to work for an
extended period in its London office, once you
are in London, you would be considered an
expatriate or "expat."
8 December 2014 2
3. In addition to salary, businesses sometimes give
their expatriate employees benefits such as:
• Relocation assistance and
• A housing allowance
For Americans working abroad as expatriates,
complying with United States income tax
regulations is an added challenge and financial
burden because the U.S. taxes its citizens on
income earned abroad.
8 December 2014 3
4. The major focus of most international
compensation programme is to keep
international employees at a sufficient
financial level during their international
assignments so that they do not lose
ground economically.
Components of an international
compensation package, in addition to the
normal salary and benefits offered in the
home country
8 December 2014 4
5. 1. Base salary
For expatriates, the term base salary means the
primary component of a package of allowances
which are:
(a) Foreign service premium,
(b) Cost-of-living allowance,
(c) Housing and utility allowance,
(d) Basis for in-service benefits and pension
contributions.
Base salary may be paid in home or local
currency or in some hard currency like pound or
8 December 2014 5
dollar.
6. 2. Foreign Service inducement/hardship premium
Parent-country nationals often receive a
salary premium as an inducement to
accept a foreign assignment or as
compensation for any hardship caused by
the transfer. Such payments vary
depending upon the assignment, actual
hardship, tax paid to foreign governments
and length of the assignment.
8 December 2014 6
7. 3. Allowances
Various allowances are paid to expatriates depending upon the
assignment. They include:
(a) The cost-of-living allowance (COLA): It involves a payment to
compensate the differences in expenditures between the home
country and the foreign country.
(b) Housing allowance: Implies that employees should be entitled
to maintain their home-country living standards (or, in some
cases, receive accommodations)
(c) Home leaves and travel allowances: Is given to cover the
expense of trips (usually once in a year) back home. These
trips allow the expatriates the opportunity to renew family and
business ties, thereby helping them to avoid adjustment
problems when they are repatriated.
8 December 2014 7
8. 4. Education Allowances for Children
Education allowances are given towards
fees for the education of expatriates’
children. Education allowances include
items such as tuition, language class
tuition, books, transportation and uniforms.
8 December 2014 8
9. 5. Relocation Allowances and Moving
Relocation allowances usually cover
moving, shipping; temporary living
expenses, and down payments or lease-related
charges.
8 December 2014 9
10. 6. Tax Equalization Payments
Many international compensation plans
attempt to protect the expatriate from
negative tax consequences by using a tax
equalization plan. Under this plan, the
company adjusts an employee’s base
income so that the expatriates will not pay
any more or less tax than if they had
stayed in the home country.
8 December 2014 10
11. 7. Spouse Assistance
To help guard against or offset income lost
by an expatriate’s spouse as a result of
relocating abroad. Multinationals generally
pay allowances in order to encourage
employees to take up international
assignments.
8 December 2014 11
12. Expatriate Compensation Packages
Expatriate compensation packages can
vary enormously from company to
company and location to location. When
negotiating an expat contract that is right
for your needs and those of your family, it
is important that you carefully consider
several factors
8 December 2014 12
13. Factors
1. Nature of the Employment
2. Contract duration and termination notice
3. Governing Law and Jurisdiction
8 December 2014 13
14. 1. Nature of the Employment
One of the first major considerations of any
expatriate compensation package should
concern the nature of the relationship
between the employee and the employer
and should address what the employment
relationship will constitute. There are
several different types of expatriate
contract and these will determine what the
employment obligations will be
8 December 2014 14
15. A. Local-to-local: When you are working
abroad for a local employer, you may
receive a local-local contract. You will be
on the same kind of contract as the local
people, which may be better or worse than
you are used to. Your salary will be in line
with that of the local employees, as will the
weekly hours, holiday entitlement and
notice period. You will be expected to pay
local tax and will be obliged to adhere to
all the local policies and plans of the UK
company. There will be no perks for being
8 Deacemnb eer 20x14pat. 15
16. B. Local-to-expat: This contract is again for
expats who are working for a local
company abroad. This time however the
contract recognizes that you have moved
abroad and are likely to have been hired
because of your skills and expertise. You
will no doubt be on a higher salary than
the local workers and you will be entitled
to more holidays and possibly less working
hours. It is unlikely that you will receive
any kind of expat package aside from
relocation costs.
8 December 2014 16
17. C. Expat-to-local: This is for people
working for an international company, but
still on a local contract. Many small
businesses work like this as they cannot
afford the expensive expat packages that
are usually associated with big multi-national
companies. There will not be
much difference to a local contract with a
local company.
8 December 2014 17
18. D. Long-term expat packages: Most
expats on a long-term contract with large
corporations will find that their expat
package is very generous. Most packages
include a housing allowance, children’s
school fees, travel allowance, good
holiday entitlement and a high salary. It is
these packages that attract so many
expats to move overseas.
8 December 2014 18
19. E. Short-term expat packages: Similar to
the long-term packages, but usually
without the holiday entitlement and school
fees. These contracts are for people
working abroad on a short contract of six
months or less.
8 December 2014 19
20. 2. Contract duration and termination notice
There are a number of different types of
expat contract, those with specified end
dates or durations, and those that are
ongoing. In the US there is also a contract
type that is referred to as “employment at
will”. Failure to fully consider the
implications of your contract type could
have serious repercussions.
8 December 2014 20
21. 3. Governing Law and Jurisdiction
This will usually be the local law in the country you will
be employed in, the law of the home country from
which you relocated or the law of the country in which
your employer is incorporated. There is simply no
such thing as a standard expatriate contract that can
be implemented in any country. The clauses and
inclusions need to be modified according to the law of
the foreign jurisdiction and tailored in such a way that
ensures that any conflict between the law of the host
country and the law of the country of the corporation
or hiring entity do not conflict.
8 December 2014 21
22. Many companies will include a clause in their
contract that specifies that all local laws be
waived in favor of the law of the employing
country. However, despite this, it is worth noting
that in many countries, especially those within
the EU, this is unenforceable. In addition to this,
although the law varies from country to country,
it is generally accepted that, in the absence of a
clear choice of law in the contract, the
employment agreement will be carried out in
the country within which the employee will carry
out their work.
8 December 2014 22