Differences between good compensation package generally compensation?
A good compensation package is generally a compensation package that an expatriate considers as fair, but it also has to be cost-effective for the company. The compensation package has to be planned to attain the organization’s mobility and staffing goals. Several approaches have been developed for the purpose of determining global compensation. The balance sheet approach is the most extensively utilized approach for international compensation (Watson Jr. & Singh 2010, p. 33). Using the balance sheet approach, this paper discusses the compensation packages of a manager from the United States who is assuming a position in Australia.
The balance sheet approach, as Dowling (2008, p. 166) pointed out, is a system which is aimed at equalizing the employees’ purchasing power at similar position levels living abroad and in the home nation. It is also designed to offer inducements in order to counterbalance qualitative differences between locations of assignment. There are 4 main classifications of expenditures that the American expatriate incurs in Australia which are included in the balance sheet approach. First is housing outlays, which includes the costs linked to housing within the host nation, namely Australia. Secondly is goods and services outlay, which includes home-country expenses for various items like medical care, transportation, recreation, household furnishings, clothing, personal care as well as food (Biteen 2011, p. 28).
Thirdly is reserve outlay, which includes social security taxes, education expenditures, investments, pension contributions, payment for benefits, as well as contributions to savings. The fourth category includes income taxes, which include host-country and home-country income taxes (Bloom, Milkovich & Mitra 2013, p. 1351). Where expenses linked to the host-country job assignment go beyond or surpass equivalent expenses within the expatriate’s parent nation, these expenses are met by both the expatriate and the company in order to ensure that the parent-country equivalent purchasing power is attained. Using the balance sheet approach, the expatriate employee receives part of her salary in the local currency, which is the Australian dollar in this case, and part of the salary in her home currency, which is the US$ (Dowling 2008, p.167). The following table illustrates the compensation package for the American expatriate who has taken a managerial job in Australia.
Table 1: Compensation package for the American expatriate working in Australia
Expatriate: Joy Adamson Job Post: Senior sales manager Home Nation: United States Reason for change: New task in Australia Effective date of change: 15 June 2017 |
|||
Item |
Amount in Australian Dollars per year |
Paid in Australian Dollars per year |
Paid in US$ per year, which is the expatriate’s local currency |
Basic pay |
200,000 |
100,000 |
150,000 |
Housing deduction (7 percent) |
-14,000 |
-14,000 |
|
Foreign service premium (20 percent) |
40,000 |
40,000 |
|
Cost of living allowance (COLA) |
50,000 |
|
75,000 |
Allowance for hardship (20 percent) |
40,000 |
40,000 |
|
Tax deduction |
-97,000 |
-97,000 |
|
Full Amount |
219,000 |
69,000 |
225,000 |
Cost of Living Index = 150 |
The American expatriate has been given a task in Australia where the Cost of Living Index is assumed to be 150 in relation to the United States. Moreover, in relation to the Australian dollar, the expatriate’s home country has an exchange rate of 1.5. Besides an overseas service premium, the expatriate from the United States who has taken up an assignment in Australia is also paid a hardship allowance for working in Australia. The company provides housing to the expatriate employee and it deducts 7% from the compensation package, together with a tax deduction. The American expatriate is able to see from the table above the components that are offered in her compensation package using the balance sheet approach and the way the compensation package would be split between the United States currency and the Australian currency.
It is worth mentioning that the balance sheet approach, as Robert and Mike (2012, p. 99) pointed out, provides equity between overseas job duties and between expatriates of the same nationality. The repatriation of expatriates is facilitated through this highlighting on equity with the parent nation given that compensation of the expatriate is based on the system of compensation used within the parent nation. The balance sheet approach is also simple and straightforward to communicate to the employee.
To sum up, using the balance sheet approach, the American expatriate who has assumed a managerial position in Australia will receive part of her salary in the Australian dollar and part of the salary in the US$. She will be paid an overseas service premium, hardship allowance, and cost of living allowance. She is provided with housing by the company and the company deducts 7% from her compensation.
Biteen, J 2011, 'Compensation Strategies for International Assignments: Alternatives to the Balance Sheet', HR Professional, 18, 2, p. 28, Business Source Complete, EBSCOhost, viewed 21 May 2017.
Bloom, M, Milkovich, G, & Mitra, A 2013, 'International compensation: learning from how managers respond to variations in local host contexts', International Journal Of Human Resource Management, 14, 8, pp. 1350-1367, Business Source Complete, EBSCOhost, viewed 21 May 2017.
Bonache, J, & Zárraga-Oberty, C 2017, 'The traditional approach to compensating global mobility: criticisms and alternatives', International Journal Of Human Resource Management, 28, 1, pp. 149-169, Business Source Complete, EBSCOhost, viewed 21 May 2017.
Dowling, P 2008, International human resource management: Managing people in a multinational context. Canberra, Australia: Cengage Learning.
Robert H, S, & Mike, S 2012, 'Expatriate compensation: An exploratory review of salient contextual factors and common practices', Career Development International, 10, 2, pp. 98-108, Business Source Complete, EBSCOhost, viewed 21 May 2017.
Watson Jr., B, & Singh, G 2010, 'Global Pay Systems: Compensation in Support of a Multinational Strategy', Compensation & Benefits Review, 37, 1, pp. 33-36, Business Source Complete, EBSCOhost, viewed 21 May 2017.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2018). Good Compensation Package Generally Compensation. Retrieved from https://myassignmenthelp.com/free-samples/good-compensation-package-generally-compensation.
"Good Compensation Package Generally Compensation." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/good-compensation-package-generally-compensation.
My Assignment Help (2018) Good Compensation Package Generally Compensation [Online]. Available from: https://myassignmenthelp.com/free-samples/good-compensation-package-generally-compensation
[Accessed 27 January 2021].
My Assignment Help. 'Good Compensation Package Generally Compensation' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/good-compensation-package-generally-compensation> accessed 27 January 2021.
My Assignment Help. Good Compensation Package Generally Compensation [Internet]. My Assignment Help. 2018 [cited 27 January 2021]. Available from: https://myassignmenthelp.com/free-samples/good-compensation-package-generally-compensation.
MyAssignmenthelp.com is the perfect solution to render quality solution for all sort of academic issues. We have hired professionals from different fields of study to provide assistance with different subjects. We successfully have provided different types of assignment solutions on 100+ subjects. We have hired industry experts to deliver nursing assignment, hr assignment and finance assignment help. To offer quality content with IT assignments, we have hired IT professionals to render programming language assignment help and IT assignment help for other types of IT assignments as well.
Answer: Training Needs The employees of Motors and More Inc needs training so that they can become multi-skilled that can enable them in performing a large number of tasks (Kobayashi, 2018). The employees of Motors and More Inc have to manufacture motors along with accessories for industrial and home purpose. The need of the training arises owing to that fact that it can help in teaching unskilled employees about the skills that can help in p...
Read MoreAnswer: Human Resource Management in the digital era: advantages and disadvantages The digital transformation plays a main character in the field of human resource management and advanced digital technologies provide a platform for recruiting. Today, most the organizations use digital era and processes for hiring purpose and it changed the way of communication. In this modern generation, human resources management team use online requirements...
Read MoreAnswer: An evaluation of what it means to be an HR professional in the contemporary and emerging business environment. The HR is one of the most important sections within the company, under this report the HR responsibilities and relevance to the company will address in depth. The CIPD professional Map will as well be integrated to help in the identification of the best HR professional practices among other concepts. Every b...
Read MoreAnswer: This report discusses the design and the testing process of the proposed website for Craft and Collectibles. The design process of the website is based on the user feedback from the previous websites. The final design is then tested use four test subjects and the results of the tests are analyzed to determine the usability of the website. Design For any design of the website to be a successful design, there are key principles it shou...
Read MoreAnswer Introduction The Deutsche Bank is labelled as the newest old bank due to the current rebranding from Qantas credit union. The bank has operated in Australia for the last 55 years and has managed to win a wide market share with competitive interest rates on the loans offered. The bank faces competition from other international banks that have wide resources to compete in the market. Deutsche Bank offers services such as credit cards, ho...
Read MoreJust share requirement and get customized Solution.
Orders
Overall Rating
Experts
Our writers make sure that all orders are submitted, prior to the deadline.
Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.
Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.
Our writers can provide you professional writing assistance on any subject at any level.
Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.
Get all your documents checked for plagiarism or duplicacy with us.
Get different kinds of essays typed in minutes with clicks.
Calculate your semester grades and cumulative GPa with our GPA Calculator.
Balance any chemical equation in minutes just by entering the formula.
Calculate the number of words and number of pages of all your academic documents.
Our Mission Client Satisfaction
I am writing to you to let you know that I am extremely impressed with your recent work. You\'ve dedicated years of service to this company, and your work exemplifies and principles now more than ever. Thank you for all that you have done to help us ...
Australia
Very good experience, so happy with the result. Very highly and strongly recommend this website.
Australia
I got a good price and quality work was provided to me in a short period of time. I scored really well in my assignment. All the rework was done in time which is great.
Australia
They have provided me with work having 0% plagiarism which really helped me to score well in my assignment.
Australia