Remuneration and compensation in international HRM

In general nationally or internationally, wages and salary determinations are almost a natural arena for conflict. National and regional differences in the tradition, meaning, and practice of pay remain significant sources of variation in the international firm (Dowling & Welch 2004).

There are many aspect to considered when a expatriate go in an international assignment. Some of the factors are the cost of living expenses in foreign countries, the taxation effects, and the expectation of expatriates that they are suppose to receive an additional compensation for leaving their country. Usually the way that organizations deal with these factors is by supplementing salaries to maintain the expatriates' standards of living as if they were in their country of origin. As a consequence, sometimes expatriates may up end earning far more than the host country nationals with whom they work. Negotiating the expatriates remuneration can be a very complex matter. One way to analyze and execute this is by considering to construct a map around five dimensions (Heneman, 1985):

1. “Pay level represents pay relative to external comparisons.”
2. “Pay structure deals with internal comparisons, the hierarchy of pay differences within the organization.”
3. “Pay form includes those determinations as to how the pay is to be presented, cash or benefits, including motor vehicle use, stock options, housing assistance, and other considerations.”
4. “Pay system is the method the organization uses to determine pay raises for individuals, like productivity increases, seniority, etc.”
5. “Pay policies and administration concerns how pay is communicated and administered, which includes how information is disclosed and communicated to employees, the nature of employee participation in pay design and administration, and the nature of dispute procedure. Executive Resources' Methodology