Chapter 11 International Compensation, Benefits, & Taxes
actual exam solution
international / global remuneration:
deals with compensation & benefit structure for employees of the MNE in various
locations/subsidiaries around the world
international assignment compensation:
deals with the compensation & benefits of globally mobile employees
those who cross borders as part of their employment with the MNE, either as short-term
or long-term expatriates
main objectives of MNE's global compensation & benefits programs:
Attraction and retention of the best qualified talent to staff the MNE, in all of its
locations.
Attraction and retention of employees who are qualified for international
assignments.
Facilitation of transfers between the various employment locations within the MNE.
Establishment and maintenance of a consistent and
reasonable relationship between the compensation of employees at home and abroad.
Maintenance of compensation that is reasonable in relation to the practices of
competitors yet minimizes costs to the extent possible.
first component of
global remuneration:
Developing an overall C&B philosophy of how an MNE pays its employees
-common set of principles on which the organization bases its reward system
second component of
global remuneration:
taking consideration of the external constraints placed by the various countries in
which the MNE operates
ex: cultural & national practices, laws, & tax systems
rewards strategy in MNEs tend to be
standardization
in order to be aligned with overall strategic objectives
specific C&B practices tend to be
localized
to fit cultural, legal, and taxation context of each specific country
, MNE's compensation approach can be
lead, lag, or at market equivalency compared with the competition in the same
industry or geographic location
international remuneration challenges
comparability
cultural values for rewards
salary-benefit ratios
tax laws differing
sunshine rules
expressed salaries
national laws & regulations
global law of economics
gov. provided/mandated benefits
equity vs. comparability
comparability:
determining peer equivalencies for jobs in the various countries & subsidiaries
ex: manager may have different meanings in different countries
cultural values for rewards:
influence how people perceive the value of rewards available in the compensation
system
ex: culture may be performance-driven vs. entitlement-oriented
or risk, vs. risk-averse
salary-benefit ratio
the amount of compensation that is salary vs. benefit
differs by country as a result of cultural practices, laws, or regulations
tax laws differing
-affects how employees income & benefits are taxed
-& how organizations pay their corporate taxes & expense deductions
sunshine rule
openly disclosing salary information to the public
-in some countries everyone knows what everyone else makes, other countries salary is
strictly confidential
knowing how salaries are expressed
net or gross, weekly, monthly, or annually
knowing what is included in the amount is important to reduce misperceptions &
errors in judgment about appropriate levels of C&B
national laws & regulations
HR must know which benefits are government-provided & mandated benefits in
each country in which they operate
actual exam solution
international / global remuneration:
deals with compensation & benefit structure for employees of the MNE in various
locations/subsidiaries around the world
international assignment compensation:
deals with the compensation & benefits of globally mobile employees
those who cross borders as part of their employment with the MNE, either as short-term
or long-term expatriates
main objectives of MNE's global compensation & benefits programs:
Attraction and retention of the best qualified talent to staff the MNE, in all of its
locations.
Attraction and retention of employees who are qualified for international
assignments.
Facilitation of transfers between the various employment locations within the MNE.
Establishment and maintenance of a consistent and
reasonable relationship between the compensation of employees at home and abroad.
Maintenance of compensation that is reasonable in relation to the practices of
competitors yet minimizes costs to the extent possible.
first component of
global remuneration:
Developing an overall C&B philosophy of how an MNE pays its employees
-common set of principles on which the organization bases its reward system
second component of
global remuneration:
taking consideration of the external constraints placed by the various countries in
which the MNE operates
ex: cultural & national practices, laws, & tax systems
rewards strategy in MNEs tend to be
standardization
in order to be aligned with overall strategic objectives
specific C&B practices tend to be
localized
to fit cultural, legal, and taxation context of each specific country
, MNE's compensation approach can be
lead, lag, or at market equivalency compared with the competition in the same
industry or geographic location
international remuneration challenges
comparability
cultural values for rewards
salary-benefit ratios
tax laws differing
sunshine rules
expressed salaries
national laws & regulations
global law of economics
gov. provided/mandated benefits
equity vs. comparability
comparability:
determining peer equivalencies for jobs in the various countries & subsidiaries
ex: manager may have different meanings in different countries
cultural values for rewards:
influence how people perceive the value of rewards available in the compensation
system
ex: culture may be performance-driven vs. entitlement-oriented
or risk, vs. risk-averse
salary-benefit ratio
the amount of compensation that is salary vs. benefit
differs by country as a result of cultural practices, laws, or regulations
tax laws differing
-affects how employees income & benefits are taxed
-& how organizations pay their corporate taxes & expense deductions
sunshine rule
openly disclosing salary information to the public
-in some countries everyone knows what everyone else makes, other countries salary is
strictly confidential
knowing how salaries are expressed
net or gross, weekly, monthly, or annually
knowing what is included in the amount is important to reduce misperceptions &
errors in judgment about appropriate levels of C&B
national laws & regulations
HR must know which benefits are government-provided & mandated benefits in
each country in which they operate
