CHAPTER 7
by Nurul Izzati
1. Going Rate Approach
1.1. Based on local market rates
1.1.1. Relies on comparisons of surveys of the local nationals, expatriates of same nationality and expatriates
1.2. Based on the selected survey comparison
1.3. Base pay and benefits may be supplemented by additional payments for low pay countries.
1.4. Advantages
2. Balance Sheet Approach
2.1. A system designed to equalize the purchasing power of employees at comparable position levels living abroad and in the home country
2.2. Provide incentives to offset qualitative differences between assignment locations.
2.3. Widely used by international organizations to determine the compensation package of the expatriates
3. Advantages & Disadvantages Going Rate Approach
3.1. Advantages
3.1.1. Equality with local nationals
3.1.1.1. Simplicity
3.1.1.1.1. Identification with the host country
3.2. Disadvantages
3.2.1. Variation between assignments for the same employees
3.2.1.1. The rivalry between expatriates of the same nationality in getting assignments to some countries
4. Advantages & Disadvantages Balance Sheet Approach
4.1. Advantages
4.1.1. Equality between assignments and between expatriates of the same nationality.
4.1.1.1. Facilitates expatriate re-entry
4.2. Disadvantages
4.2.1. Result in considerable disparities between the expatriates of different nationalities and between expatriates and local nationals.
4.2.1.1. be quite complex to administer due to changing economic conditions, taxation etc.