1. INTERNATIONAL COMPENSATION
STRATEGIES
Amaresh C Nayak

2. International Compensation Strategies
• International compensation is understood as provision
of monetary and non-monetary rewards, including base
salary, benefits, perquisites and long and short-term
incentives, valued by employees in accordance with
their relative contributions to performance.

3. Objectives
• Attract individuals who arc competent and interested in
international assignments.
• Facilitate movement of expatriates from one subsidiary
to another, from the home country to subsidiaries, and
from subsidiaries back to the home country
• Provide a consistent and reasonable relationship
between the pay levels of employees at the
headquarters, domestic affiliates and foreign
subsidiaries.
• Be cost-effective by minimizing unnecessary expenses.
• Be consistent with the overall strategy, structure and
business needs.

4. COMPENSATION PHILOSOPHY
• Compensation philosophy is the set of values and
beliefs that an organisation has with regard to monetary
and non-monetary benefits payable to employees.
• Often is combined with a set of guiding principles that
further assist in compensation administration.

5. COMPENSATION PHILOSOPHY
• What are the goals of the organization’s compensation
system?
• What percentage of compensation should be linked to
individual/unit performance and what should be the
base salary?
• What is the role of performance appraisal in disbursing
compensation?
• How to target the positioning of compensation of
employees relative to market?

6. COMPENSATION STRATEGY
Employee Inputs Business and Industry end Labour
and Preferences Operating Inputs Market Practices and
Trends
Compensation Philosophy and Objectives Based upon Business, Operating
and Human Resource Requirements
Base Pay Organisation Performance or Fringe Compensation
Variable Pay. Non-monetary Benefits Administration
Delivery
and Other Monetary Rewards
and Recognitions

7. Components of Compensation
• Base Salary
• Incentives
• Allowances
• Benefits
• Taxes
• Long Term Benefits

8. Variables Influencing Compensation
Internal and external
MNC Internal relativities MNC External
Environment Environment
• Goal Orientation • Parent Nationality
•Capacity to pay •Labour market
•Competitive strategy characteristics
•Organisational culture •Local culture
•Internal workforce •Home and host country
composition government’s role
•Labour relations •Industry type
Staffing
•Subsidiary role •Competitors strategy
Orientation
International
Compensation Strategy

9. COMPENSATION ADMINISTRATION
• Establishing salary bands
• Developing rates of pay for jobs
• Linkages to performance appraisal
• Starting salary for new employees and
• Salary increases’ reviews

10. THANK YOU