International Compensation Programs- Components and Cultural Considerations for Expanding into International Compensation Programs

International Compensation Programs- Components and Cultural Considerations for Expanding into International Compensation Programs

Main components of international compensation programs

The objective of any expatriates’ compensation package is to sustain international employees economically. Apart from the base salary and other benefits, an expatriate employment package includes hardship premiums, allowances, tax equalization funds, children’s education, and spousal assistance. An employer must consider local currency fluctuation, taxation, employment laws, and the standard of living in the host country when designing and developing expatriate employee compensation packages.

US expatriates working in China encounter many cultural challenges that affect their work. Chinese cultural complexity, different time orientations, xenophobic tendencies, and perceived ethical flexibility affect US expatriates (Gracianette, 2011). Another factor that has significantly impacted employee productivity is the perceived economic rivalry between China and the US. An attempt to work on interactive adjustment is impossible due to trust issues, social-cultural formality, and difficulty building rapport with older Chinese people.

US expatriates’ recommended compensation packages in China

To ensure US employees are well equipped to work in China, employers should provide critical service offers. For instance, employers need to facilitate expatriates’ access to health since public health in China is not sufficient compared to the US (Gracianette, 2011). To ensure they get better healthcare, employers should facilitate expatriates’ transfer to better-equipped public facilities in Shanghai and Beijing or private facilities.

Another critical component of the expatriate pay package in China is housing allowance. Housing allowance ensures that the expatriates can maintain or at least be close to the living standards in the US. Given the xenophobic treatment of expatriates in China, it would also be helpful for the organization to provide housing facilities on a mandatory or optional basis to ensure employees live in a peaceful environment (Gracianette, 2011). The organization can also offer support services such as helping the expatriates rent good housing facilities.

Also, supporting the expatriates’ children to join good international schools will bridge the gap between the US and Chinese education systems. International schools in China are expensive; thus, organizations should consider helping parents with fee payments. The education cost should, therefore, be part of the expatriate compensation package.

References

Gracianette, A. (2011). Chinese cultural factors affecting the culture shock and sociocultural adjustment of American business expatriates working in the People’s Republic of China: an exploratory study.

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As you reflect on the module readings and any additional research you may have completed, respond to the following question:

What are the main components of international compensation programs?

International Compensation Programs- Components and Cultural Considerations for Expanding into International Compensation Programs

Also, select a country outside of the U.S. and conduct research into the cultural characteristics you believe should be important considerations in establishing a core compensation program for a U.S. company doing business in this country.

2. In your post, identify the country and provide a list of at least three components of a U.S. expatriate’s compensation package that you would recommend for employees assigned to this country.