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Compensation and Benefits for American Expatriates

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Presentation on theme: "Compensation and Benefits for American Expatriates"— Presentation transcript:

1 Compensation and Benefits for American Expatriates
Sarah Brady Deanine Estes Shannon Johnson Kate Robertson

2 Questions for our Expatriates and Experts
Ms. Kate Robertson - Human Capital Advisory Services Division - Mercer Ms. Shannon Johnson – Colgate Palmolive Ms. Deanine Estes - Proctor & Gamble Ms. Sarah Brady - Chevron

3 CAUTION… What is an American expatriate?
There is not “one correct method” to create a compensation package. There are more factors above and over what we have discussed…we choose the main issues.

4 Failed Assignments Many expatriate assignments fail each year ~30%
Family dissatisfaction Cultural issues Feeling of isolation from home company Financial dissatisfaction High costs associated with failures

5 Overview Monetary Factors of Expatriate Compensation
Non-monetary Factors Political Implications Current Events

6 Monetary Factors: Base Salary
Comparable to home country Serves as a reference point for establishing additional benefits Greatest point of flexibility Choose method Home country-based Host country-based Headquarter-based “Base salary is the greatest point of flexibility. Companies set a maximum that’s not a maximum, to be honest” -David Kohtynski, Nike

7 Monetary Factors: Assignment Premium
Incentive: persuade acceptance of international assignments Environmental or hardship premiums Mobility premiums

8 Monetary Factors: Tax Considerations
Tax burden depends on location of assignment Solution: Tax Equalization Simple and easily understood Benefits both employee and employer Employee will not receive the tax burden May be high cost to Employer

9 Monetary Factors: Payroll
Not placed on foreign location’s payroll May accrue Social Security benefits Consider exchange rates and inflation

10 Non-monetary Factors: Family Considerations
Assimilation programs Support programs Call centers Language programs Cultural awareness

11 Non-monetary Factors: Medical Coverage
27% of expatriates are dissatisfied Employers provide full coverage 2 plans may be necessary Supplemental plans are necessary

12 Non-Monetary Factors: Housing
Housing and utilities allowance Goods and services allowance Cost of housing differences Expatriates discouraged from selling their American home American communities in foreign lands

13 Non-monetary Factors: Education
Match American standards Tuition reimbursement

14 Non-Monetary Factors: Days Off
Travel Expenses Children Employees Rest and Recreation days

15 Non-Monetary Factors: Repatriation
Employees forfeit “special” compensation Re-assimilation problems Difficult to collaborate Resentment Solutions Re-assimilation courses offered Promotion offered Career development programs Capitalize on foreign experiences

16 Political Implications: Attack on September 11th
Fear of domestic and international air travel Safety became top priority Travel restrictions to certain regions Extra approvals and precautionary measures “After September 11th some companies curtailed travel and cautioned employees but there wasn’t any huge exodus.” -Wall Street Journal, 2002

17 Political Implications: War on Iraq
Large impact on expatriates in Middle-Eastern region Fear for lives Opinionated with respect to business implications

18 Current Economic Conditions
Companies are decreasing number of expatriates Localization is a more cost efficient option

19 Conclusion Many factors in sending expatriates abroad
Every company compensates differently TOP PRIORITY: MAKE THE EXPATRIATE HAPPY!! ““It is important to get an understanding of how your employees perceive the international human resources policy you’ve put in place and why you have relocated them. It is necessary to make sure they feel good about the programs that are underway to facilitate their international assignment. You want to know you are meeting their needs.” - John Fadel, Deloitte & Touche

20 QUESTIONS FOR YOU… QUESTIONS FOR US…?
If you were an expatriate, what would you perceive as being the most important benefits? Why? Would you let the current social and political events affect your decision to go abroad? If not, what extra compensation would you deem necessary? Would you fear coming back to the U.S. after working abroad? What types of repatriation programs would you like to see implemented within your company? QUESTIONS FOR US…?

21 References Bibliography
Anonymous. “Worker safety is top priority”. Business Insurance, Chicago, (Mar 24, 2003). Anonymous. “Shell Oil, CIGNA winners of IFEBP awards”. Employee Benefit Plan Review, Chicago,(Jan 1999). Balkin, Cardy, and Gomez-Megia. Managing Human Resources III edition Cairncross, Francis. “Survey: No Man is an Island.” The Economist, May 1999. Cummins, Chip. “Expatriate Iraqis Say Oil Fields Should Be Opened --- U.S, -Backed Panel’s Embrace of Investment Isn’t Surprise, But It Gives Hope to Firms”. Wall Street Journal NY, (Mar 3, 2003) Feinstein, Selwyn. “A Special News Report on People and Their Jobs in Offices, Fields and Factories”. Wall Street Journal, (May 3, 1998) Geber, Beverly. “The Care and Breeding of Global Managers” Training,29. July 1992. “How U.S. Companies Are Responding --- Most Are Curtailing Travel and Cautioning Employees, But No Exodus Is Under Way”. Wall Street Journal, NY, (Jun 3, 2002). Howe, Kenneth. “Salary Negotiating Tips for Expat Assignments.” The Wall Street Journal Interactive Edition Hunt, John. “Fewer Foreign Criticisms: Companies, it seems, have been dealing with The complaints of disgruntled expatriates.” Financial Times. London, July 2001. Janush, Erwin. “Developing Expatriate Remuneration Packages.” Employee Benefits Journal. June 2001. Jordan, Miriam. “Your Career Matters: Have Husband, Wil Travel --- World of the Trailing Spouse Isn’t Wives-Only Anymore; ‘It’s the Best Job I Ever Had’. Wall Street Journal, (Feb. 13, 2001). LeClaire, Jennifer. “Managing Employees in a Global Marketplace.” L2S, Inc. May 17 2000. Payne, Beatrix. “Luxembourg Builds Multinational Model for Pension Plans.” Pensionsand Investments, 28 June 2000. Peach, Robert. “Expatriates and Qualified Plans”. Benefits Quarterly Riki, Takeuchi.“An Examination of Crossover and Spillover Effects of Spousal and Expatriate Cross-Cultural Adjustment on Expatriate Outcomes”,, Journal of Applied Psychology, Volume 87, Issue 4, August 2002, Pages Slater, Jeremy. “Compensation Surveys: The Basics.” HYPERLINK "http://www.expatica.com" March 2003. Solomon, Charlene Marmer. “Global Operations demand that HR rethink diversity.” Personnel Journal, 73. July 1994. Sussman, Nan. “Repatriation transitions: psychological preparedness, cultural identity, and attributions among American managers, International Journal of Intercultural Relations, Volume 25, Issue 2, March 2001, Pages “Tax Planning For Expatriates.” The Tax Adviser. New York, April 2001. Thaler-Carter, Ruth E. (1999). “Vowing to Go Abroad.” HR Magazine, 44. November 1999.


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