Retaining Human Resources

Forms of Compensation North American and European international companies tend to reward employees based on the type of work performed and the skills required. In Singapore and Hong Kong, individual performance and skill influence compensation.

Forms of Compensation Since, compensation standards vary around the world, local laws, employment practices, and employer obligations should guide companies as they design compensation packages.

Cultural Sensitivity these benefit packages include both cash and noncash items. The mix of benefits varies from country to country, but the cash component is usually the largest. Some companies offer discounted products or services to their employees as noncash compensation.

Cultural Sensitivity In European countries, items such as lunches and transportation are often part of the noncash executive compensation. In less-developed countries, basic foods such as rice and flour can be part of the noncash benefits.

Base Salary For parent-country nationals, compensation usually involves a salary used to maintain the customary standard of living of the employee and their family.

Expatriate Bonus Often, companies must pay a premium to persuade an employee to work abroad. It is compensation for adjustment problems and for hardship caused by living and working abroad.

Cost-of-Living compensates for the fact that basic living costs vary greatly around the world.

Employee Benefits compensates for the additional expenses of living abroad such as local taxes and contributions to government insurance programs. They also include relocation expenses, high-risk insurance premiums, and extra educational and medical expenses.

Evaluating Performance With the ethnocentric approach, parent-country nationals primarily set and administer the standards. In contrast, with the polycentric approach, host- country nationals primarily set and administer the standards.