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Is variable compensation based on the international location of expatriates logical or a wrong approach?

Is variable compensation based on the international location of expatriates logical or a wrong approach?

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Today's MNCs face far more challenging mobility problems than in the past. Some MNCs have been forced to change their policies to ensure that the needs of individuals from dozens of nationalities relocating on various types of assignments are well accommodated. The process of adjusting to the given compensation policy, as well as how to make relevant communication and administrative decisions, has been considered one of the most important logistical and strategic challenges for most MNCs. This is because the type of strategy that is appropriate for the compensation of employees from one country cannot necessarily be applied to employees of other nationalities. All compensation strategies are influenced primarily by two cultural aspects. These are the institutional culture of the MNC and the indigenous culture at the subsidiary location. A compensation plan that is considered effective in one country will not work properly if it violates the traditional values of the work environment in which the expatriates operate. Is variable compensation based on the international location of the expatriates logical or a wrong approach?
Transcribed Image Text:Today's MNCs face far more challenging mobility problems than in the past. Some MNCs have been forced to change their policies to ensure that the needs of individuals from dozens of nationalities relocating on various types of assignments are well accommodated. The process of adjusting to the given compensation policy, as well as how to make relevant communication and administrative decisions, has been considered one of the most important logistical and strategic challenges for most MNCs. This is because the type of strategy that is appropriate for the compensation of employees from one country cannot necessarily be applied to employees of other nationalities. All compensation strategies are influenced primarily by two cultural aspects. These are the institutional culture of the MNC and the indigenous culture at the subsidiary location. A compensation plan that is considered effective in one country will not work properly if it violates the traditional values of the work environment in which the expatriates operate. Is variable compensation based on the international location of the expatriates logical or a wrong approach?
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