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ETHICS IN GLOBAL

COMPENSATION
By: William Griffiths, Mariasole Taiocchi, Matthew Burns

Expatriate Compensation Packages:


What do Employees Prefer?
Utilitys from an international assignment come from
various characteristics and trade offs which are
discussed beforehand between the employer and
employee.
Social effect an aspect related to the cultural values and
institutions of the home country that can influence the
employees preferences on accepting and expatriate
compensation offer.
Language barrier
Cultural indifference
Home country services

HILCA

Hierarchic individualized limit conjoint analysis

1. The employees list their important characteristics that


would influence their decision.
2. Employees are then asked to rank those
characteristics from least important to most
important.
3. The employees then go through that list and select the
top five most important characteristics, they also start
to evaluate the packages/offers given to them by
employers.
4. The previously evaluated packages are presented to

Case Study
German companies and its Spanish subsidiaries were
given a scenario of a 2 year assignment located in the
united states. The measures taken to appeal to the two
different cultures were:
Relevance
Importance
Relative importance
Knockout criteria
Utility values

What Really Matters in


Compensation Packages
The golden picture in a compensation package used to be the salary
number jumping up. Employees would love to be rewarded financially
just for doing the same job just in a different country. However this is
changing very rapidly and companies are noticing that its not just the
financial factor anymore. These other factors include:
1. Job stability in the country they are relocated in.
2. Education for their children + family.
3. Re-integration guarantee if things dont work out abroad.
4. Location bonus, what is the incentives that are driving them into
wanting to work abroad.

When Expatriate Compensation


Works the Best
Expatriate compensation is found to be most successful
when the selection process mainly focuses on what that
person is capable of achieving, not just their status in the
home country. There's always a more qualified candidate
for any job in any field, but that doesnt always mean
theyll do a better job at achieving the structural goal.
This enables companies to choose better qualified
candidates for improving companies abroad because
they are evaluated on what they can achieve, not what
they may have already achieved in their home country.

Expatriate Pay Differential and Expatriate Inputs


On Host Country Nationals' Pay Unfairness
The article I read for my seminar report is titled the
Interaction of expatriate pay differential and expatriate
inputs on host country nationals' pay unfairness. The
article is about a study done on expatriates and host
country nationals that explains the reasoning behind why
and how expatriates are sometimes compensated
differently from people who work in their home country
and how unfair compensation or unfair work environment
can negatively affect the business.

Fair and Ethical Compensation


Pay Unfairness
Unfair salaries between expatriates and HCNs may have a huge effect
on HCNs pay satisfaction, which in turn is likely to affect their attitude
and behaviour in future outcomes
Inputs/ Outputs
Expatriates sometimes arrive in countrys and come across as
arrogant by not putting in as much work as the host country national.
Interpersonal sensitivity
Organizational justice research suggests that treating people with
dignity and respect increases their perceptions of fairness and the
likelihood of accepting outcomes, both positive and negative (Shapiro
and Brett 1993).

Questions
Mariasole
1. Do you think companies should create their own individualized packages for their
employees or ones based on competitors packages?

Willis
2. Is it ethical to send workers into a foreign country without compensation in order to keep
it fair between expats and HCNs?
3. What do you feel is a fair compensation package for both expats and HCNs?

(if the expat is from Canada and the HCN is Mexico)

Matthew
4. Kj
5. kk