Chapter 11
GLOBAL COMPENSATION,
BENEFITS, AND TAXES
International Human Resource Management, 2e
D. Briscoe & R. Schuler
© Briscoe & Schuler 2005. Created by I.Tarique 1
LEARNING OBJECTIVES
• The basic objectives of global compensation
• The seven options available for design of a
compensation system for expatriates
• The most commonly used system for
expatriate compensation: the balance sheet
approach
• The two major components of the balance
sheet approach: incentives and adjustments
© Briscoe & Schuler 2005. Created by I.Tarique 2
LEARNING OBJECTIVES (cont’d)
• The major approaches to managing taxes
• Major problem areas with managing
compensation and taxes
• Design of a global compensation system
• A number of critical components of
compensation and benefits for the global
workforce
© Briscoe & Schuler 2005. Created by I.Tarique 3
KEY TERMS
• Balance Sheet Approach, Localization,
Lump Sum
• Cost of Living Allowance (COLA)
• Stock Options, Employee Ownership
© Briscoe & Schuler 2005. Created by I.Tarique 4
COMPENSATION AND BENEFITS FOR
EXPATRIATES
• See IHRM in Action 11.1
• Types of Expatriates for Purposes of
Compensation
• Approaches to Compensation for
Expatriates
– Negotiation/Ad Hoc
– Balance Sheet (see Figure 11.1, Box 11.1,
and Tables 11.1 and 11.2)
© Briscoe & Schuler 2005. Created by I.Tarique 5
COMPENSATION AND BENEFITS FOR
EXPATRIATES (cont’d)
– Localization
– Lump Sum
– Cafeteria
– Global Regional Systems
• Flexibility in Expatriate Compensation
• Taxes on Expatriate Income (see Table
11.3)
– Laissez Faire
– Tax Equalization
– Ad Hoc
© Briscoe & Schuler 2005. Created by I.Tarique 6
COMPENSATION AND BENEFITS FOR
EXPATRIATES (cont’d)
• Taxation of U.S Expatriates (see IHRM in Action
11.2 and 11.3)
• The Price of an Expatriate
• Major Problem Areas in Expatriate Compensation
– The Special Problem of "Bandits"
– Benchmarking Global International Assignee
Compensation Practices
– Compensation by Foreign Multinationals in the United
States
– Compensation and Taxation of Foreign Nationals
Working in the United States
© Briscoe & Schuler 2005. Created by I.Tarique 7
DESIGNING A COMPENSATION
STRATEGY FOR MULTINATIONALS
• See IHRM in Action 11.4 and Tables 11.4
and 11.5
• Compensation of Third-Country Nationals
• International Benefits and Related Taxes
• Vacation Requirements (see Table 11.6)
• Pension Plans (see IHRM in Action 11.5)
© Briscoe & Schuler 2005. Created by I.Tarique 8
DESIGNING A COMPENSATION
STRATEGY FOR MULTINATIONALS
(cont’d)
• Stock Options, Equity Participation Plans,
and Employee Ownership (see IHRM in
Action 11.6 and 11.7)
• Share Ownership/Equity Bonuses
• Insurance
• Maternity and Family Leave (see Table
11.7)
• Flexible Benefits
© Briscoe & Schuler 2005. Created by I.Tarique 9
POINTS FOR FURTHER DISCUSSION
• What issues of global compensation are
most relevant to Lincoln Electric in China?
• Can Lincoln Electric use all the components
of its incentive system in all the other
countries in which it operates?
• What components of the incentive system
work in China? Which ones might work in
China but not in the U.S?
© Briscoe & Schuler 2005. Created by I.Tarique 10
