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Compensating Global Careerists

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The Management of Global Careers

Abstract

Compensation is a key strategic component of the management of international assignments. It is, nonetheless, the area to which the academic literature has paid the least attention, focusing instead almost exclusively on business practice. Over these first years of the twenty-first century, the compensation of international assignees has undergone numerous changes, although there still lacks a holistic proposal that addresses all the challenges and difficulties present in this field (McNulty 2014; Caligiuri and Bonache 2016).

This work was supported by the Spanish Ministry of Economy: Grant Number: ECO2015-68343-R.

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Notes

  1. 1.

    Grant (1991:112) states that a firm’s “crown jewels” are its “most important resources and capabilities […] which are durable, difficult to identify and understand, imperfectly transferable, not easily replicated, and in which the firm possesses clear ownership and control ”.

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Author information

Authors and Affiliations

  1. Department of Business Administration, Carlos III University of Madrid, Madrid, Spain

    Celia Zárraga-Oberty & Jaime Bonache

Authors
  1. Celia Zárraga-Oberty
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  2. Jaime Bonache
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Corresponding author

Correspondence to Celia Zárraga-Oberty .

Editor information

Editors and Affiliations

  1. Cranfield School of Management, Cranfield University, Cranfield, United Kingdom

    Michael Dickmann

  2. School of Management, University of Vaasa, Vassa, Finland

    Vesa Suutari

  3. School of Management, University of Vaasa, Vassa, Finland

    Olivier Wurtz

Practical Case

This practical case is a wholly fictional work by the authors, for example, purposes only. The names are pseudonyms and do not refer to anyone.

Practical Case

Lena Schweizer, the HR manager of an MNC providing industrial services, is slightly concerned and somewhat confused, as she has long been exploring the possibility of moving away from the balance sheet approach to compensate international assignees . She now has to design the compensation package for a senior industrial engineer called Peter Becker. Peter has six years’ experience in the firm; he is 42 years old, married and has two children (aged 6 and 8 years, respectively). The company headquarters is in Alfa, but Peter is going to be posted to Beta. Beta is a country with a higher standard of living than Alfa, which is proven by a goods and services index of 139 points (i.e., the cost of living (G&S) in Beta is 39 per cent higher than in Alfa). Peter’s job in Alfa would be to provide engineering services, advice on industrial engineering activities and prepare reports reviewing production methods, equipment layout, and equipment and material utilization.

As mentioned, the company applies the balance sheet approach to calculate the compensation for an international assignment and, in particular, the home-country balance sheet approach. However, Lena is thinking about changing the system. The company’s competitors in the industry are starting to compensate according to the “local-plus” system. She therefore thinks that the time may have come to change.

In order to make an informed decision , Lena wants to know the figures in order to understand the real impact of the decision made.

You can help her by answering the following questions:

  1. 1.

    Table 12.3 provides some data for the case of an assignee posted from Alfa to Beta. Complete this sheet by assuming that you are not paying any amount for a hardship allowance or any other premiums .

  1. 2.

    If Lena, the HR Manager wants to use the “local-plus” approach:

    1. (a)

      What information does she need ?

    2. (b)

      What key decisions does she have to make?

    3. (c)

      What challenges , advantages and difficulties will she have to face if she finally opts for a different compensation system for Peter and newly appointed international assignees ?

Table 12.3 The case of an assignee posted from Alfa to Beta
Full size table

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Zárraga-Oberty, C., Bonache, J. (2018). Compensating Global Careerists. In: Dickmann, M., Suutari, V., Wurtz, O. (eds) The Management of Global Careers. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-76529-7_12

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