Assignment 23-02
In-Class Discussion
Background Story
It’s common for companies to offer financial supplements for executives living abroad.
The international operations division has asked your HR department to develop a
standard supplementary compensation plan for expatriate employees.
The division’s managers have provided you with a list of issues that seem to make their
typical foreign assignment more difficult that a domestic one.
They want you to decide which of these issues are most important and to specify the
effect each should have on compensation.
Your
Ranking
Issues
Description
Effect on Compensation
Health Care
Physicians & hospital do not meet
Western standards.
Make contingency money
available to fly expatriate to
closest country with Western-style
health care. (Example)
Family Life
There are no English language
schools for children – children of
expatriates will need to attend private
boarding schools.
Target country currency is unstable.
Currency may inflate by as much as
20% per month
The expatriate will not be able to
have his or her own phone or TV.
Assigned country faces the risk of
political upheaval.
Inflation
Infrastructure
Political Risk
Divide the class into groups of 4 – 6 students.
Ask each group to perform the following tasks:
1. Rank the issues from 1 to 5 (number 1 being the most important). List their
effects.
2. Assume that each employee has a base salary equal to his or her US compensation
of $80,000.
You may add from 0 to 50% to that as a supplement for each item on the list.
Answer the following discussion questions as a team:
1. What will be the effect of each on compensation ?
2. How much did you need to increase compensation overall to satisfy the expected
needs of your expatriate workers ?
3. What problems might this level of compensation create ?