Compensation Strategies: Workshop 4 Case Analysis Assignment

This assignment analyzes compensation strategies used by multinational corporations (MNCs), focusing on the balance sheet and local plus approaches, along with a discussion of comparability in compensation. The solution explores the advantages and disadvantages of the balance sheet approach, which aims to provide equitable compensation to employees regardless of their location. It also examines the local plus approach, where employees are paid based on local market rates. The assignment further considers the implications of these strategies for employees on international assignments, particularly in the context of skill transfer and repatriation. Finally, it addresses the choice of compensation strategy (full international, Expat Lite, or local plus) based on the specific circumstances of an international assignment and the need to maintain employee morale and competitiveness.

3033IBA-WORKSHOP 4 CASE ANALYSIS PREPARATION FORM
Name:………………………………………Student No:………………………….Campus (or Online):………………………...............
1. Briefly discuss and explain the issue of
comparability? [Please include an
example(s) in your explanation].
The two approaches which multinational companies follow while compensating employees
are going rate approach and balance sheet approach. The companies condier two significant
factors in case of comparability of the two compenation structures. The first one is that the
salaries and benefits an employee is receiving should be comparable both to other firms and
his peers in other countries. The salary should be comparable to the other departments within
the organisation. The companies in comparison to going rate, are concerned about the salary
structures prevailing in the domicile country. In comparsion to the going appraoch, the
balance sheet rate is based on the philosophy of the MNCs to provide salary accoridng to a
uniform rewrad system. For example, companies based in countries like the US having
higher currency value than most of the countries offer their employees additional benefits to
compensate the loss they suffer in their salary drawings due to difference in exchange rates
between their home and host countries.
2. What are the main advantages and
disadvantages of the Balance Sheet
approach to international compensation?
The fowling are the main advantages of balance sheet approach are:
1. There remains an equity between the payments of employees in same company based
in same country, hence motivates the employees.
2. Special non-financial compensation measures make up the loss employee suffer due

3033IBA-WORKSHOP 4 CASE ANALYSIS PREPARATION FORM
to difference in exchange rates between their home countries and countries of
deployment.
The following are the disadvantage of balance sheet approach:
1. Great disparities between expatriates of different countries effect the motivation of
employees.
2. The different compensation packages consisting of financial and non-financial
compensation components are extremely complex.
3. Briefly describe the Local Plus approach
to compensation (including why a MNC
may use this approach and the main
inherent risk of this approach?)
Local plus approach have international companies playing their staff according to the salary
rates prevailing in the host countries where they are deployed. The business organizations
use the local plus approach to enable their employees take advantage of the growing salary
rate in emerging countries where are placed. However, employees placed in countries having
poor economic growth may suffer a great decrease in their salary. This loss of salary poses
results in the decrease of motivation of employees which in turn leads to fall in their
productivity, thus posing risks to the revenue generation of the company.

3033IBA-WORKSHOP 4 CASE ANALYSIS PREPARATION FORM
4. An MNC is sending a person on an 18
month international assignment in order to
transfer skills to a subsidiary. Following
the completion of the assignment the MNC
has no plans to send this person on another
international assignment. Does your
workshop reading suggest that the MNC
should use a "Full international", "Expat
Lite" or "Local Plus" compensation
strategy? Why?
The choice of use of full international, local plus or expat lite would depend on the country
where the employee would be deployed. The companeis have to maintain comparatibility in
the salaries and benefits of their international employees and maintaining equability in the
process so as to uphold employee morale. For example, the salary should be comparabel to
the expatiates of the same nationality and local nations. The companeis have to increase the
base pay and benefits to supplement the loss of compensate due to transfer to low paying
countries. Thus, the choice of the compensation would on these factors.
Word count:……………………
 Please limit your submission to a maximum of 350 words in total for ALL questions.
 Please upload and submit this form on the course website link by 5.00 p.m. on the day BEFORE your workshop.

3033IBA-WORKSHOP 4 CASE ANALYSIS PREPARATION FORM