How to develop a compensation strategy for international assignments

Determining a compensation strategy for employees in your domestic office can be tricky at times, but sending an employee abroad can create even more complex issues. Suddenly, you have to think beyond just payroll and benefits. Housing considerations, transportation and even family expenses may be included in the compensation package for an international assignment. And these can vary drastically with the term of the contract.

What to determine ahead of time
As you begin to think about negotiating the contract for an international assignment, there are a few key things that you need to settle first. At the top of that list is the duration of the contract. Are you sending a staff member aboard for a few months, or for a few years? Or perhaps the contract is open ended. The length of time stated in the contract will dictate certain received benefits. Next, you need to consider the type of assignment. Is the employee going to inspect factories abroad – or will they be managing one of those factories? Work in a highly populated city, on the other hand, will necessitate steeper costs when it comes to housing. And finally, there’s the employee’s marital status. Will he or she be taking along family members? Will the employee’s children need to receive education abroad? These are the basic facts that need to be settled upon before further negotiations can take place.

compensation strategyInternational assignments take a lot of work to implement.

Allowances
Defining and negotiating allowances for international assignments can be a long process, especially if your enterprise doesn’t already have a policy in place. That’s why hiring a global compensation service is an option to seriously consider. Writing up a complicated international contracts is no easy task, and it’s always better to have a team of professionals on your side. Here are a few things such services can help with:

  • Housing allowances: According to BlueSteps, this is one of the most important aspects of the compensation package, and for good reason. Your employee will need a place to live, and they may need help in selling or renting their domestic property. Included in this allowance may be utilities and other related costs.
  • Foreign premiums: Taking on an international assignment is no small step in a person’s professional or personal life. Whether the terms of the contract are for a single year or much longer, it means giving up a lot at home. Monster reported that many companies pay a premium of 10 to 15 percent per employee.
  • Tax assistance: Your employee will still have to pay U.S. taxes when working abroad. Depending on the country they go to, they may also have to pay foreign taxes as well. If these costs are heavy, it may be on your enterprise to provide some assistance.

ROI is important
Sending an employee on an international assignment is a big step for their career as well as your business. It means moving out into international water, where the stakes are higher and the rewards can be greater. As you negotiate your contracts, you have to be sure that the ROI makes sense. If you’re spending more to send someone abroad, it has to be a sound business decision. Using a global mobility company can prevent you from making costly mistakes.

Is your company ready to send employees on international assignments? Tell us about your process by tweeting @MSIGTS