What method sets compensation for employees on international assignments by comparing to home country standards?

What method sets compensation for employees on international assignments by comparing to home country standards?

• A. Base salary
• B. Bell curve
• C. Benchmarks
• D. Balance-sheet approach

Answer: (D)

The balance-sheet approach keeps international compensation aligned with home-country standards by balancing foreign costs and tax differences so the employee’s total package mirrors what they would earn at home. In practice, it ensures parity through housing and cost-of-living adjustments, allowances, and tax equalization so net take-home pay remains comparable to the home-country package, regardless of host-country conditions. Base salary is just a fixed amount, not necessarily preserving home-country parity; the bell curve relates to performance ratings, and benchmarks are external market comparisons not specifically tied to home-country standards. This approach uniquely maintains equivalent compensation by comparing to the home-country standard.

The balance-sheet approach keeps international compensation aligned with home-country standards by balancing foreign costs and tax differences so the employee’s total package mirrors what they would earn at home. In practice, it ensures parity through housing and cost-of-living adjustments, allowances, and tax equalization so net take-home pay remains comparable to the home-country package, regardless of host-country conditions. Base salary is just a fixed amount, not necessarily preserving home-country parity; the bell curve relates to performance ratings, and benchmarks are external market comparisons not specifically tied to home-country standards. This approach uniquely maintains equivalent compensation by comparing to the home-country standard.