While the situation is changing employers still tend to use performance based incentives less abroad. In Europe firms traditionally emphasized a guaranteed annual salary and company wide bonus. European firms tend to be moving more towards incentive pay, but still have to overcome several problems — including the public relations aspects of such a move (such as selling the idea of more emphasis on performance based Pay). US firms that offer overseas managers long term incentives use overall corporate performance criteria (like worldwide profits) when awarding incentive pay – although ironically a manager’s local performance may have little or no effect on how the company as a whole performs.
Foreign Service premiums:
Over and above regular base pay ranging between 10% and 30% of base pay.
Compensates expatriate for exceptionally hard living and working conditions at certain location.
Typically lump-sum payments to reward employees for moving from one assignment to another.
US companies do offer various incentives to get expatriate to accept and stay on international assignment .Foreign service premiums are financial payments over and above regular base pay. These typically range from 10% to 30% of base pay and appear as weekly or monthly salary supplements. Hardship allowances compensate expatriates for exceptionally hard living and working conditions at certain foreign locations. Employees also usually pay these incrementally (with each paycheck) so it’s important to make it clear that this is not a permanent raise. Mobility premiums are typically lump sum payments to reward employees for moving from one assignment to another.
In general executive compensation systems around the world are becoming more similar. The structures have common broadband base salary ranges flexible annual incentive targets / maximum and internationally established share option guidelines awards. And, as in the United states more multinational employers are granting more stock options to a broader group of their employees overseas a step that requires even more attention to complying with local tax laws.
Appraising Expatriate managers:
Several things complicate the task of appraising a expatriate’s performance. For one ting, the question of who actually appraises the expatriate is crucial. Obviously local management must have some inputs but cultural differences here may distort the appraisals. Thus, host country bosses might evaluate a US expatriate manager in India somewhat negatively if they find his or her use of participative decision making culturally inappropriate. On the other hand home office managers may be so out of touch that they can’t provide valid appraisals since they’re not fully aware of the situation the managers face. Similarly the procedures may be to measure the expatriate by objective criteria such as profits and market share, but local events (such as political instability) may affect that manager’s performance while remaining invisible to home office staff.
Suggestions for improving the expatriate appraisals follow: The employment Law Feature presents related issues.
1) Stipulate the assignment’s difficulty level, and adapt the performance criteria to the situation.
2) Weigh the evaluation more towards the on-site manager’s appraisal than towards the home site manager’s.
3) If the home office manager does give an actual written appraisal have him or her use a former expatriate from the same overseas location for advice.
International labor relations
Firms that open subsidiaries abroad will find substantial differences in labor relations practices among countries and regions. This is important because while union membership is dropping in the United States it is still relatively high abroad, and unions abroad therefore tend to be more influential. Wal–Mart for instance has successfully neutralized attempts to organize its US employees but in 2006 had to accept unions in many of its stores in China.