BALANCE SHEET APPROACH IN INTERNATIONAL HRM Balance sheet approach is a method o
ID: 373964 • Letter: B
Question
BALANCE SHEET APPROACH IN INTERNATIONAL HRM
Balance sheet approach is a method of compensation for employees who are working as expatriates. This method of approach was developed in an effort to find a solution for the complexity of compensation variables while working in another country. Cost of living, variations in laws and policies, tax variants are some of the aspects while determining the compensation for international employees. Also, the cost of living of the family members, conveyance costs, unstable currency rates add to the complexity in determining the compensation structures. Thus, a balance sheet approach aims to make the compensation structure simpler for those expatriates.
In a balance sheet approach, the pay and compensation structure of the employees are determined by calculating the differences in cost in an international project and the cost of the same project in the home country of the employee or the organization. This approach is based on these assumptions.
Home country as a point of reference
The standard of living of the employee in the home country is determined based on the compensation he receives in the home country. With the keeping the home country’s compensation as a reference, the compensation is determined so that the employee could continue or retain the same level of standard of living in an international location. The employee may be offered with benefits and remunerations to afford a standard of living similar to that of the home country.
Short term nature of international project
Usually international projects are of short duration. Again, the balance sheet approach is used so that the employees could re-enter their work in the home country. This makes the employees feel satisfied regarding their pay and standard of living until they rejoin their company in their home country. This makes them avail their retirement benefits and pension as per the home country’s compensation structure, assuming that they will retire from the home country.
Sometimes the top level executives of international organizations may be moved to different locations where the company has operations. Therefore, it is required to have a bigger vision than just international employees assigned for their global project. Thus the balance sheet approach helps to make the compensation structure simpler while taking into consideration the laws and tax policies of different countries.
Explanation / Answer
explain the term ' balance sheet approach' in international HRM
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.