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The purpose of this paper is to discuss the compensations strategies that are used by multinational companies for its employees; what are those strategies? Are they fair enough for the entire employees? Does implementing those strategies assist in achieving the organizational and business objectives? We will talk about those issues in details.
Before jumping into the types of compensation, we need to take a closer look on the forms of employment by multinationals as it affects the compensation plan of the employee significantly. First of all, there is the Parents Country Nationals (PCNs) who are personnel of the same nationality of the company or the government that they are signing contracts with. Second, we have the Third Country Nationals (TCNs) who are employees with a separate nationality other than both the contracting government and the location of operations. Last but not least, there is the Host Country Nationals (HCNs) who are basically the nationals or the locals. Each and every kind of personnel has different needs according to the type of contract signed with the multinational.
The compensation package consists of the basic salary, the allowances and the benefits for the employee. The basic salary serves as the benchmark, by which most of the remaining factors will be set accordingly (Essays UK, 2013). As for the allowances, they may be categorized as Cost of living ones that are supposed to provide the employee with the same standards of living he/she maintained back home (TCNs). There is the housing allowance, the leave for home allowance in case the expat would like to pay his home a visit and many others (Educational allowance, Spouse assisting allowance,etc). Finally, there are some benefits that are offered too under the compensation umbrella; medical coverage for employees, social security benefits (especially for expats in the host country) and transportation pocket money in other cases.
According to the type of employees and the compensations previously mentioned, I guess that nearly all employees are receiving a fair treatment and set of privileges. Actually, the main reason behind offering the set of benefits that are offered to expats is to make them nearly equivalent to the locals when it comes to the standards of living. Some may criticize that expats may be getting an overall better package, yet I guess that is the price they pay for leaving their homes and working abroad.
The compensation strategies are of great importance in any multinational; they are one of the main pillars that keep the employees (who are a very important stakeholder) motivated and willing to fulfill the organizational goals.
References
Essays, UK. (November 2013). Compensation System For Multinational Corporations Economics Essay. Retrieved from https://www.ukessays.com/essays/economics/compensation-system-for-multinational-corporations-economics-essay.php?cref=1
