International Compensation

Compensation is increasingly seen as a mechanism to develop and reinforce a global corporate

culture, a primary source of corporate control and explicitly linking performance outcomes with
associated costs.
Objectives of international compensation policies
1. The policy should be consistent with the overall strategy, structure and business needs of
the multinational.
2. The policy must work to attract and retain staffs.
3. Should facilitate the transfer of international employees in the most cost-effective way for
the firm.
4. Must give due consideration to equity & ease of administration
.
Three approaches to international compensation
1. Going rate approach
2. Balance Sheet approach
3. Local plus approach
Tropic Knit uses the local plus approach. This approach is a mixture of both the going rate
approach and the balance sheet approach. The Local-plus is an approach in which expatriate
employees are paid according to the salary levels, structure, and administration guidelines of the host
location, as well as being provided, in recognition of the employees foreign status, with special expatriate
benefits such as transportation, housing, and the costs of dependents education

Compensation Package
The compensation package available for expatriates at Tropic Knit is made up of the basic salary
plus allowances.
These allowances include:
1.
2.
3.
4.
5.
6.

Cost of living allowance (COLA)

Housing allowance
Home leave allowance
Education allowance
Relocation allowance
Spouse assistance allowance