Host-country Approaches

A host-country system assigns the expatriate to the host salary and benefits structure, delivering pay in local currency, so that expatriates and local-nationals who do similar work receive comparable salaries. It works best if the transfer is permanent or if the employee will have to move to another location rather than return home.

Advantages:

Simplifies administration.
Allows easy explanation.
Necessitates a one-time salary adjustment.
Pays all nationalities under the same programme.
Attracts candidates from low-salary and high-tax countries.
Promotes career identification with the host-country organisation.

Disadvantages:

Makes expatriation from high-salary countries and repatriation to low-salary countries difficult.
Does not consider significant differences in taxes, housing, and living costs between home and host because employees are not on a true expatriate status.
Allows potential inequity for expatriates moving from country to country, thus limiting worldwide mobility.
Involves difficulties for expatriates adjusting to local spending patterns.
Does not maintain benefits in the home-country plan.

Sometimes variations in methodology are necessary when the compensation package is based on a host-country salary structure. Under a "host plus" approach, an employer may add compensation elements—assistance with housing, cars, education, continuation in home-country benefits, etc.—that are not available to local nationals because of the assignee's home-country ties, unique status, and other related factors. The advantages and disadvantages are the same as the host-country approach, but slightly mitigated.

For more information, contact one of our worldwide offices or e-mail International Compensation Services.

Expatriate Services

Expatriate Programme Consulting

Expatriate Compensation Data

Custom Approaches

Pure Home-country Salary

Headquarters-based Pay

Host-country Approaches

Net-to-Net Approach

Higher of Host or Home

Modified Balance Sheet

For Missionaries and Nonprofits

Seminars

Publications

Expatriate Networks

Compensation Services

Expatriate

Global Local-National