Headquarters-based Pay

The balance sheet approach requires a reference point for pay administration. Although often the employee's actual home country, this point can be another designated country (most commonly, company headquarters). The salary programme for all assignees—regardless of nationality or previous work site—would follow that of headquarters, orienting all equalisers to the headquarters base. Companies are most likely to use this approach when most of their expatriates come from the headquarters country, or when the concern to ensure pay equity among expatriates of different nationalities is a predominant consideration.

Advantages:

Promotes equity among all nationalities.
Maintains ties with the parent company and headquarters.
Attracts expatriates from low-salary countries.
Simplifies administration.
Allows easy explanation.

Disadvantages:

Makes repatriation difficult to lower-paid countries.
Increases costs when transferring expatriates from low-salary countries.
May make it difficult to attract and retain expatriates from high-salary countries.

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

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