Expatriate compensation packages can vary enormously from company to company and location to location, but there are certain factors that will largely determine what exactly your potential boss is likely to offer you for the job.
According to ECA International, a provider of knowledge, information and technology for the management and assignment of employees around the world, the most common approach is to use the employee's salary in their home country as the starting point, then adjust for cost of living and any other allowances, and tax.
However, a growing number of companies are choosing an approach whereby host country local salary is used as the starting point with or without some additional benefits.
This is more common when relocating employees between countries with similar or higher pay levels and economic development.
So, if you are coming from a country where salaries are lower then it’s quite likely that you will be offered a lower package than your counterpart coming from another country where the salary levels are higher.
This also explains the discrepancy at the workplace, where colleagues doing the same job can receive different amounts.
“When choosing an expatriate pay approach, it is essential for companies to be clear about the reasons behind the assignment so that their choice reinforces this.
"This will also help them to decide whether they wish to create equity among home or host country peers – something that has become even more complex as companies manage increasingly diverse nationalities in and out of different markets.
"And of course all this needs to balance against benefits and costs to the business,” explains Mark Harrison, Manager, Remuneration Services, ECA International.
The ECA findings also highlight the importance of currency in which salary is delivered and its implications too. For example, if paying in one currency rather than splitting it, human resources need to have a policy in place to ensure their employees’ buying power is maintained should currencies fluctuate significantly.
Besides these two primary factors, negotiation also plays an important role in determining your salary and this is irrespective of your past salary levels.
The performance of a company and the sector in which you specialise will also be instrumental in determining your final package.
If you are in a sector where talent is hard to come by, employers will be ready to pad up your total package a bit more as opposed to a sector which is not doing particularly well or is going through a downturn.
“[Other] factors which can come into play while determining salaries are the qualifications and experience that employers are looking for, as well as company performance, industry, and size,” as a Bayt.com expert says.
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