Expatriate Compensation Preferences

Raffray, Benoit
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To be successful in a globalised environment, it is necessary not only to have the free flow of capital and technology, but also the ability to relocate human capital across borders. Expatriates cost corporations three to five times more than local employees and the costs of expatriate failure can be high. It is therefore important for multinational corporations to attract and retain a competent and motivated cadre of expatriates. Since compensation plays an important role in employee motivation and retention, it is necessary to identify those remuneration aspects perceived to be important by expatriates. Experts in expatriate remuneration were interviewed to identify the variables that are important in expatriate remuneration. From these interviews, a questionnaire was designed, piloted and sent to expatriates in seven South African multinational companies. Conjoint analysis was used to examine the relative importance of the identified variables. The relative importance of these variables was also examined according to different demographic characteristics of the sample. The results show that of the compensation package variables, base salary is perceived to be the most important followed by benefits, currency in which the expatriate is paid, equity, taxation method, and lastly the cost of living adjustment. In terms of the different benefits and allowances, housing is perceived to be the most important followed by career opportunities of the assignment, education allowance, health benefits, partner assistance, hardship allowance, and finally foreign service premium.
MBA thesis - WBS
Compensation , Salaries