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While this is a daunting task domestically, it becomes even more difficult when you are dealing with international employees of differing nationalities in numerous countries with differing customs, pay standards and competitive practices.

Some of the suggested international compensation management tools you need to have in place to ensure international internal and external base salary equity and ease of ongoing administration are:

• An international compensation management grading system that corresponds identically to your domestic grading system.
• International salary ranges by country that allow you to smoothly expatriate a manager overseas, or from country to country and back home again without disruption.
• Reliable external compensation market data on competitive pay levels for each major function as well as levels within each function.
• A standardized performance measurement system that weighs the contribution made my management in a consistent fashion regardless of where the executive is stationed.
• Salary increase guidelines that properly motivate and reward performance and are in line within your worldwide compensation strategic plan.
• A base salary delivery method that complies with local country laws and still remains integrated with your overall base pay systems.

If you do not have all these tools in place, the quicker you design and implement the same, the easier your ongoing maintenance becomes.


Base Salaries are the foundation of the international compensation program. In reality, they are a minimum “entitlement” while the employee is working for your company and rarely, if at all, are they reduced. Add to that, the fact that many ancillary pay items such as target bonuses, 401(k) or pension contributions, life insurance and a myriad of other items are pegged off this one most critical item of international total compensation.

Pay is supposed to be kept confidential but do not kid yourself; Base Salaries are the single most compared pay item among employees. As such, there must be internal equity that accurately reflects job responsibility and performance. Just as critical, there must be external equity that is competitive and attracts and retains employees to work for you versus going with a competitor.

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