Expatriate Compensation

Seeking international assignments can be extremely rewarding in many ways such as expanding your cultural horizons and opening doors for your career, but it also has various costs that need to be thoroughly considered. Personally, accepting an international position would have a severe impact on my personal life and overall wellbeing because of the drastic change and the distance from my family, despite my love for traveling. Because of the severe adjustments I would have to make, I would need to ensure the benefits outweigh those costs and that I would be properly compensated for my troubles when making such a decision.

The top three benefits discussed in the lecture that would impact my decision to accept an expatriate position are housing and utilities allowances, relocation assistance, and hardship allowances.

Housing and utilities allowances are an important consideration for me because I would need to ensure that I could afford the change in cost of living in order to maintain my current standard of living. Due to the mere volume of housing expenses and the difficulties of navigating this expense in a foreign country, this compensation factor would greatly improve my satisfaction and the ease of the transition; the size of this allowance would be a strong convincing factor for me.

Relocation assistance is the next most important factor for me to consider. Moving your whole life across the world can be difficult logistically and emotionally, so having extra support in both of these realms is a game changer. This service can also include language and culture assimilation assistance which could be very beneficial. Having assurance that I would feel comfortable and settled in the new culture quickly is another key convincing factor.

Lastly, hardship allowances are an important consideration for me due to the emotional toll the move would cause and the sacrifices I may make in decreased living and work conditions (Lecture: Expatriate Compensation). Having a proper hardship allowance would make me feel more valued as an employee and would be one convincing factor in making the big move.

All in all, at this point in my life, I would definitely consider taking on an assignment abroad (short-term more likely than long-term) while I am young since I have less ties here – such as a husband and kids. Factors such as the ones mentioned above as well as a competitive base pay and a good benefits package would convince me to make the move. It would also be important to my job satisfaction and motivation for my pay and benefits to be competitive both in the U.S and my host country.


Executive Compensation: excessive or appropriate?

Executive pay is undoubtedly a controversial topic, especially with the drastic 940% growth we have seen since 1978 (Lecture: Executive Compensation). While executives play an important role in organizations and make countless contributions throughout their tenure, my opinion is that executive compensation is excessive and promotes inequality in organizations.

According to the PBS video on Executive Pay, CEOs made nearly 500 times more than the average employee back in 2002, and likely much more than that now. No level of performance can account for a pay gap this drastic. Additionally, the video mentioned multiple examples of CEOs from large corporations that made hundreds of millions each year despite poor company performance and plummeting stock value — Cisco Systems ($280 million), Tyco ($332 million), and Oracle ($795 million). If CEOs are really paid by performance and in a manner that mimics their organization’s financial success, then why are these CEOs continuing to make more even when their company’s success is declining?

It is no doubt that CEOs put immense amounts of time and effort into their organizations through leadership and innovation, and that they deserve to be compensated for that work. However, it is the mere degree to which they are compensated that may do more harm than good. This pay gap can be discouraging to employees as promotions become more limited and their pay growth flattens. What can be especially discouraging is when a company’s profits are declining and a CEO’s pay is increasing, despite the perception that their compensation is directly correlated to company performance. To combat this, it may be beneficial for companies to properly define and justify CEO compensation and communicate that to the company.

In my opinion, the most important aspect of executive compensation as far as motivating executives goes is stock options. At their level of experience and caliber, these executives don’t typically have to worry about receiving too low of a base wage — they will receive competitive pay regardless. In contrast, providing stock options for executives will motivate them to actively work to improve the organization and lead their firm to competitive advantage. Stock options build a sense of ownership and added respnsibility because their compensation is directly correlated with firm performance and financial success. It also aligns the executives interests with that of the organization and its shareholders (Lecture: Executive Compensation). While base pay and benefits packages may be what helps companies recruit and retain top executives, stock options and profit-sharing programs are whata motivates and engages them to make progress and accomplish new achievements.

All in all, I think CEOs deserve to be paid significantly more than average employees because each of their contributions impacts the company in powerful ways. However, I think pay should be more proportional and such large pay gaps can be extremely harmful in many cases. Additionally, properly defining and justifying pay is vital at any level, and I think it could make a big difference in how people view CEO pay as well as how it is structured in the future.


Choosing discretionary benefits.

Choosing the best benefits package for your company and your unique group of employees can be a difficult, but vital task. There are many options, all with their benefits, so how do you prioritize them and create the most effective package for your specific situation?

According to this week’s lecture, there are three main categories of discretionary benefits: protection programs, paid time off, and services (Lecture: Discretionary Benefits). Simply based off of these broad categories, the most important and non-negotiable set of discretionary benefits, in my opinion, are the protection programs, and the most disposable (least necessary) are the services.

The following is the order in which I would eliminate discretionary benefits:

  • Outplacement counseling (services)
  • Transportation services (services)
  • Tuition reimbursement (services)
  • Family assistance (services)
  • Paid time off
  • Employee assistance programs (services)
  • Disability and life insurance (protection programs)
  • Retirement (protection programs)

I would eliminate outplacement counseling first because, although it is a decent thing to do from an employer standpoint, it will not have a direct impact on your current employee productivity or morale. It is also not guaranteed that the program set by the former employer will align with the needs or timeframe of the former employee, and thus, may not be beneficial. Next, I would eliminate transportation services because remote jobs are becoming increasingly more prominent so transportation needs are limited, and there are legal restrictions that control an employer’s options within this benefit. I would next eliminate tuition reimbursement from my company’s benefits package because it is very costly and there is an increasing amount of free learning resources that employees can access to add similar value that they would get gaining a new degree. Next, I would eliminate family assistance programs because, although they can greatly improve an employee’s work-life balance and reduce life-stress, there are other ways in which they can receive this support that are not costly to the employer (Textbook: Strategic Management). Next, I would eliminate paid-time-off because the last three discretionary benefits will have a more direct impact on employee satisfaction and company culture.

The top three most important discretionary benefits, in my opinion, are Employee Assistant Programs (EAPs), Disability and Life insurance, and retirement. Of these, the third to last benefit that I would eliminate is EAPs. Unlike some of the other benefits, this one directly impacts the wellbeing of the employee and tackles factors that may be negatively influencing their performance in the workplace. It focuses on the personal needs of each employee and creates actionable solutions and support for them, directly impacting their performance and wellbeing. The second to last benefit that I would eliminate is Disability and Life insurance; investing your limited funds into Disability and Life insurance will not only create a safe and open environment for employees, but it can also save you from potential lawsuits. Lastly, the most “important” discretionary benefit to me is retirement. Having a sufficient retirement plan is increasing in importance in recruiting and retaining employees and can also improve satisfaction in current employees. There are also many options to choose from that vary in cost, goal, and strategy.

The demographic composition of the company’s workforce would greatly impact the desired benefits package and adjust the overall priorities regarding compensation. Each employee has different values, priorities, and needs, so adapting your benefits package to suit the overall needs of your workforce is vital to effectively motivate, ensure satisfaction, and increase productivity. For example, employees with families have different needs than singles, and employees who are closer to retirement may care more about the specifics of the retirement plans. Additionally, those who work remotely may care less about transportation services and family assistance, but care more about EAPs and tuition reimbursement. Overall, it is important to match your benefits package to the needs and priorities of both the employees and the organization.


Job-Based Pay or Person-Based Pay?

For Target, a large corporation with thousands of employees and a very structured and hierarchical job system, a job-based pay structure is likely the best move. While some aspects of the person-focused pay strategy could be beneficial for many layers of Target’s job structure, a job-based pay structure may be the easiest to implement company-wide and prove most effective.

According to this week’s lecture, job-based pay structures are based on both job performance and average market pay and are evaluated by thorough job analyses (Lecture: Contrasting Person-Focused Pay with Job-Based Pay). This strategy would work well for Target because it sets clear job expectations, guides promotion and raise conversations, and controls labor costs. By identifying benchmark jobs and clearly defining compensable factors and degree weights, Target would have clear expectations for each position and could streamline their compensation process. For such a large corporation with many varying levels within the organization, Target needs a well-established pay structure that is fair, transferrable, and cost-effective.

However, one aspect of the person-based structures that could potentially be beneficial for Target is incorporating skill-based pay bonuses and increases for additional certifications and skill acquisitions into their job-based pay structure. This could allow more opportunity and motivation for departmental cross-training for all store-level employees and allow store executives to develop their skills and learn new specialties. These changes could have a positive effect on company-wide motivation, help link pay to performance, and overall add value to how they compensate their employees. However, adopting a full skill-based pay structure would not be ideal for Target due to the increase in costs, potential for bias, and employee resentment (Lecture: Person-Focused Structures). While this is not a traditional combination of pay strategies, some aspects of the person-based pay strategy could be a useful addition to a traditional job-based pay strategy for Target and many other companies in a similar position.

Overall, after assessing Target’s current pay strategy, organizational goals, and company culture, it is clear that a job-based pay strategy would be the most effective. Whether or not they should incorporate aspects of a skill-based structure is up for debate, but what Target needs is a pay structure that is clear-cut, expectation-based, and properly aligned with their job analysis.


Compensation as a Motivator

During my Junior year at Oregon State University, I was a Teaching Assistant for a professor who taught a College of Business series for Seniors. I was given freedom regarding how many hours per week I would work and which days and times I chose to do so. I also shared the workload with another Teaching Assistant, so we were both vying for the same work and would pick up each other’s slack when necessary. I enjoyed this job and built a meaningful relationship with the professor I assisted, but sometimes I had trouble finding the motivation to log on and complete a significant portion of the grading before my counterpart did. After analyzing this behavior, I found that there were a few explanations for why I struggled.

The first and most relevant explanation is compensation. I was paid minimum wage, worked less than 10 hours per week on average, and received monthly paychecks. Due to this rate and minimal hourly workload, my paychecks ranged from $150-$300 per month. For the mental effort that this job required, these paychecks did not motivate me to work longer hours or have the discipline to log in early on in the week. To make matters worse, oftentimes, if I clocked in too late in the week, my counterpart had already completed most of the work and I had nothing to do. In summary, the combination of diffusion of responsibility and low compensation resulted in minimal motivation and less job satisfaction so I chose not to continue this job after the academic year was completed.

The compensation for this job motivated this behavior because of the combination of factors that were involved. The national minimum wage may be low (and a whole other discussion at that), but it is a respectable and sustainable wage for those who work full-time. In my specific case, working 10 hour (or less) weeks at minimum wage did not result in sustainable paychecks. Additionally, monthly paychecks led to delayed gratification and difficulty linking my compensation to short term goals and added effort. While I did not need to obtain this job in order to pay my bills or maintain a good quality of life, the compensation made me feel that my hard work was not paying off and made it exceedingly difficult for me to put in the extra effort. In return, these feelings made me procrastinate in my work which directly resulted in fewer weekly hours because my counterpart finished all that had to be done. While I enjoyed much of the physical work and interacting with my professor and my peers, the compensation and various other factors led me to not perform at my best and simply wait around for the academic year to come to a close so I no longer had the burden of this job on my shoulders.


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