Feb 5, 2011

PAN-EUROPEAN ROLES | International Remuneration

Some organizations, notably consultancies and IT systems development and/or implementation companies, recognize that some of their staff spend so much of their time outside of their country that they could live anywhere within the region without additional detriment to either themselves or their employers. In such circumstances, the employer should decide which home locations would be acceptable to it and limit the freedom of location of employees to those locations, should the employees decide to move from the present home country location of their own volition. The company should be clear about the circumstances in which it would make any contribution to any moving expenses - clearly, if the employer gained no benefit from any such relocation, it might be considered inappropriate for it to contribute anything to such costs. Indeed, the company might even be slightly disadvantaged by any relocation and might wish to pass on, or at least share, the cost penalties incurred to the employee, eg the additional cost of local IT support, additional transportation costs, higher employer tax or social insurance payments, higher administration costs, etc. For certain consultancy and IT client-project-based organizations, this situation can be further complicated by the observation that members of the same client project team could come from a variety of different home countries. The fact that they may be working side by side doing similar work raises the question of how equitable their base remuneration should be. This would be of even greater significance if the same team tended to go from client location to client location over a protracted period.
Add a note hereAn additional complication might come from the payment of any project-related bonuses. If such bonuses were paid as a percentage of home country base salary, any inequity in base salary would simply be magnified by these bonus payments. When one considers that the eligibility for such a bonus might stem from an individual's or team's performance on the project, relating the size of the payment to where the person lives at weekends would seem potentially unfair. At the other extreme, of course, the payment of a bonus based upon an equal slice of the project bonus pool might result in very different relative bonuses being paid out, in terms of purchasing power in the country of residence, ie what the employee might be able to buy in the home country with the money paid out.
Add a note hereThe precise approach chosen will depend on a number of factors such as:
§  Add a note hererecruitment and retention pressures;
§  Add a note hereview of internal equity;
§  Add a note herestretch of targets relating to achievement of bonuses;
§  Add a note herelink of remuneration elements to performance objectives (what are we paying for?).


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