The Equity of Compensations for Expatriate and Local Employees
At the moment, many expatriate employees transfer abroad to work in foreign outlets of their companies (Schaeffer, 2007). However, while they decide to transfer, they also expect to receive the fair reward for their work and their decision, but the fair reward often means higher wages or better compensation plans for expatriate employees compared to other employees in the company, who stay in the home country, or local employees, whom expatriate employees are working with (Milkovich, Newman, & Gerhart, 2013). Hence, companies face the dilemma in developing their compensation plans how to maintain the equity of compensation to keep all employees satisfied with their level of income, on the one hand, and provide fair and attractive compensation plans for expatriate employees.
In its essence, the problem is that expatriate employees expect higher wages or better compensation plans than they had in their home country. However, such compensation plans often mean that they will receive higher wages, or they will have better compensation plans than local employees. Hence, companies using such different compensation plans for expatriates and local employees may face the problem of the conflict between employees and the growing dissatisfaction of local employees, who may feel disappointed with lower wages or worse compensation plans.
Hence, the study of effective strategy and compensation policies to maintain the equity of compensations for expatriates and local employees is essential to help companies to elaborate effective compensation policies. Such policies should keep the balance between expatriate and local employees and make them satisfied with their compensation plans.
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