Two primary purposes of expatriate compensation?

• A. Encouraging qualified employees to accept foreign assignments and removing financial obstacles that hinder relocation to a foreign post.
• B. Aligning pay with host country standards
• C. Providing only base salary
• D. Offering non-financial recognition

Answer: (A)

Expatriate compensation is aimed at making international assignments appealing and financially feasible for employees. The two main goals are to attract qualified staff to accept foreign postings and to remove financial barriers that could deter relocation. When a assignment involves moving to another country, costs can rise due to housing, cost of living differences, taxes, schooling for dependents, and the disruption to personal life. A well-designed package addresses these realities, signaling the employer’s commitment and helping the employee feel no net financial disadvantage from taking the assignment.

While aligning pay with host country standards can be part of compensation strategy, it isn’t the primary reason for expatriate pay. It’s more about equity and external competitiveness than the decision to undertake the assignment itself. Providing only a base salary ignores the various additional costs and supports essential to international moves, and non-financial recognition alone doesn’t address the substantial financial considerations involved.