A continuous challenge for multi-national companies is the necessity to equalize compensation packages to attract the right people to the company. Benchmarking expat pay is vital for finding this equilibrium, but as corporations function into and out of an ever-growing location, these contrasts are becoming more involved. Dynamic development in regions such as Asia and South America encourages to provide marketable chances for companies, making an even increased international call for the skilled and able staff. However, in the recent past, nations in these areas have joined the ranks of expatriating nations and in the imminent future there will be more migration out of these developing regions into the developed world. This is generating additional encounters for those trying to achieve equitability.

Another challenge is the local pay issue that arises because of fast economic growth and higher inflation in developed nations (local salaries are increasing more rapidly as compared to expatriate salaries). This is predominantly true in South America and many unindustrialized Asian thrifts such as China. Nevertheless, in many industrialized countries, predominantly those in the Eurozone, local incomes have increased only moderately due to moderate price increases and controlled GDP growth.

Notwithstanding the salary structure used for determining an expatriate’s pay, it is vital to keep a trail of local wages, which aids in evaluating how it fits the assignees’ pay and assess whether it meets and reinforces business purposes. Comparing local and expatriates pay is an indication whether a remuneration system is cost-effective under the home-based approach. This is especially effective and recommended for multi-national companies that rely on how much cash the company is ready to pay to get the right individual in the right place. It may consider paying an assignee the local market rate; other companies may consider paying an extra 'position allowance' to meet expectations of the local spendable. It is clear that what may work at one job level may not work at another one. It isnbs certainly true for companies going into or operating in high growth markets. For example, placing an assignee from the West to Chile on a host-based system may be suitable for the senior level, but not at the junior manager level. An approach called 'one size fits all' does not help the company attract talent comprehensively.

Due to the current global monetary crisis, stockholders, voters, and legislators in North America and Western Europe have developed an interest in the issue of executive reimbursement. New principles such as say-on-pay stockholder votes, tax inducements to reduce base wage, and tough caps on bonuses have been ratified to slow the exponential development in the worth of executive remuneration packages in developed countries. This drift is not restricted to developed states as in other regions, for instance in Asia, executive pay has risen significantly and quite often with little or no oversight from formal controlling frames or state bodies.

Some mechanisms can be used to control executive compensation and, extrapolating to general tendencies, to detect broader corporate governance trends. Two main trends are as follows: one hemisphere is ratifying strict lawful mechanisms to regulate executive compensation, while the other depends on self-regulation; and one area is using executive compensation reorganization to open up admission to the commercial governance platform for small stockholders, while the other is endeavoring to limit stockholder democracy. As depicted above, executive compensation is more attractive internationally than expatriate compensation in both developing and developed countries.

Recommendations

Having analyzed both executive compensation and expatriate compensation, it is highly recommended to follow the path of standardizing the two packages.

Multi-national companies should continuously seek to offer uniform employment packages for employees doing the same kind of work without taking into consideration economies they operate in and the percentage of profits they record. As much as the wage bill can easily paralyze an organization, this aspect should be considered as it would promote equity and each and every employee would feel appreciated, which would aid in developing positive energy and attitude towards the job that would be later reflected in their job performance.

Individual governments of both developed and underdeveloped countries ought to take a keen interest in both expatriate compensation and executive compensation as some packages are not realistic. They are offered and implemented at the expense of other employees, especially of the junior staff. Governments, in particular those of under-industrialized countries, should seek to be more involved in the private sector as employees are equal with citizens in the public sector and should hence be protected and well-remunerated.

Directors should endeavor to offer junior employees equally attractive employment packages as they are more involved in daily operations of the organization and are the reason why good profits are gained. As they receive hefty packages, they should reciprocate it to their subordinates. This would help develop a fair remuneration system.

Conclusion

It is evident that there is a vast disparity between executive compensation and expatriate compensation in both developed countries of Europe, the UAE, and the USA, as well as in developing countries in Africa and South America. This requires increased attention from the society, especially legislators and governments. In order to reduce the disparity gap, everyone’s input is necessary, but it particularly so in developed nations. This is attributed to the fact that most under-industrialized counties benchmark their systems to developed countries and later adapt to their ways. Thus, implementing the above solution can solve the disparity globally in future.