What are the components of an HRIS in compensation administration in a MNE?

Question

What will be an ideal response?

Answer 1

1. The components of an international compensation system are very similar to those of a domestic program. The major components are a base salary and a set of benefits. However, extra pay premiums would be much more complex for an MNE. For example, there may be a foreign service or hardship premium for expatriates, whether they be from the parent or a third country. Other premiums could be based on the “riskiness” of the assignment in the country. Although most domestic companies give cost-of-living allowances (COLAs) based on where one works (e.g., rural vs. urban locations), MNEs must also use between- and within-country COLAs to have an equitable compensation system. These considerations, along with the other compensation issues discussed, make managing the compensation system a “nightmare” for the IHRM department. The existence of the employee, country, and compensation/benefits data in an HRIS means that IHRM professionals have the ability to quickly access important information for making both policy and operational decisions about compensation in an MNE.
2. In the going rate or “host-country” approach (Bohlander & Snell, 2007), the base salary for international employees is tied to the salary levels in the host country. For example, an expatriate would earn pay that is comparable with the salaries of employees in the host country. Thus, the compensation levels for employees would depend on wage surveys of (1) local nationals (HCNs), expatriates of the same nationality and (2) expatriates of all nationalities (Dowling & Welch, 2004). For low-pay countries, the base pay and benefits could be supplemented with additional payments. It should be obvious that HRIS applications for compensation based on the going rate would be useful for establishing initial compensation levels, particularly for expatriates. Having this database would also be quite useful for handling complaints by any MNE employee regarding the equity of his or her compensation.