There are many issues to consider when dealing with international business compensation packages. In relation to direct compensation of pay and incentives, it is more challenging than domestic employment. Some of the concerns in creating an effective international compensation package are equity, attractiveness, cost-effectiveness, consistency, and employee motivation.
Many international businesses use the same type of compensation plans used by the home-base country.
Wages and salaries of expatriates is competitive and sometimes confusing to understand. Generally, expatriates are paid from their home country at the home country rates. International businesses take a more indirect compensation approach to compensating expatriates with nonpay benefits. Foreign allowances are paying an allowance for housing, transportation, and tax cost to employees in foreign countries.