MODULE 3 - Global Compensation & Benefits Flashcards
Allowances
Compensation provided to meet individual needs; includes additions to salary to cover expenses for housing, transportation, meals, or the increased cost of goods and services in an international assignment.
Acquisition
Situation in which one organization acquires assets takes over the full operation of another organization.
Balance sheet compensation strategy
Compensation approach that seeks to preserve the purchasing power of an employee assigned from one country to another country by balancing the differences various categories of expenditures between the two countries.
Benefits
Tangible payments or services provided to broad groups of employees to cover common issues, such as those related to retirement, private health coverage, sick pay/disabilities schemes, life insurance, and paid time off.
Brownfield operation
Situation in which a company or government entity purchases or leases existing production facilities to launch a new production activity.
Cafeteria compensation system
Form of compensation in which HR managers select those assignment components that work best for their program (based on cost and/or availability of town).
Commuter assignments
Assignments in which employees live in one country and work in another country by regularly commuting across borders to perform different aspects of their jobs while their families remain at home.
Compensation
All financial returns and tangible services, including salary, allowances, and incentives.
Danger premium
Additional incentive provided by an employer and the employee is assigned to a location in which there are risks of bodily harm, such as those related to work, unstable political conditions, or other dangerous environments.
Defined benefit plan
Promise made by retirement plan guaranteeing that you specified amount later date, most often the day.
Defined contribution plan
Retirement plan specifies how much money is to be regularly contributed, but no promises are made regarding the future value of the benefit; amount of benefit at retirement will depend on the investment return.
Detached worker rule
Social Security rule that stipulates that, in the case of individuals at international Simon, home-country social security taxes will apply.
Differentials
Adjustments paid to make up for differences in home-and host-country cost-of-living.
Divestiture
Situation in which a company “spins off” a business division or subsidiary.
Efficient purchaser index (EPI)
Assumes that an assignee is no longer completely new to a location and has learned to purchase local versus imported items that cost less because of his or her increasing familiarity with the location; goods and services allowances is reduced at deployment or after a certain period of time.
Employee stock ownership plan (ESOP)
Type of plan that gives employees of shares in a company.
Equity compensation
Non-cash compensation that represents an ownership interest in the company.
Foreign service premium
Basic incentive provided by an employer to convince an employee to move to or from a country; also known as mobility premium.
Global employment companies (GECs)
Subsidiaries that multinational enterprises (MNEs) sometimes form to manage high performers and other types of employees who are not readily fit within the MNE’s traditional operations.
Greenfield operation
New operation built from the ground up by an organization, often in a new country, as a vehicle for global expansion.
Hardship premium
Additional incentive provided by an employer to convince an employee to move to a country where the living conditions are uncomfortable or difficult.
Incentives
Payments in return for the achievement of specific, time-limited, targeted objective; also known as premiums.
Job valuation
Determination of the value and price of a job to attract and retain employees in a competitive environment.
Job-content-based job evaluation
Type of evaluation in which the relative worth and pay opportunities of different jobs are based on assessment of their content (e.g., responsibilities and requirements) and their relationship to other jobs within the organization.
Joint venture
Situation in which two or more organizations form a new venture for a variety of purposes, including manufacturing, sales, marketing, and research and development.
Localization compensation strategies
Compensation approach that provides an international Signy with the same level of compensation provided to local employees working in a similar capacity, sometimes with certain adjustments.
Long-term assignment
Traditional international (expatriate) assignment, usually lasting longer than one year and involving relocating the employee and his or her family to the host country.
Lump-sum compensation strategies
Compensation approach that takes the form of payments made to an international assignee; provides the employee with additional flexibility in how he or she spends the additional compensation for international work.
Market-based job evaluation
Type of valuation the bases the realtor worth and pay opportunities of different jobs on their value or “going rate” in the marketplace.
Merger
Situation in which two entities are brought together; entities have approximately equal weight and value in the final organizational configuration.
Mibility premium
Basic incentive provided by employer to commence an employee to move to or from a country; also known as foreign service premium.
Multinational pooling
Strategy for sharing insurance risk among an organization’s business units located in multiple countries; includes coverage for life insurance, disability insurance, and health insurance.
Prerequisites
Compensation provided on an individual basis in the form of goods or services (e.g., automobiles and club memberships).
Phantom stock arrangements
Generally used when a company does not view ownership of real equity as desirable but seeks to create some of the incentives that go along with having participants feel aligned with the company’s owners.
Premiums
Payments in return for the achievement of specific, time-limited, targeted objectives; also known as incentives.
Remuneration surveys
Surveys used to collect information on prevailing market compensation and benefits practices; allow organizations to compare their remuneration structures to global and local trends.
Restricted stock grant
Transfer of stock or gift of stock with forfeiture provisions.
Restructuring
Acts of reorganizing an organization’s legal, ownership, operational, or other structures for the purpose of making it better organized or more profitable.
Short-term assignments (STAs)
Assignments in which an employee goes abroad for a specified period of time (usually 3 to 12 months); the family typically does not accompany the employee.
Social Security
Programs that provide individuals with some level of income when faced with the contingencies of old age, survivorship, incapacity, disability, and other situations; also known as social insurance.
Split payroll
Allows an employee to draw a portion of his or her compensation and host country currency and the remainder in home currency; pay is delivered to the location where it is spent in the correct currency, avoiding exchange rate issues.
Start-ups
New business ventures created from scratch; most common types are Brownfields and Greenfield.
Stock option
Right to purchase shares of the company’s stock at a predetermined price for a certain period of time.
Tax equalization
Tax approach in which an organization takes over responsibility for employee taxes in the home and host locations instead of paying the employee an allowance to cover an increase in taxes; the assignee’s salary is lowered by the amount of taxes he or she would normally pay in the home country; also known as text balancing.
Territorial rule
Social Security rule that stipulates that, in general, an employee will be subject to the taxes of the country in which the work is to be performed.
Total compensation
Sum of all direct and indirect compensation provided to employees, including base salaries, incentives and bonuses, long-term incentive plans, benefits, and prerequisites; also known as compensation and benefits.
Totalization agreements
Bilateral Social Security agreements entered into by many countries to eliminate double taxation for individuals on international assignment.
