MODULE 3 - Global Compensation & Benefits

Question 0

Allowances

Answer 0

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.

Question 1

Acquisition

Answer 1

Situation in which one organization acquires assets takes over the full operation of another organization.

Question 2

Balance sheet compensation strategy

Answer 2

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.

Question 3

Benefits

Answer 3

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.

Question 4

Brownfield operation

Answer 4

Situation in which a company or government entity purchases or leases existing production facilities to launch a new production activity.

Question 5

Cafeteria compensation system

Answer 5

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).

Question 6

Commuter assignments

Answer 6

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.

Question 7

Compensation

Answer 7

All financial returns and tangible services, including salary, allowances, and incentives.

Question 8

Danger premium

Answer 8

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.

Question 9

Defined benefit plan

Answer 9

Promise made by retirement plan guaranteeing that you specified amount later date, most often the day.

Question 10

Defined contribution plan

Answer 10

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.

Question 11

Detached worker rule

Answer 11

Social Security rule that stipulates that, in the case of individuals at international Simon, home-country social security taxes will apply.

Question 12

Differentials

Answer 12

Adjustments paid to make up for differences in home-and host-country cost-of-living.

Question 13

Divestiture

Answer 13

Situation in which a company “spins off” a business division or subsidiary.

Question 14

Efficient purchaser index (EPI)

Answer 14

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.

Question 15

Employee stock ownership plan (ESOP)

Answer 15

Type of plan that gives employees of shares in a company.

Question 16

Equity compensation

Answer 16

Non-cash compensation that represents an ownership interest in the company.

Question 17

Foreign service premium

Answer 17

Basic incentive provided by an employer to convince an employee to move to or from a country; also known as mobility premium.

Question 18

Global employment companies (GECs)

Answer 18

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.

Question 19

Greenfield operation

Answer 19

New operation built from the ground up by an organization, often in a new country, as a vehicle for global expansion.

Question 20

Hardship premium

Answer 20

Additional incentive provided by an employer to convince an employee to move to a country where the living conditions are uncomfortable or difficult.

Question 21

Incentives

Answer 21

Payments in return for the achievement of specific, time-limited, targeted objective; also known as premiums.

Question 22

Job valuation

Answer 22

Determination of the value and price of a job to attract and retain employees in a competitive environment.

Question 23

Job-content-based job evaluation

Answer 23

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.

Question 24

Joint venture

Answer 24

Situation in which two or more organizations form a new venture for a variety of purposes, including manufacturing, sales, marketing, and research and development.

Question 25

Localization compensation strategies

Answer 25

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.

Question 26

Long-term assignment

Answer 26

Traditional international (expatriate) assignment, usually lasting longer than one year and involving relocating the employee and his or her family to the host country.

Question 27

Lump-sum compensation strategies

Answer 27

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.

Question 28

Market-based job evaluation

Answer 28

Type of valuation the bases the realtor worth and pay opportunities of different jobs on their value or “going rate” in the marketplace.

Question 29

Merger

Answer 29

Situation in which two entities are brought together; entities have approximately equal weight and value in the final organizational configuration.

Question 30

Mibility premium

Answer 30

Basic incentive provided by employer to commence an employee to move to or from a country; also known as foreign service premium.

Question 31

Multinational pooling

Answer 31

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.

Question 32

Prerequisites

Answer 32

Compensation provided on an individual basis in the form of goods or services (e.g., automobiles and club memberships).

Question 33

Phantom stock arrangements

Answer 33

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.

Question 34

Premiums

Answer 34

Payments in return for the achievement of specific, time-limited, targeted objectives; also known as incentives.

Question 35

Remuneration surveys

Answer 35

Surveys used to collect information on prevailing market compensation and benefits practices; allow organizations to compare their remuneration structures to global and local trends.

Question 36

Restricted stock grant

Answer 36

Transfer of stock or gift of stock with forfeiture provisions.

Question 37

Restructuring

Answer 37

Acts of reorganizing an organization’s legal, ownership, operational, or other structures for the purpose of making it better organized or more profitable.

Question 38

Short-term assignments (STAs)

Answer 38

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.

Question 39

Social Security

Answer 39

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.

Question 40

Split payroll

Answer 40

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.

Question 41

Start-ups

Answer 41

New business ventures created from scratch; most common types are Brownfields and Greenfield.

Question 42

Stock option

Answer 42

Right to purchase shares of the company’s stock at a predetermined price for a certain period of time.

Question 43

Tax equalization

Answer 43

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.

Question 44

Territorial rule

Answer 44

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.

Question 45

Total compensation

Answer 45

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.

Question 46

Totalization agreements

Answer 46

Bilateral Social Security agreements entered into by many countries to eliminate double taxation for individuals on international assignment.