Global compensation has drawn the attention of many HR managers. Compensation management is becoming progressively more difficult for organizations to control as employees’ needs are increasing day by day. Expatriate compensation policy is important and needs to be looked into before embarking on an international assignment. Apart from compensation approach and types, one has to understand the legal system of that particular country. Compensation in the international context is directly related to performance management as well as to employees’ satisfaction. This article throws light on how HR policies differ from country to country, especially in terms of compensation.

In the wake of increasing globalization, more and more Multinational Companies (MNCs) have implemented transnational business strategies, characterized by global incorporation as well as local responsiveness. If Human Resource Management (HRM) is to provide a support function, it is suggested that strategic developments should be reflected in the compensation strategies of MNCs.

Compensation system in the international context is a very critical decision for any HR manager, because compensation is not only governed by the norms of the company but also by the legal framework of the country. If a company has its operations overseas, then the HR manager has to satisfy and convince the expatriates while putting forward the compensation package. Employees should get a balance pay considering the salary structures of both, the host as well as the home country.

To develop a competitive advantage in this age of globalization, the compensation system of a particular organization should not only support total strategic plan but should also develop a plan of action accordingly.

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