Expatriate compensation packages: what do employees prefer?

Abstract

Purpose

Heterogeneous employee preferences may encumber employers' attempts to standardize expatriate compensation packages. The purpose of this paper is to outline an empirical approach that informs employers about their employees' preferences concerning an international assignment.

Design/methodology/approach

Utility theory and conjoint measurement techniques are applied. Employees, it is argued, derive utility from the multiple characteristics of the assignment in terms of working conditions, career prospects, and living conditions. Employees perceive that utility relative to their country‐specific status quo. Such preferences may be measured with conjoint analysis.

Findings

To illustrate the methodology, German and Spanish employees in one company were given the scenario of an assignment in the USA. Measured preferences, though partly heterogeneous, were systematically related to the home country's institutional and cultural environment (societal effect).

Research limitations/implications

More countries should be included in future studies. Studies of this kind may be related to the concepts of institutional and cultural distance.

Practical implications

Based on these findings, worldwide policies and procedures on expatriate compensation packages may be formulated to strike a better balance between standardization and the needs of a heterogeneous global workforce.

Originality/value

The paper presents a first systematic model of the preferences that guide the employee decision to accept or decline an international assignment, and it illustrates how these preferences can be measured.

Citation

Warneke, D. and Schneider, M. (2011), "Expatriate compensation packages: what do employees prefer?", Cross Cultural Management: An International Journal, Vol. 18 No. 2, pp. 236-256. https://doi.org/10.1108/13527601111126049