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Is It Just About The Money? New Perspectives On Expatriate Compensation

Special issue call for papers from Journal of Global Mobility

Paper submission deadline: 30th April 2015

Guest Editors: Yvonne McNulty and Michael Harvey

Expatriate compensation is often regarded as a key component of effective international assignment management (Bonache & Fernandez, 1997; Harvey & Moeller, 2009), yet it has long been a source of frustration for many multinational companies (MNCs) (Chen, Choi, & Chi, 2002; Foote, 1977; Harvey, 1993; Suutari & Tornikoski, 2001). Compensating expatriates is undoubtedly complex, complicated by fluctuating exchange rates, inflation, challenging locations in emerging markets, variable income tax rates, and a range of new compensation practices (Dwyer, 1999; Phillips & Fox, 2003). A survey by Ernst & Young (2010) found that 67 percent of mobility managers report “compensation packages” as the biggest area where international assignee expectations are not met. Yet prior research suggests that expatriates do not seek or accept international assignments purely for financial reasons (Borstorff, Harris, Feild, & Giles, 1997; Dickmann, Doherty, Mills, & Brewster, 2008). Indeed, there is compelling evidence that expatriates have many non-financial reasons for engaging in global mobility, with career enhancement and progression, seeking a personal or family adventure, and fulfilling a lifelong dream among them (Hippler, 2009; Selmer & Lauring, 2012). Why then is expatriate compensation such a challenge?

A successful compensation strategy involves keeping expatriates motivated while maintaining a competitive advantage through the meeting of MNC corporate goals and budgets (Latta, 1998; Morris, Clark, & Pennings, 1997). There is also the challenge of allaying compensation disparity between expatriates and local employees, which has been identified as a key determinant of dissatisfaction and lower morale among host-country nationals (HCNs) that work directly with international assignees (Leung, Wang, & Hon, 2011). Moreover, the fierce competition for foreign talent has caused issues in executive compensation (Carpenter, Sanders, & Gregersen, 2001), not because it is driving salaries up as one would logically expect, but because it is driving salaries down. Consider, for example, that global mobility bears considerable costs that are prohibitive for many companies, the response to which is to engage in cost-cutting. Whereas in years gone by, MNCs used ‘rich’ compensation packages to create a “home away from home” as an incentive to relocate (predominantly the balance sheet or full package approach; see Sims & Schraeder, 2005 for an overview), the availability of more expatriates willing to accept reduced packages such as local-plus and to localise in the host-country has caused a decline in the need for home-country compensation approaches (McNulty & Aldred, 2013), particularly in Asia (Diez & Vierra, 2013; ORC Worldwide, 2008). Local-plus is an approach in which expatriate employees are paid according to the salary levels, structure, and administration guidelines of the host location, as well as being provided, in recognition of the employee’s foreign status, with special expatriate benefits such as transportation, housing, and the costs of dependents’ education. It is worth noting that not all expatriates on local-plus receive the full range of additional benefits, these being at the discretion of the employing organization and largely determined by the location of the assignment (e.g. hardship versus non-hardship location), among other factors (Stanley, 2009). Thus, while the traditional reasons for needing expatriates (e.g. knowledge and skills transfer, global control and culture, career development) remain valid, more localised and local-plus expatriates now have a level of managerial talent that they can often compete for jobs with “full package” expatriates.

But, there are opportunity costs associated with expatriate compensation as a result of these new approaches: changes in the assignee profile in terms of the types of employees that are willing to engage in global mobility (McNulty & Aldred, 2013); increases in turnover when expatriates leave their job during an assignment and join a competitor (Brookfield Global Relocation Services, 2013); and an increasing number of third-country nationals and self-initiated expatriates that are willing to accept localized employment, thereby reducing MNCs’ reliance on parent-country nationals. Yet, our understanding of these issues is scant, with only a limited number of studies exploring, for example, global versus expatriate compensation approaches (e.g., Gomez-Mejia & Welbourne, 1991; Salimaki & Heneman, 2008), and few studies of an empirical nature (e.g., Harvey, 1993; Leung et al., 2011; Lowe, Milliman, De Cieri, & Dowling, 2002; Stone, 1995; Welch, 1994).

In this special issue, we provide a platform for new approaches to expatriation compensation with a view to extending the very limited knowledge about this under-researched and under-developed, yet highly relevant, topic. We invite submissions focused on any of the following themes, noting this is not an exhaustive list and other topics are welcome:

  • What are new approaches to expatriate compensation? What are the drivers for their implementation?
  • How important is expatriate compensation to expatriates? What are the “hygienic” versus “motivator” factors pertaining to expatriate compensation? What is really “important” to (a) MNCs, and (b) expatriates?
  • What are the implications of the rapid increase in “local-plus” and other host-based packages such as localization? In what regions of the world are these compensation approaches taking hold, and why?
  • How can managers deal with expatriates’ compensation concerns and develop packages that motivate and reward for optimum return in terms of ROI, assignee satisfaction, and global performance success?
  • What are the advantages and disadvantages of traditional versus new approaches to expatriate compensation?
  • How should the various types of assignees be compensated (i.e., PCNs, TCNs, SIEs, among others)? What are the implications arising from differences in compensation approaches among different types of assignees?
  • To what extent are changes to compensation and the process through which companies manage compensation as important as the remuneration itself?
  • What implications arise when expatriates are transitioned from “legacy” (i.e., initially deployed) compensation plans to new approaches?
  • Should compensation approaches be different for male versus female expatriates?  For parent country nationals versus third country nationals? For traditional versus non-traditional expatriates? For inter-regional versus intra-regional assignees?
  • How do expatriate compensation policies and practices affect host country nationals?
  • When expatriates receive reduced compensation packages such as local-plus, do career benefits as a form of non-financial compensation mitigate salary losses?

Submission Process and Timeline

To be considered for the special issue, manuscripts must be submitted no later than 30 April, 2015, 5:00pm Eastern Standard Time. Papers may be submitted prior to this deadline as well. We welcome quantitative, qualitative (including case studies) and conceptual papers that provide unique insights into expatriate compensation and its practice. Findings and/or conceptualizations should have theoretical and policy implications, and seek to inform management practice. The editors of the Special Issue will be pleased to discuss initial ideas for papers via email.

Submitted papers must be based on original material not under consideration by any other journal or publishing outlet. The editors will select up to 5 papers to be included in the special issue, but other submissions may be considered for other issues of the journal. All papers will be subject to a double-blind peer review in accordance with the journal guidelines and will be evaluated by at least two reviewers and a special issue editor. The final acceptance is dependent on the review team’s judgments of the paper’s contribution on four key dimensions:

  1. Theoretical contribution: Does the article offer novel and innovative insights or meaningfully extend existing theory in the field of global mobility?
  2. Empirical contribution: Does the article offer novel findings and are the research design, data analysis, and results rigorous and appropriate in testing the hypotheses or research questions?
  3. Practical contribution: Does the article contribute to the improved management of global mobility?
  4. Contribution to the special issue topic.

Authors should prepare their manuscripts for blind review according to the Journal of Global Mobility author guidelines, available at www.emeraldgrouppublishing.com/jgm.htm. Please remove any information that may potentially reveal the identity of the authors to the reviewers.

Manuscripts should be submitted electronically at: http://mc.manuscriptcentral.com/jgmob. Authors should select the special issue title New Perspectives on Expatriate Compensation from the drop down menu.

For enquiries regarding the special issue please contact either of the two Guest Editors, Yvonne McNulty at ymcnulty@expatresearch.com or Michael Harvey at mharvey@bus.olemiss.edu.