The challenge of expatriate compensation: the sources of satisfaction and dissatisfaction among expatriates

Abstract

Expatriate compensation has been commonly said to be a very complex and challenging issue both for expatriates and for companies. As a result, dissatisfaction with compensation is reported to be very high among expatriates. In the light of this, the present study provides new empirical evidence of recent compensation practices among Finnish expatriates (n=301), and in particular, of the sources of satisfaction and dissatisfaction with the reported practices. The results indicate that the most difficult issues were found to be taxation, availability of information about local cost level/standard of living, currency rate risks, social security and pension issues, as well as spouse-related issues. In contrast to earlier reported findings, the majority of the expatriates were satisfied or even very satisfied with their treatment. The major sources of satisfaction were the lower level of taxation, the higher total salary level and allowances (in particular the car allowance). Furthermore, in the majority of the cases the expatriates reported that the companies had clear compensation principles, that they had enough prior information to negotiate and thus the contract-making situation was not perceived to be very difficult. The reported redesign needs regarding existing compensation packages were found to vary a lot from case to case, but the most common issue was a too low total salary level. In conclusion, some advice is given to future expatriates and international companies.