Factors to consider when setting wages Essay Example | Topics and Well Written Essays - 1750 words

Factors to consider when setting wages - Essay Example It is necessary to consider some parameters when determining the wages to be paid to employees. When a multinational corporation is operating in a foreign country, the human resource director has to set the appropriate wages for both the local employees and expatriates. There exist differences in the cost of living between the host country and the home country. When expatriates move to a new environment, they expect some changes in their salaries. This is because there may be hardships experienced while working in a foreign country. The wages of expatriate managers and engineers in the case of multinational food processing company is likely to be influenced by the salary scales in their home countries. On the contrary, the wages of local managers, engineers, and manufacturing staff will be determined by factors in the local markets (Ajami, 2006). Factors to consider while setting the wages for expatriate managers and engineers The calculation of expatriate pay borrows a lot from the wages that the expatriates could receive if they were working in their home country. ... For example, the expatriates may decide to settle in the capital cities of Australia, Russia, and India. The cost of living in the capital cities is always high since some of the lavish estates tend to be occupied by the elite and the political class. Given the high cost of living in such places, it would be vital for the HR director to offer competitive wages to the expatriate engineers and managers (Ajami, 2006). Since multinational companies establish their businesses in the key towns and cities of the host countries, the setting of wages for the expatriates should consider the high cost of living in such cities. Therefore, as a human resource director, I would set wages that can be adequate for the expatriate managers and engineers to cater for their needs. Another vital factor, which I would consider as a human resource director while determining the wages of expatriate managers and engineers, is the law governing the compensation packages for the expatriates. Czinkota (2008, p. 323) observes that while setting the wages of expatriate managers, it is crucial to consider both the law of the home country and the host country laws regarding the wages of expatriates. As a human resource director, it is vital to have the knowledge of both the local laws and the laws of the host country regarding payment of wages. This is remarkably crucial in order to ensure that the set wages do not conflict the local laws. The laws of host countries dictate the standard wages that should be paid to expatriates. Setting high wages for the expatriates may contradict the local laws in the host countries and lead to conflicts between the multinational corporation and the government of the host country. The other crucial factor to consider