With even the smallest companies opening offices overseas, understanding expatriate benefits and compensation is a must for any business. Providing expat benefits involves more than putting together a nice retirement package or providing health insurance. Expat compensation may also include reimbursement for relocation, or to pay for the technology needed for expat employees to stay in touch with friends, family, colleagues and associates in the United States. You'll also need to understand any foreign laws and regulations that impact the kind of expatriate compensation you're allowed or required to offer.

To understand and implement expatriate compensation packages, you'll probably need training, either in a formal setting or one-on-one from a consultant. Expatriate benefits education and training can include the following:

1. Getting a degree in human resources with a focus on management and compensation
2. Taking workshops, seminars or classes
3. Hiring a consultant to train your staff about expat employee benefits
   

Action Steps
The best contacts and resources to help you get it done

Get a human resources degree that covers expatriates compensation

At the very least, you'll need an undergraduate or graduate degree in human resources, which can serve as a foundation for more specialized training. Most universities offer both bachelors and masters, or even doctoral degrees, in human resources, including how to manage expatriate employees.

I recommend: Consider an MBA with an emphasis on human resources, like that offered by Columbia University. Or, search for online human resource degree programs at HRDegrees.

Sign up for a seminar, workshop or class focusing on compensation for expatriates

A seminar, workshop or class, either in-person or online, can serve as a refresher to your human resources training, or provide more in-depth instruction in specific expatriate topics.

I recommend: The ERi Distance Learning Center offers an online / self-study course called "Determining an Expatriate's Compensation." The course covers how to set compensation for employees on foreign assignments, including compensating them with a series of allowances, and how to "tax equalize" their compensation. The course is designed for HR managers and generalists, and requires some college-level coursework and algebraic training as prerequisites. Associates for International Research, a consulting firm, offers seminars for executives who manage expatriate programs.

Hire a consultant to teach you and your staff about expatriate compensation and benefit packages

While many consultants and coaches will create and oversee expatriate benefit programs, many will also train you so you can do it yourself. This method is more 'hands-on,' and will allow your company to be more self-sufficient, rather than having to turn to an expert every time you have a question. An added benefit is that you can train your entire company at once, rather than only select employees.

I recommend: IBIS provides international HR consulting and training on everything from compensation to sick time to vacation to overtime. IBIS will provide country-specific legal information, in addition to helping companies put together efficient, tax-effective programs. The firm also ensures that benefits for expatriates are competitive with local practices. Worldwide Consulting Group will teach your company how to put together expatriate compensation programs, create expatriate policies, provide expatriate medical insurance, and even repatriate employees.

Expatriate compensation for overseas employees is complex at best. There are companies who can handle both expat compensation and expat benefits professionally and efficiently, making it a great deal easier for the employee to get business done for you.

Not only do expatriates face the challenges of being away from family and friends for long stretches, when expats do get to talk to family members an friends, it is typically at odd hours or through static-filled phone calls. The cost of managing expatriate benefits should include compensation for both their work while on the job as well as the challenges they face outside of their work environment, including phone and video technology for communicating with family in the U.S.

The key to handling expatriate compensation is to recognize the challenges expatriates face, and compensate accordingly. Weigh the following when you put together expatriate compensation packages:

1. Internal versus external support for expat employee benefits;

2. Foreign laws and regulations for expat compensation; and

3. Salary hikes in place of complete expatriate compensation packages.

Action Steps
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Offer solid expatriate benefit management

Large and well-established expatriate job benefits specialists are more expensive, but well worth it. An in-house operation comes with the hassle of staying up-to-date on country-specific foreign policy surrounding everything from health care to local customs. Easily accessible corporate support should always be an expatriate benefit. So, even if you outsource expat benefits management, be sure your expatriate has a direct contact for any questions an in-house expatriates compensation specialist can't handle.

I recommend: Contact Global LT for an extensive list of expat benefits in Hong Kong, Germany and London. Estimate the cost of managing international expatriate benefits in-house with Equus Software. Fill out an online form for a free CD demo.

Provide help with foreign health care in expat compensation packages

In a survey of at least 700 expatriates, 55% felt a lack of health care support hindered their job performance and peace-of-mind. If an expat isn't feeling well or is battling ongoing health issues, chances are it will have a dire effect on work performance. Turn to well-established benefits specialists for medical care and compensation. Offer comprehensive packages and include coverage for office and emergency visits. For expats who spend more than 2 years at a time overseas, find a package covering intensive care and transplants.

I recommend: Get a quote from CIGNA, one of the biggest medical providers in many overseas locations. Another trusted company in international health care providers, Aetna, offers coverage through Goodhealth.

Find expatriate salary information online

Salary is the deciding factor when it comes to making the decision to work in another country. When employees leave home, they leave behind family and friends for foreign customs, and they are typically well compensated. If you decide not to offer a benefits package, you can handle expatriate compensation with salary as long as you offer some other kind of support system.

I recommend: Survey salaries by location with Executive Resources Limited. Go to SalaryExpert for a full line of worldwide salary and cost-of-living calculating products. Expatica.com and TripResource.com both offer free resources and links for a variety of expatriate needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Select an expatriate medical package that covers expenses in both the U.S. and abroad, in the event the expatriate needs care when returning for holidays or family visits.

Many global-based companies require that their employees have a degree of international work experience to be promoted to higher-level positions. Expatriate work assignments challenge both the workers and their families, and most globally based businesses offer expatriate incentive packages that compensate employees. To understand the compensatory packages, it’s important to learn the expatriate benefits key terms

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Expatriate

An expatriate is an employee who is not a citizen of the country in which the business operations are located. Expatriates usually don't plan on living in their new country permanently, but if they do they usually retain their citizenship in their native country.

I recommend: There is more information about expatriates at Wise GEEK.

Localization

Localization is the process of changing the expatriate benefit package to a plan that is the same as one offered to employees locally.

I recommend: Mercer has a detailed description of the various aspects of localization.

Tax equalization

Tax equalization ensures that while the expatriate employee is working in another country, he or she pays the same amount of Social Security taxes and income taxes as if they were working for the business while living in the United States.

I recommend: Tax Me Less supplies a detailed summary of tax equalization for expatriates and can help corporations formulate benefits that include tax-equalization policies.

Expatriate compensation

The salary base rate and increases must address the changes that are seen in the cost of living and the overall experience and job responsibilities that employees and their families undertake when they relocate to another country.

I recommend: More information about expatriate compensation programs is available at Business & Legal Reports.

International/expatriate medical insurance

International/expatriate medical insurance provides expatriates with coverage for medical expenses that occur when the employee is traveling, or living, temporarily in a foreign country. This type of coverage usually extends to major medical expenses like hospital stays and surgery done in an emergency.

I recommend: Insure has extensive information for any employee considering work oversees.

Balance-sheet approach

The main focus of using the balance-sheet approach is ensuring that expatriate employees have a lifestyle in the host country that is equivalent to the lifestyle they would have at home. Factors such as housing, quality and cost of living, and transportation are taken into consideration when using this approach.

I recommend: A detailed summary of the balance-sheet approach can be found at OCR Worldwide.

To begin a tutorial on expatriate benefits for beginners you must first understand what an expatriate is. An expatriate is a worker who is temporarily or permanently residing in a foreign country. In other words, one that is different from their original legal residence. Because of the global economy, companies place workers all over the world. Normally associated with Western countries placing employees in non-western countries, an expat may also be a Westerner living in a Western country such as an American living in the U.K. Other examples of expatriates include a Japanese citizen working in New York.

Because of the difference in standards of living and currency fluctuations, companies strive to ensure that their employees who work overseas have equitable expatriate compensation and benefit packages. Larger companies have internal human resource professionals who are responsible for managing expat compensation and expat benefits. Small to medium sized firms normally contract the management of benefits for expatriates to consultants or firms that specialize in international expatriate benefits. To learn more about expat employee benefits:

1. Research expatriate benefit consultants.

2. Investigate expat benefits packages offered by insurance companies.

3. Consider attending a seminar on expat compensation.

4. Join an online community for expatriates.

Action Steps
The best contacts and resources to help you get it done

Use expat employee benefits consultants to help you conduct a competitive analysis

You will want to research firms which can provide competitive and cost effective programs for the wide variety of benefits employees will need. The services that consultants offer include benefit plan, design and support, insurance vendor identification and selection as well as benefit plan implementation and transition.

I recommend: McKenzie Taylor provides expatriate job benefits services such as retirement plans, group life and long term disability as well as fund management. Worldwide Consulting provides information on expatriate compensation packages as well as expatriate benefits.

Compare and contrast insurance providers' expat benefits packages

Insurance providers can tailor your expat benefit offerings to mirror domestic benefit plans and you will want to find a carrier which can coordinate benefits in the specific countries where you have expatriates.

I recommend: American International Group offers a range of expatriate benefit products. CIGNA offers a variety of medical plans for expatriates in a variety of locales.

Attend seminars or join online communities that provide information on expat benefits

For objective information on expatriate job benefits, attend a seminar where you can hear about real world cases and get your questions answered in break out sessions. Also, joining an online community is an excellent way to gather information on a wide variety of topics related to expat benefits.

I recommend: Associates for International Research holds seminars in the U.S. Europe and Asia on expatriate compensation. expatriates.com is an online community for expatriates.