International compensation is an interesting and complicated subject. This includes the pay of people from one country who take a one-time assignment overseas, those who work for a company that is based in another country, those who work for an international company but as workers move from country to country, and a host of other examples. This chapter discusses a number of issues important to paying employees internationally, including culture, institutional issues, and specific types of workers. We should keep in mind that these differences by country could also be true within organizations. When considering international pay, people sometimes lose sight of a company business strategy and compensation strategy. Focusing on international issues could inappropriately overshadow other important internal issues (Milkovich and Newman, 2008).

Culture

Culture is fundamental to the issue of international compensation. Many discussions of culture with respect to international compensation start with Hofstede's (1980) big four issues: (1) power distance, (2) uncertainty avoidance, (3) individualism versus collectivism, and (4) masculinity versus femininity. Each of the four is considered more carefully here. Marin (2008) offers a clear outline on which some of the following country examples are based.