UpTech Support, a medium sized company based in Silicon Valley, California, operated in the intensely competitive computer industry with its’ main area of focus in the development of software support systems. Throughout the Internet Bubble bust, they were able to survive through their focus on key competencies and building relationships with key clients. Due to this they are now a successful company with offices in the major cities across the US. However, their international operations have remained small, with subsidiaries only in Canada, France, and a recent venture in Australia. These international offices have all been initiated due to following current US clients. VP of Operations, Jessica Kellaway and HR Director, Steve Hegworth are perplexed by a salary problem and are meeting to discuss the following issue: Pierre Lecruet, who had previously been Managing Director at the France location, had been moved into the same position, but in the new Australia office. During a previous performance appraisal, Pierre had noted that his job in France had lost the challenge and that there was no-where else for him to go within the French operation. The decision for him to move to Australia to repeat his success from France seemed to be a mutual one, but now 6-7 months into the position, Pierre seems overly focused on his compensation package rather than the job.
Pierre, knowing if he performed well in the Australian initiative that he would be moved to a top management spot in the US, agreed to take the position eagerly from the business perspective. Yet it was not such an easy decision to make on the personal side. Pierre’s wife Sabine had recently gone back to work after having stayed home with their children for a number of years. Pierre and Sabine decided that Pierre would go to Australia alone for 6 months, which would allow him to acclimate and explore options for living and school and would also allow Sabine extra time working and minimize the disruption in school for the children. While alone for the first 6 months, Pierre was consumed with work, but when his family joined him it became immediately apparent that there were issues.
Issues:
• It had been determined that Pierre, a TCN, would be paid according to his home base salary and upon receiving his first payment he noticed that Australian base salaries were higher on average.
• Sydney is the most expensive city in Australia and finding a rental space for a family showed this.
• The school expected the children to operate in English; a private school in Sydney offered the opportunity for “immersion French” but was highly expensive o Upon request, Steve offered to meet half the cost of the educational expenses
• It was discovered that other companies were paying more benefits than UpTech Support provided; Ex: a company car for spouses as well as employees
• Pierre and Sabine felt that a COLA would help to bring the already lower base salary (compared to Australian counterparts) up to a level that would compensate for the loss of purchasing power they felt at his current Compensation.

Discussion Questions:
1. What information, other than comparative salary levels, should the HR Director, Steve Hegworth, have specifically asked his assistant to collect prior to his meeting with Jessica Kellaway? How would you access these extra data?
First, I would want to know more specifically what type of comparative data had been gathered. Is it specific to UpTech only or is it more generalized across the countries in which UpTech operates. Is the data gathered at the managerial level or is it lower level, or both? I would also want to know what locals in a similar managerial position make. These Compensation benchmarks would be helpful. I would also want a lot more information on the cost of living expenses in Australia; the housing norm, home-country spendable vs. host-country spendable and resulting differentials to help determine amounts of, if any, COLAs needed. Another piece of data to look into is the Foreign Exchange Rate. As Pierre was being paid according to his home base salary from France, initially he did not complain as the exchange rate for Euros was favorable, but this is subject to flux and should be kept in mind.

There are consulting firms, located in the foreign cities who can be used to estimate cost of living expenses. Information may be provided by accounting firms with international operations. Some governments, especially in already developed countries, will collect and publish compensation data. An additional resource may be a professional HR group or industry group which would allow for more accurate benchmarking.

2. How would you recommend that the company proceed in this case?
I would recommend that Steve and Pierre have a face-to-face conversation/negotiation, preferably in Sydney, so that Steve could see the local operation and get a more realistic impression of what the situation truly is. Once more research has been done to determine costs of living in Sydney, Australia, I would recommend that UpTech provide Pierre with a Cost of Living Adjustment based upon the research done on the differentials. Another allowance that I would suggest be provided is an education allowance for the children so that they can continue to receive their education while familiarizing themselves with a foreign language. It is important that some considerations are given to Pierre and his family so that he can focus on his job performance and incentivize Pierre to stay with the company. UpTech may also need to provide additional incentives to Pierre, perhaps in the form of a foreign premium, to convince him that this move to Australia has been worth the trouble to uproot his family, especially since they have already felt they have been unfairly treated.

3. Should UpTech Support develop expatriate compensation policies or continue to treat each expatriate case on an ad hoc basis?
UpTech is still a relatively small company so it feasibly could continue to operate on an ad hoc basis. However, as the company seems to be growing in an international direction I would recommend that they put together an International Assignment compensation policy to set up a standardized framework for the future. Having a framework allows for some customization based on individualized varying situations while having a consistency that provides employees with a sense of fairness and engagement with the company. The more expatriates the company uses, the greater the need for equity of treatment.