The balance sheet approach to expatriate compensation equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home.
The balance sheet approach is designed in order to equalize the purchasing power of employees at comparable position levels living abroad and in the home country and to provide incentives.
So the most common approach to expatriate pay is the balance sheet approach. This approach equalizes purchasing power across countries so that employees can enjoy the same living standard in their foreign posting that they enjoyed at home.
Hence, the balance sheet approach is used to set expatriate compensation.
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