Many companies have embraced localized, or host-based, pay in order to meet their global staffing needs. These types of compensation packages can sometimes be significantly less expensive than traditional expatriate pay packages, but they must be applied with care and in appropriate circumstances.
Localization: The process of transferring an employee who used to be under expatriate remuneration terms and conditions to local conditions
Local or host-based approach: A compensation approach intended to integrate the employee into the local market structure by paying him or her according to the local market rate
Local plus: Local employment conditions with supplementary expatriate benefits and allowances
Hybrid approach: A compensation approach applying the higher of the home and host country approaches, depending on the home/host location combination a net to net calculation comparison is done
Prepare for success
To build effective policies and provide equitable host-based compensation packages, you need reliable and comprehensive data on international assignments and local salaries. As a global leader in talent management, Mercer can help you providing the expertise and information your organization requires.
Set your policy
More than 60% of multinationals use some form of Local Plus approach, yet only about 40% have a Local Plus policy. Local Plus is a cost-effective but complex method that requires the balance of a systematic approach and flexibility.
Mercer works with multinational companies to develop policies that find this balance, informed by our experience working with the largest multinationals on their programs and by decades of research into assignment policies and the latest trends in alternative assignment practices.
Mercer can help you:
- Navigate between the different localization options
- Assess salary differentials in over 125 countries using Mercer’s Total Remuneration Surveys (TRS) and evaluate potential compensation gaps between the home and the host locations
- Understand local benefits, social security/pension practices and how they could impact international assignees
- Determine what “plus”, if any, should be added to the host local package and set a consistent approach for local plus packages globally
- Design a consistent global localization or local plus policy that combine fixed core assignment package components and more flexible country specific benefits
Benchmark your policy
Mercer collects benchmarking data on multinational companies' host-based approaches to compensation and benefits for international assignments across all geographies.
Build local or local plus packages
Mercer’s Compensation Localizer calculator helps you assess how home pay compares to the host compensation program.