Question

U.S. citizen John is an employee of GE, headquartered in the United States. His job requires him to work in Belgium for at least three years. Which method of pay is most appropriate?

a) Local-plus
b) Balance sheet
c) Host-based
d) Home-based

Answer 1

For a U.S. employee working in Belgium for a multi-year assignment, the most appropriate method is the home-based approach, maintaining the employee's link to U.S. living standards while adjusting for costs in Belgium.

Step-by-step explanation:

When a U.S. employee like John works abroad for a company such as GE, the compensation approach must align with the nature of the international assignment. Given John's scenario of working in Belgium for at least three years, the home-based method, also known as the balance sheet approach, is generally considered the most appropriate. This method maintains the link to the home country's living standards and benefits, while also considering cost-of-living adjustments and housing allowances in the host country to ensure the employee is not financially disadvantaged by the assignment. It is also a common method for long-term assignments such as John's because it provides continuity and predictability with the home country's compensation and benefits, which can be beneficial for both the employee and the employer for budgeting and planning purposes.