For 70 years, AIRINC has been a pioneer in global mobility solutions, helping companies and their talent navigate international assignments with confidence. Over the decades, one compensation model has proven its resilience: the Balance Sheet Approach. Much like AIRINC itself, this method has stood the test of time.
Why? Let’s explore the top four reasons this approach remains the gold standard for expatriate compensation.
- It Works in Any Country Combination
The Balance Sheet Approach offers unparalleled flexibility. By anchoring compensation to the employee’s home-country salary and benefits, it ensures consistency no matter where in the world they are posted. The underlying principle is that an expatriate’s employment-related compensation (e.g., Base or Regular Salary, benefits, bonuses, etc.) will remain unchanged during an international assignment that may typically span anywhere between one and five years. Unlike host-based approaches, which can vary widely depending on local pay scales, the Balance Sheet preserves equity and stability. Your employees can relocate from New York to Tokyo or from London to São Paulo without worrying about financial shocks.
- Protects Employees Against Excess Costs
Trust is key in global mobility. The main reason the Balance Sheet is used is because it conveys economic neutrality to the employee. The company can offer the employee the peace of mind that they will not lose out financially on an expatriate assignment. The Balance Sheet Approach was designed to ensure that an employee living and working abroad at the behest of his/her employer, would not be at a financial disadvantage (or advantage) relative to a peer performing the same job function back home. After all, a fundamental aspect of Equity in the Workforce is fairness in pay and benefits.
By accounting for differences in taxes, housing, and living costs, this method shields expatriates from unexpected expenses. It demonstrates a clear commitment to their well-being, making international assignments attractive and stress-free.
- Adapts to Inflation and Exchange Rate Fluctuations
Recent years have shown how volatile global economies can be, with high inflation and significant exchange rate shifts impacting many countries. The Balance Sheet Approach adjusts regularly to reflect these changes. By rebalancing allowances and compensation, it ensures expatriates maintain their purchasing power and standard of living.
Best practice companies update the COLA two to four times a year to reflect changing economic conditions.
- Simplifies Repatriation
Returning home can be as challenging as moving abroad. The Balance Sheet Approach eases this transition by allowing employees to slide off their allowances and continue with their home-country salary and benefits.
Since the employee remained in the Home Country compensation/organizational structure, there is a seamless transition home from a compensation and benefits perspective. This process helps reintegrate talent smoothly, reducing reverse culture shock and ensuring they remain engaged and motivated.
A Legacy of Excellence
For seven decades, AIRINC has been at the forefront of global mobility, and the Balance Sheet Approach has been a cornerstone of that success. It’s more than just a compensation model — it’s a proven strategy that fosters trust, consistency, and adaptability.
Back to Basics Webinar on the Balance Sheet
Why not watch our 30-minute webinar to master the Balance Sheet Approach in Global Mobility! Discover the fundamentals, learn best practices for long-term success, and explore real-world scenarios. Perfect for beginners and seasoned professionals looking to refresh their expertise — don’t miss out!