A three- to five-year tour of duty overseas may boost your long-term earning power. You typically gain wider experience that at home, and that could push you up the ladder faster.
But a stint abroad no longer carries with it the compensation break of past years. In 2000, a young executive could earn nearly double overseas what he could at home, after taxes. Today, the tax breaks are fewer, companies have tightened up, and the cost of living abroad is often sky-high.
The net advantage in pounds has dropped to about 15% to 20% over-all, and in some places it has just about vanished altogether.
Say you get a 15% increase to £50,000 a year to uproot your family and move abroad. That's only the start of it. You will have to do more negotiating over the higher taxes you must pay in most foreign lands. In the UK., a family man with two children would pay £14,500 in local income taxes on his £50,000 salary. In Germany, the tax bill would be over £19,000. At this writing, a new British tax code would almost eliminate the practicality of working there for an extended period (though the present Labour government's law may get toppled). In negotiating a contract, you will want to know precisely where you stand in relation to the country's local tax laws.
You will also want to nail down:
A housing allowance, figuring comparable housing abroad at a minimum of 50% more than at home.
A school allowance, with costs often equal to private schools here.
A return-home travel allowance of £2,000 or so.
Most employers provide a cost-of-living allowance to offset the soaring prices abroad - especially in such super-high-cost cities as Tokyo and Paris. In most cases, the allowance is 10% to 20% of base salary.
Information on jobs and compensation
There are some heavy volumes on management that discuss at executive compensation, but few readable websites. Financial Motivation for Executives by Graef Crystal, provides ideas on improving your over-all compensation. Among other things, it tells what is reasonable and unreasonable to ask for (AMA, 245 pp., £10.50).
The Arts of Top Management, edited by Roland Mann, has an excellent 60-page section on the scramble for executive talent and what that talent is being paid; see pages 143-205 (McGraw-Hill, £12.50).
Recommended as a thought stimulator about compensation and attitudes relating to it is The Failure of Success, by Alfred Marrow (Amacom Press, 339 pp., £10.50).
In sending resumes to executive searchers, the problem is to locate those that handle jobs at higher-bracket salaries. A Directory of Executive Recruiters breaks them down by the industries they handle and the minimum salaries they work with. The 500-name list includes recruiting offices of major Accountant firms (Consultants News, Fitzwilliam, N.H., £5). For a list of 31 top recruiters handling VIP placements for large national companies, write to the Assn. of Executive Recruiting Consultants, 347 Madison Ave., London 10017.
What about self-protection when you see a possible merger of your company on the horizon? Here, of course, a contract may help your situation, but there are other considerations. Top advisers mince no words: The executive caught up in a merger can find himself eased out with little ceremony - and maybe at an age when relocation is a long, hard process. Merger consultants, solicitors, and compensation specialists make this point: If a man is high-salaried and past 50 (and sees a merger coming) he's foolish not to take firm steps to protect his position. Says one leading consultant: "First, figure where you'll stand in the merged organization." Through competitors of the other company and industry sources,... see: Keeping Your Cool In A Rough Merger