Pay refers to money that an employee gets for regular services. Compensation can be defined as different forms of financial returns and benefits and substantial services which an employee gets due to employment relationship with organisation. Reward refers to giving something valuable or worthwhile to the employees for their excellent performance. The most common form of reward is increase in pay.
International organisations face two issues when developing rewarding and pay system of employees in home country and foreign country. Localisation refers to paying employees in accordance to local standards of each country. Standardisation means global standards of reward and pay.
Employees who commit to an international assignment get both pay and compensation. Their pay includes base pay, allowance, contingent pay, benefits and non-financial benefits. The organisation pays their rent, electricity bill, travel expenses and other personal costs.
The traditional work trends are challenged and new work trends are introduced. For majority of the employees, pay is not the only motivator. There are other factors that motivate employee and hence help them perform better. The concept of total reward includes all aspects of job that an employee values (Chen and Hsieh, 2006). It includes elements such as safe and healthy work environment, opportunities for career growth and development, learning opportunities, better benefits, and insurances such as health insurance or med claim, security of the employees. Total reward system is developed because of inefficient exclusively-extrinsic-based reward systems and approaches.