Question

KYZ, Inc., a U.S. firm, sends its manager, Ryan, to London to manage its operations there. Ryan's salary is still based on the U.S. payment system; however, KYZ offers him a lump-sum payment to offset the additional standards-of-living expense in London. In this case, which of the following approaches to expatriate compensation did KYZ use?

a. The cafeteria approach
b. The localization approach
c. The local plus approach
d.The balance sheet approach

Answer 1

Correct option is (a)

Step-by-step explanation:

Cafeteria approach is an approach of compensation which is used by organizations that send employees to other countries but still pay them a per home country salary system. In addition to the salary, they are paid a lumpsum amount to compensate for difference in the standard of living in home country and foreign country.

Here, KYZ is following cafeteria approach of compensation system.