Certified Relocation Professional (CRP) Practice Exam

Short-term international assignments typically use which compensation plan?

1. A host source compensation plan

2. A unique international case structure plan

3. A combination home source and host source compensation plan

4. A home source compensation plan

The correct answer is: A home source compensation plan

The reason why a home source compensation plan is most commonly used for short-term international assignments lies in its alignment with the employee's current compensation structure and the organization’s cost management strategies. A home source compensation plan enables companies to maintain an employee's existing salary and benefits as they transition to a temporary international role. This approach helps to preserve the employee’s financial stability and ensures their compensation remains consistent with their home country’s standards. Short-term assignments, often lasting a few months to a year, do not typically warrant the complexities of adjusting salaries to match the cost of living or tax implications in the host country, which is what is generally handled by other compensation plans. By using a home source structure, organizations can also mitigate potential issues related to currency fluctuations and tax liabilities associated with foreign earnings. While other compensation structures, such as a combination plan or a host source plan, may be applicable in different contexts—especially for long-term assignments—short-term international roles benefit most from maintaining the established home-based compensation practices.