If the HR team in Germany follows a home-based approach to assignment pay, it may find that:

The home-based, or "balance sheet," approach to expatriate compensation is designed to maintain the employee's home-country purchasing power and standard of living while on assignment. This requires a complex series of calculations for various allowances (cost-of-living, housing, hardship) and tax equalization. Managing these components for each expatriate is administratively intensive and requires specialized expertise and resources. Consequently, a primary and well-documented outcome of using this approach is a significant increase in the administrative burden and associated costs for the HR department.

A. The desire to remain abroad is influenced more by career and personal factors than by the specific compensation methodology.
C. This approach is designed to maintain equity with home-country peers; while it can create inequity with host-country nationals, its most direct impact is administrative complexity.
D. While Chinese laws affect compensation, they do not make the home-based approach uniquely or prohibitively costly; the approach is inherently complex and costly regardless of location.

1. Bonache, J., & Zárraga-Oberty, C. (2008). Compensation and benefits of the international executive. In P. Sparrow (Ed.), Handbook of International Human Resource Management: Integrating People, Process, and Context (pp. 143-170). Wiley-Blackwell. (Section on "The Balance Sheet Approach" details its components and administrative complexity, p. 146).

2. Dowling, P. J., Festing, M., & Engle, A. D., Sr. (2017). International Human Resource Management (7th ed.). Cengage Learning. (See Chapter 6, "International Compensation," which describes the balance sheet approach as complex and administratively burdensome, requiring significant HR resources).

3. McNulty, Y., & De Cieri, H. (2011). Global mobility: the challenges of assigning and repatriating international staff. Swinburne University of Technology, Faculty of Business and Enterprise. (This paper discusses the various approaches to expatriate pay, noting the high administrative overhead of the balance sheet method, p. 12).