First I have a question:
What comes first? Business, right?
…and I answer: Yes, 99% it is.
Split pay is a method a business may use to pay its employees who are on international assignments.
Split pay is generally used in Global Mobility, where you can protect the employee from the effects of “being mobile” especially between geographical areaes where the income, cost of living and even quality of living difference is substantial. It also transfers exchange-rate risk from the employee to his company and makes it easier for companies and their employees to comply with the host country’s regulations for work and for transferring money out of the country.
If you consider split pay in any of the markets under your responsibility; most probably that country is in a trouble; either financially or legislative.
So, it sounds like a great support to the business, to the employee, but… Yes, there’s a but…
The administrative burden of split pay is complicated and huge yet it does not solve all your problems. Then the only question comes to mind is: Is it really worth to keep doing this?
I’ve answered this question many times back in the early days with a “No!”.
Was that the correct answer?
You have to understand the business context and its linkage with the very basic need to talent.
Usually, such countries have an additional problem beside socio-economic problems, which is TALENT. When I talk about talent, she’s not the star of the company or the 14-years old singer on TV. When we, HR professionals, talk about talent we mean professionals who are able to manage/support/develop business in the circumstances their capabilities and skills are required.
Hence you’re developing a business or even trying to stabilize your market coverage, you need those talents.
So, it has a double effect. Additionally, these countries lack talent.
So, that’s why you are mostly forced to mobilize your talents from other parts of the world and consequently you will need to process a split pay, ALTHOUGH it will create you so much trouble in the administration.
If you can look from business perspective, there is no need to be stuck with a dilemma because the formula is so simple as I told you in the beginning:
Business comes first. 99%.
P.S.: I’ll try to write about the common issues you can have when processing a split pay in another post. Oh, by the way, I’m still not a fan of split pay.