Describe the advantages and disadvantages of the going rate approach to international compensation and the balance sheet approach.

Advantages of Going Rate Approach:
1. Allows organizations to use the same set of data and a standard approach for making international compensation decisions.
2. It is relatively easy to use, as it does not require complex calculations or financial analysis.
3. Encourages consistency across international locations in terms of employee compensation and benefit packages
4. Provides an opportunity for companies to stay competitive with other employers in local labor markets by setting salaries at going rates.
Disadvantages of Going Rate Approach:
1. Does not fully consider factors such as job responsibility, performance, and skills specific to the individual employee or the organization’s overall strategy so may lead to inequity between employees within an organization doing similar work in different countries/regions;
2. Can be expensive if the company continues to pay wages above market rate; and
3. May not be effective in highly competitive markets where labor costs are rapidly changing due to economic conditions or technological advances that make certain jobs obsolete more quickly than before, resulting in higher turnover among employees who cannot keep up with these changes or do not have enough skill sets needed for higher-level positions being introduced into the market by competing firms offering better salaries and benefits packages than what is provided by their current employer through the going rate approach.

Advantages of Balance Sheet Approach:
1. Its ability to accurately reflect differences between two jobs—and therefore helps ensure equity between them—by taking into account many factors including experience level, education level, duties performed, performance reviews etc.;
2. The flexibility this method provides when creating a fair compensation structure that takes into consideration both internal comparisons (with respect to other employees performing similar roles) as well as external comparisons (with respect to what competitors are paying).
3 Disadvantage of Balance Sheet Approach: 1 Difficulties associated with collecting accurate data on external wage scales; 2 The complexity involved in evaluating multiple variables when making decisions; 3 Potential risks associated with implementing salary structures based on only one factor rather than considering all relevant aspects related to job responsibilities (e.g., skill set required versus actual experience possessed).