Free HRCI GPHR Practice Exam with Questions & Answers | Set: 3

Comprehensive and Detailed Explanation:

Alocal market approachinvolves aligning compensation with thestandards and expectations in the host country. Thecost of livingis a critical component in ensuring that pay is competitive and sufficient for local lifestyle.

Cost of livingvaries by region and includes housing, transportation, food, and services

Ignoring this can lead to dissatisfaction or challenges in attracting/retaining local talent

GPHR Study Guide Extract – Global Compensation and Benefits / Compensation Strategy and Localization:

“In a local market approach, compensation is structured in alignment with local labor market conditions. Key considerations include the cost of living, prevailing wages, and local employment norms.”

Hypothetical taxandmobility premiumsare related to expatriate packages, not localization.

Comprehensive and Detailed Explanation:

Strategic thinking in HR means connecting people strategies withorganizational priorities. This includes:

Talent acquisition linked to growth plans

Performance systems that drive business outcomes

Workforce planning aligned to market expansion

GPHR Study Guide Extract – Strategic Global Human Resources / HR as a Strategic Partner:

“Strategic HR professionals translate business goals into people strategies. Alignment between HR programs and organizational outcomes defines HR’s role in value creation.”

Compliance and administration are essential butnot strategicin nature.

Comprehensive and Detailed Explanation:

Ethnocentrismis the belief that one's own culture or ethnicity is superior to others. This mindset isnot limited to specific regions or groups— it existsacross all culturesand can manifest in:

Hiring practices

Leadership selection

Cultural insensitivity in global operations

It presents auniversal challengein cross-cultural management.

GPHR Study Guide Extract – Workforce Relations and Risk Management / Cross-Cultural Awareness:

“Ethnocentrism is a universal human trait. All cultures can exhibit a belief in their superiority, making cultural sensitivity a critical competency in global HR practice.”

Identifying and mitigating ethnocentrism is essential forinclusive global HR policies.

Comprehensive and Detailed Explanation:

Theprimary objectiveof global executive compensation is to align rewards with theorganization’s international business strategy. This includes:

Driving desired behaviors

Supporting talent attraction/retention

Enabling mobility across markets

Reinforcing financial and strategic outcomes

Compensation becomes astrategic lever, not just a payroll function.

GPHR Study Guide Extract – Global Compensation and Benefits / Executive Compensation Strategy:

“Global executive compensation must align with the organization’s strategic objectives to drive performance. It should reflect business priorities, cultural expectations, and the complexity of global roles.”

Equityandstandardizationare important, butstrategy alignmentis the overarching goal.

Comprehensive and Detailed Explanation:

Expatriates who move frequently across borders oftendo not remain in any one country long enoughtovest in pension or retirement plans. This creates fragmented or evennon-existent retirement benefitsacross assignments.

This issue is particularly common in countries where benefits are based ontenure thresholds, like in defined benefit plans.

GPHR Study Guide Extract – Global Compensation and Benefits / Retirement Planning for International Employees:

“Internationally mobile employees often face difficulties in accumulating sufficient service time to qualify for retirement benefits, as benefit eligibility is usually country-specific and tied to length of service.”

Payroll deduction issues or offshore funding may occur, butthe core issueis theloss of continuity in benefit accrual.

Comprehensive and Detailed Explanation:

Localizationmeans that expatriates are paid likelocal employeesin the host country, often with some transitional support or legacy benefits. It involves:

Paying in local currency

Adjusting to local compensation levels

Removing expatriate premiums over time

GPHR Study Guide Extract – Global Compensation and Benefits / Localization Strategy:

“Localization is a compensation model in which the expatriate is placed on the host-country payroll and paid according to local market conditions, sometimes with transitional benefits.”

This is increasingly used for long-term international employees or those who choose to remain abroad.

Cross-border teams withshared leadership responsibilitiesfosterglobal collaborationandknowledge transfer. This aligns with thetransnational model, which balances global integration with local responsiveness.

GPHR Concept:Transnational HR strategies emphasize cross-functional, cross-border collaboration.

Comprehensive and Detailed Explanation:

While training and leadership matter, thedeepest influenceon ethical attitudes stems fromnational culture, which shapes people's views on:

Right vs. wrong

Bribery and gift-giving

Hierarchy, loyalty, and fairness

For example, collectivist cultures may prioritize loyalty over whistleblowing, while individualist cultures may view autonomy as more ethical.

GPHR Study Guide Extract – Workforce Relations and Risk Management / Global Ethics and Cultural Norms:

“Ethical behavior is deeply rooted in cultural norms. HR must be sensitive to these differences while promoting universal standards where applicable.”

Corporate values should align with global frameworks but must be adapted inhow they’re communicated and applied.

Retention of repatriates ensures return on investment and supportsleadership continuity. It reflects effectiveness incareer planning and reintegration.

GPHR Concept:Repatriate retention is a key success indicator in global mobility lifecycle management.

Comprehensive and Detailed Explanation:

Guiding principlesserve as thefoundationfor a global expatriate program. They define:

The purpose of the program (e.g., leadership development, market entry)

Values (e.g., equity, career advancement)

Strategic intent (e.g., support global growth)

These principles ensure alignment and consistency across all assignments and geographies.

GPHR Study Guide Extract – Global Talent Acquisition and Mobility / Framework for Assignment Program Design:

“Establishing guiding principles provides a strategic compass for policy design and program execution. They align expatriate goals with organizational priorities.”

Costs, vendors, and benchmarking are tactical steps that follow thestrategic framework.