Determining employee compensation levels across different countries and cultures isn't easy, but putting in the time and effort to get it right is essential. Pay significantly impacts your company's ability to attract and retain great people, keep your team happy, and stay on the right side of local labor laws.
However, every country where you hire presents variables that must be taken into account when developing a fair compensation philosophy.
Pay expectations, tax structures, labor laws, and cost of living can differ drastically, and what's considered competitive in one market might be way off the mark in another. While local nuances matter, you still need a cohesive global strategy ensuring internal equity and financial sustainability to make informed compensation decisions.
Key takeaways:
- Global compensation decisions must balance consistency with local realities, including cost of living, labor laws, and cultural expectations.
- An effective compensation strategy combines internal salary data with external benchmarks from trusted compensation platforms.
- Fully loaded employment costs, such as employer taxes and statutory benefits, can vary by country and must be factored into compensation planning.
Internal vs. External Data Sources: What You Need and Where to Find It
A well-informed global compensation strategy requires a mix of internal insights and external benchmarks.
Internal data tells you what kind of compensation packages your organization currently provides and where gaps or inconsistencies exist. External data, on the other hand, helps you understand what's happening in the market so you can stay competitive and attract and retain talent in various countries.
Internal Data: Pulling Insights from Payroll, Performance, and Turnover
Begin with your internal data sources, including current salaries, job levels, compensation bands, and historical raise data. Retention or turnover patterns, especially when broken down by role and region, can also reveal whether your pay strategy works effectively or needs attention.
Don't overlook your talent acquisition team, either. They're on the front lines, discussing pay ranges and negotiating offers with candidates. Tracking what candidates are asking for — and what they ultimately accept — can offer valuable insights into market shifts.
External Data: Where to Find Reliable Market Benchmarks
External data sources are just as critical, especially when expanding into new countries or re-evaluating pay for global roles. In some regions, pay transparency laws make it easy to find published salary ranges.
Base salary benchmarks from third-party providers like Salary.com, Payscale, and the Radford McLagan Compensation Database can provide reliable salary baselines. At the same time, cost-of-living indexes and labor market trends offer context for interpreting that data.
It’s also a good idea to research the compensation your competitors offer. You can look for this information on job boards like Glassdoor, Indeed, and LinkedIn to see what salaries are listed for open positions.
Avoid Creating Accidental Pay Gaps
As you gather this data and create your compensation strategy, keep existing employees in mind. For instance, if market data shows rising pay rates in a specific region, you may need to adjust both new hire offers and existing employee salaries to maintain fairness and prevent pay inequity.
Ultimately, the goal is to create a compensation structure that reflects your organization’s values and the realities of the global talent market.
Tapping Into Vendor Tools With Market Benchmarking Data
Several platforms provide comprehensive compensation benchmarking tools that can help you make informed pay decisions, including:
- Justworks: Its HR tools include basic compensation benchmarks particularly useful for U.S. teams.
- Carta Total Comp: Popular among tech companies and startups, Carta combines equity and cash compensation benchmarking.
- Radford (by Aon): Designed for larger enterprises, Radford delivers deep, detailed compensation benchmarking across global roles and industries.
- Pave: It offers real-time market compensation data and integrates with HR systems like Greenhouse and BambooHR.
- Employer of Record (EOR): Many EORs provide salary guidance, helping you avoid over- or under-compensating talent in unfamiliar markets.
These tools can be game-changers for HR professionals and compensation teams. They help you understand what's competitive and what talent expects in each market.
How to Analyze Internal Data Across Locations
Once you've collected your internal data, turning those numbers into meaningful insights is the next step. Start by creating a centralized dashboard or spreadsheet that includes:
- Salary ranges by role and location
- Team member compensation by level and function
- Geographic pay differentials
- Retention or turnover indicators by pay band
With this data in one place, you can begin to notice gaps, recognize patterns, and ask meaningful questions such as the following:
- Are certain markets consistently underpaid relative to benchmarks?
- Are there pay discrepancies between employees in similar roles across different countries?
- Is employee turnover concentrated in specific pay bands?
This kind of internal analysis is essential, especially if you're pursuing pay equity or moving toward greater transparency, a growing trend among global companies and, in some regions, a legal requirement.
While only 19% of U.S. companies have a pay transparency strategy, 63% say they plan to share pay information. Meanwhile, pay transparency laws in the EU go into effect at the end of 2026.
It also helps to visualize geographic pay differentials, which include adjustments made for cost of living, talent supply, or local market expectations. For example, a software engineer in Germany may command a different compensation level than one in India, even if they perform the same job.
The Role of Consultants and Advisors in Compensation Strategy
Global compensation can be incredibly nuanced, especially if you're hiring in new countries or operating without in-house HR expertise. This is where compensation consultants or HR advisers come in.
These experts specialize in helping organizations build compensation frameworks that aren’t only competitive but also compliant and scalable across borders. Here’s how they can support your team:
- Conduct market research: Consultants can access proprietary compensation data and regional insights to benchmark roles accurately.
- Design custom compensation structures: They help align pay strategy with business goals by designing salary bands, incentive plans, and equity-distribution models that reflect market conditions and company culture.
- Define global job levels: Standardizing job levels across countries ensures internal consistency while allowing for geographic pay differentials.
- Advise on compliance: Consultants can guide you through local labor and tax laws, helping you avoid costly mistakes.
While hiring outside help comes at a cost, consultants can save you significant time — and avoid costly noncompliance issues — by helping you get compensation right the first time, especially during international expansion.
Building an Internal System for Ongoing Data Collection
Your pay structures must evolve as your business grows, enters new markets, or responds to economic trends. You need an internal system that enables ongoing data collection so you can stay competitive and compliant. Here are a few ways to do that.
- Implement a centralized HRIS: Start with a global Human Resource Information System (HRIS) to consolidate compensation data across regions. This system should track salaries, bonuses, and adjustments and be capable of segmenting data by role, level, and location.
- Schedule regular market benchmarking: Review and update your compensation benchmarks at least once a year to stay aligned with market trends. Many companies also revisit benchmarks before major hiring pushes or budget-planning cycles.
- Establish a salary review process: Set up clear processes to trigger compensation reviews when key changes happen, such as promotions, international relocations, or role restructuring.
- Define pay bands by role and region: Standardized pay bands that factor in local market rates and cost of living help maintain equity and consistency, especially as your team expands across borders.
- Leverage employee feedback: Regular employee salary surveys, engagement check-ins, and exit interviews can reveal how your compensation strategy is perceived.
- Track benefit usage and adoption: Monitoring how employees use benefits can provide insights into what they value and what may require updates.
- Appoint an owner or committee: Consider creating a compensation committee or appointing an HR lead responsible for overseeing data collection, updates, and compliance.
Balancing Global Consistency With Local Flexibility
Creating a global compensation strategy involves balancing consistency and local adaptability. After all, what’s considered a competitive salary in Tokyo may exceed market norms in Manila, and enforcing identical pay across vastly different economies can lead to employee dissatisfaction.
On a recent episode of RemoFirst’s Freedom of Work podcast, Creating Global Benefits Beyond Borders, Ashley Ugorji — who’s worked in people ops for more than 10 years — shared how she and her team incorporate first principle processes when determining competitive pay rates.
“I think as you continue to scale, the best way to think about it is first principle thinking,” said Ugorji. “It's thinking, who are we trying to compete against? Is our number one competitor doing the same revenue as us? Are they in the same locations as usual? What does their team look like? And then you can benchmark where you want to be, rather than trying to get every single use case, meaning the location salary for each employee.”
Ugorji added, "I've seen both. When you do the specific areas, you could do it by region. For example, I'm going to pay the U.K. rate for everyone on this side of the world, I'm going to pay the Texas rate for everyone on this side of America, and then have one or two anomalies for cities like New York, San Francisco or Singapore, etc. It can get very complex; there's a lot of different ways, but it can get done.”
Many companies adopt one of the following approaches:
Location-Based Compensation
Companies adjust salaries based on the cost of labor or the cost of living.
- Pros: Helps optimize budgets while staying competitive locally
- Cons: Can create tension when employees doing similar work earn different pay
Geo-Zoning
Geo-zoning clusters countries or cities into defined “zones,” each with a standardized pay band. For example, Singapore and London might be considered tier-one cities, while tier-two might include Warsaw and Budapest.
- Pros: Creates standardization but with more flexibility than adjusting by each country
Cons: Can result in tension among employees in lower-cost zones
Global-First Pay
This approach, also known as location-agnostic pay, is used by companies like Buffer and GitLab and offers the same salary for the same role regardless of where the employee is based.
- Pros: Promotes radical transparency and fairness and doesn’t require local salary adjustments
- Cons: Can be expensive for companies hiring primarily in lower-cost markets and can be viewed as unfair
There’s no one-size-fits-all solution, but having the right data lets you choose the model that best aligns with your company’s values, goals, and resources.
Don’t Forget Employer Taxes and Benefits Costs
When building a global compensation strategy, it's essential to remember that the actual cost of employing someone goes beyond base pay and includes additional expenses that vary significantly by country, from employer-paid Social Security contributions to statutory benefits.
Take France as an example: Employer taxes and social charges add 45% more to the total cost of hiring an employee. That means an annual salary of EUR 60,000 would actually cost a company EUR 87,000. These employer costs cover a range of employee benefits, including healthcare, unemployment insurance, and retirement — all of which are legally required.
This is why understanding fully loaded costs is essential when making compensation decisions. A budget-friendly salary in one region could be cost-prohibitive in another after the mandatory contributions are applied. Failing to account for these costs upfront can lead to budget issues.
That’s why many companies partner with an EOR to ensure their total compensation packages are sustainable, competitive, and legally compliant in every country.
Hire and Manage Your Global Team With RemoFirst
Making global compensation decisions starts with having access to the best available set of data. But even with the most up-to-date insights, executing an effective global pay strategy still often requires support.
RemoFirst can help with that. We enable companies to employ, manage, and pay talent in 185+ countries and manage and pay contractors in more than 150 countries. From global payroll and compliant benefits — including private health insurance options for international employees — we ensure that your workforce is supported, no matter where they are. Plus, we stay on top of local employment laws and pay regulations, so you don’t have to.
Ready to take the guesswork out of global compensation decisions? Schedule a demo with RemoFirst.
