From Planning to Payroll: A Guide to Global Salary Benchmarking

What is meant by global salary benchmarking?

As organisations increasingly search for talent beyond their borders in response to talent shortages and the shift towards remote work, the importance of effective global salary benchmarking cannot be overstated. In this Teamed Insights article, built with our partners at reesmarxGLOBAL, we delve into the topic of global salary benchmarking to guide businesses through this stage in their international hiring.

Our discussions with Ericha Hartz and her team at reesmarxGLOBAL shed more light to the intricacies of global hiring and the importance of timely salary benchmarks. This conversation is particularly relevant given the global push towards salary transparency and fairness in hiring practices. Ericha Hartz highlights the perils of delaying salary benchmarking until the later stages of global expansion.

“Comprehensive early planning is essential to identify potential legal and economic impacts on recruitment strategies,”

Ericha points out, stressing that precise benchmarking is crucial for attracting top talent and fostering sustainable growth in new markets.

Joanna, Head of Legal at Teamed, observes, “In regions like the UK, where gender pay gap reporting has been mandated since 2017, there is an increasing demand for broader wage transparency.” The EU’s pay transparency directive, proposed in 2023, is aimed at combating pay discrimination and reducing gender pay gaps across Europe, illustrating a significant regulatory interest in addressing pay inequality.

In the United States, the lack of a comprehensive federal pay transparency law contrasts with state and city-level regulations that increasingly mandate employers to disclose salary ranges and benefits.

“These changes are reshaping how companies approach salary offers, making benchmarking more than just a strategic necessity — it’s becoming a regulatory requirement,” Joanna adds.

This evolving regulatory landscape, coupled with diverse cultural expectations of compensation, underscores the necessity for businesses to adopt a sophisticated approach to salary benchmarking. With insights from global experts like reesmarxGLOBAL and the strategic capabilities of Teamed, companies are better equipped to navigate these challenges, ensuring compliance with emerging laws and the attraction and retention of the best global talent.

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Factors Influencing Global Salaries

When setting salaries internationally, businesses should balance out a variety of factors that can significantly impact their hiring decisions:

• Industry Impact and Regional Skills Gaps: “As a part of your people plan, it’s  key to align the hiring strategies with regional industry strengths and weaknesses”, Ericha states. “For instance, the technology sector in Silicon Valley benefits from a robust ecosystem of talent and innovation, making it an ideal location for tech startups.” Conversely, post-Brexit changes in the UK have affected immigration laws, impacting talent availability for industries reliant on international workers. “Planning where and why you are hiring, considering local skills availability and economic factors, is key,” advises Tom, CRO at Teamed.

• Role Specificity and Cultural Differences: The demands of specific roles and their cultural fit are of utmost importance in determining the suitable candidate pool. In Japan, where business practices emphasise respect and hierarchy, adjusting recruitment strategies and salary packages to align with local expectations is necessary. Ericha explains, “Cultural fit and role demands significantly affect the recruitment process.” Moreover, compliance issues such as GDPR in Europe necessitate modifications to hiring procedures.

• Local Presence and Executive Recruitment: “The absence of a local headquarters can increase perceived risks among candidates, leading to elevated salary demands” notes Ericha. Furthermore, recruiting for executive-level positions can be challenging due to longer notice periods and smaller candidate pools, particularly in countries like Sweden, where long-term employment relationships are highly valued.

• Employment Costs and Payroll Management: The overall cost of employing staff in different regions can vary dramatically due to local economic conditions, legal requirements, and benefits expectations. Countries with mandatory high social security contributions or comprehensive healthcare benefits can significantly inflate employment costs. Luke, CFO at Teamed, highlights the advantages of leveraging an EOR:

“Employing through an EOR like Teamed allows companies to effectively manage and streamline payroll and taxation processes, reducing the high costs of direct employment (local entity registrations, professional services, corporate taxes, intercompany etc), whilst also removing the HR headache of directly managing compliance across global regions. Working with organisations in the past where this was done in-house, if I could turn back the clock and do it again, I would pick EOR each time.”

Understanding these factors helps businesses effectively navigate the complexities of global hiring. By considering industry dynamics, cultural expectations, local presence needs, and employment costs, companies can develop more strategic, informed, and successful global employment practices. 

Partnering with recruitment experts like reesmarxGLOBAL can provide valuable insights into local talent pools and salary benchmarks.

“Engaging with a Global Expansion Advisor early can provide actionable, reliable data for successful market entry,” advises Ericha.

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Practical Steps for Businesses

Implement these actionable steps to enhance your approach to global salary benchmarking and ensure successful international hiring:

1. Early Planning and Compliance Review: “One thing I’d always say is; Begin the planning process well in advance” notes Ericha. This should include a comprehensive review of employment regulations in potential new locations. Understanding the legal landscape is critical to ensure compliance and avoid costly litigation. “Utilise legal and HR experts or a hiring partner who can help you gain a deep understanding of each market’s regulatory requirements.”

2. Consider Cultural Differences and Local Expectations: Cultural nuances significantly impact recruitment and onboarding. Develop a good understanding of these cultural factors to tailor your recruitment strategies effectively. “This includes adapting communication styles, negotiation tactics, and management approaches to align with local norms and expectations, thus enhancing both recruitment and employee integration” lists Ericha.

3. Stay Competitive with Comprehensive Benefits: Investigate and understand what constitutes a competitive salary and benefits package in each region. This goes beyond just the basic salary; consider health benefits, retirement plans, and other perks that are valued in the local market. “This is another stage where the right global hiring partners can do the heavy lifting for you” notes Tom, “ We offer benefits guidance and information to our customers who use this information to craft offers that are attractive to potential employees, helping their brands stand out as an employer of choice.”

4. Successful Onboarding: Ensure that once a candidate is selected, the onboarding process is compliant with local laws regarding employment classification. “Mistakes in employee classification can lead to significant financial consequences” Joanna explains. Partnering with a Professional Employer Organization (PEO) or an Employer of Record (EOR) like Teamed can streamline this process, ensuring that all legal requirements are met efficiently.

5. Consult Experts for Strategic Expansion: We suggest working closely with recruitment and global employment experts such as reesmarxGLOBAL and Teamed. These partnerships can provide you with critical insights into local employment landscapes and detailed salary benchmarks. As demonstrated, we can offer strategic advice tailored to each location, enhancing your ability to make informed decisions and successfully enter new markets.

By following these steps, businesses can more effectively manage the complexities of global hiring. Each step is designed to build upon the last, creating a comprehensive approach that covers legal, cultural, and strategic aspects of international recruitment and salary benchmarking.

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In summary

To build competitive and compliant packages is best started from the get go of your global hiring journey. With the right approach to salary benchmarking and a strong partnership with experts, it becomes much more manageable. By joining forces with partners such as reesmarxGLOBAL and leveraging Teamed’s expertise as an Employer of Record, businesses are well-equipped to tackle any talent acquisition challenges head-on.

Salary benchmarking is key not only to attracting the best talent but also to retaining them by ensuring your offers are competitive and culturally appropriate. It’s about more than just meeting compliance — it’s about understanding what motivates your global team and ensuring they feel valued.

Remember, the goal is to make global expansion smooth and sustainable. With our expert support your business can thrive in new markets, well-prepared to adapt to the local nuances that make each region unique.

Ready to expand your operations globally? You can always contact our team to discuss your global hiring plans and our partners reesmarxGLOBAL for finding the right talent and the salary benchmarking.