Building and maintaining successful global teams isn’t always easy. But with a people-first compensation strategy — and a reliable Employer of Record (EOR) partner — it can be.
In today’s evolving workforce, a compliant compensation strategy that is competitive across borders is key to attracting and retaining top talent. Drawing from the expertise and insights of our in-house experts, let’s explore how to build a strong compensation strategy that ensures a positive employee experience.
What is global compensation?
Global compensation, also known as global rewards, refers to the overall benefits and incentives a company offers its employees. Global compensation includes both direct and indirect compensation for a distributed or remote workforce. Direct compensation is paid directly to employees in the form of base pay, pay equity, set salaries, and commissions.
On the other hand, indirect compensation, also known as employee benefits, refers to non-monetary rewards. Indirect compensation is given to employees on top of minimum wages and base salaries. Benefits packages can include health insurance contributions, employee stock programs, or retirement account and retirement fund matching.
What is a global compensation strategy?
A compensation strategy is a business’s plan to offer fair and competitive compensation to its workforce. A strong strategy considers various factors when compensating employees, including location, job role, and stock options.
A strategic compensation package is particularly essential when companies hire international remote workers. Since the talent pool is much larger for these positions, a competitive compensation package is critical to attracting remote talent worldwide.
There are four key elements of global compensation that make employees feel supported, including:
- Base pay. An employee’s basic wage, excluding overtime or any bonuses
- Variable and incentive compensation. Additional compensation tied to tenure or performance
- Statutory benefits packages. Legally required benefits including medical insurance or pension programs
- In-kind benefits. Non-wage-related benefits, also known as in-kind benefits, that improve employee well-being and retention, including remote work, additional time off, gym memberships, or childcare reimbursement.
What are the benefits of a competitive compensation plan?
According to G-P’s 2023 Global Growth Report, 95% of professionals believe global companies outpace their peers, citing access to better pay and benefits as a key strength. Yet, only about a quarter of organizations offer retention bonuses to hire and retain key talent.
Here are three reasons why you need a global compensation strategy:
- Stay ahead of the competition. Employees seek employers who make them feel valued beyond a simple salary range at market rate. In addition to competitive salaries, employees seek employers that offer benefits packages tailored to their specific region.
- Maintain compliance. Compensation laws vary by country, and global companies must comply with local employment laws within every jurisdiction they have a presence. A strong compensation plan helps companies navigate key factors like minimum wage, equal pay legislation, and income taxes. Noncompliance penalties include fines, litigation, or other regulatory sanctions.
- Ensure equal pay. Any fair compensation strategy guarantees pay equity to talent with comparable education, role, and experience. Streamline equity payroll management with our G-P Meridian Suite™ of global employment products. We can help simplify the process of managing taxable events related to equity-based compensation, ensuring compliance in any country you’re hiring in.
How to create a global compensation strategy
Paying competitively was identified as the number one challenge 62% of organizations face when designing a pay strategy. So, how can companies design a pay strategy to attract and retain valuable talent?
Let’s explore how to build a competitive and equitable pay structure and benefits package.
1. Establish long-term goals.
Whether you’re creating or restructuring your global compensation strategy, start with establishing goals. Are you hiring your first international employee? Are you working to establish pay equity across hundreds of international employees? With clear goals in place, you can focus on compliance and the competition.
2. Research local employment regulations.
Regardless of whether you’re developing a benefits plan in Portugal, the Philippines, or a country on another corner of the globe, you should start by researching the economic conditions and best practices in your target region.
3. Run a competitor analysis.
A strong compensation package can make or break whether a potential hire will choose your company. Before you determine local compensation packages, research what compensation direct competitors are offering. If other companies are offering better benefits or higher salaries in any given market, consider adjusting your compensation package to remain competitive.
4. Classify all workers correctly.
Workers may receive different compensation packages or structures depending on their classification. For example, a 1099 worker is entitled to different rights than a W-2 employee working full time. Determine fair compensation based on the individual’s contributions. Employee categorization will also inform budgeting and workforce planning efforts.
5. Build a budget that’s equity based.
Boost engagement and retain top talent worldwide by offering equity-based compensation to your global workforce. When building a distributed agile team, evaluate how much of the company budget you can allocate to compensate employees in a competitive market.
Pay close attention to a few key factors, including base pay, statutory contributions, bonus structures, and any supplementary benefits.
6. Consult in-country experts.
Paying employees in other countries can be challenging, especially when maintaining compliance with local labor laws. It may be helpful to partner with a reliable Employer of Record (EOR) to handle the payroll and benefits administration for you.
Gain access to the largest team of in-country experts on employment law, compensation, and mobility through a single point of contact at G-P.
7. Put your global team on payroll.
When it comes to payroll, it’s helpful to partner with industry-leading HCM and payroll providers that can serve your global needs best. Only G-P delivers the #1 Employer of Record (EOR) and connects with best-in-class HCM and payroll systems to manage global teams. Together, we provide the full lifecycle of solutions to meet the unique needs of every customer.
Attract and retain top talent with a reliable EOR partner.
A competitive compensation strategy can improve talent recruiting, retention, and overall employee performance. With a reliable EOR partner like G-P, your company can plan, hire, and manage global teams quickly and efficiently, regardless of entity status. As the global Employer of Record, G-P acts as the legal employer of your team members.
Our industry-leading, SaaS-based Global Growth Platform™ streamlines every step of global expansion. We take the time, cost, and risk out of managing global HR, payroll, benefits, and more.
