Hiring international employees can be a huge boon for companies. You gain access to a broader talent pool, introduce new perspectives, and lay the groundwork for global expansion. Global hiring has its challenges, though. One of hiring managers’ biggest questions when considering international recruitment is how to calculate salaries globally.
How do you determine the right salaries for talent around the world? In this article, we'll explore some strategies and tools for setting competitive salaries, no matter where you're hiring employees.
Using Oyster’s Salary Insights Tool
Competitive salaries in a particular location need to be comparable to or better than the compensation people receive for similar job positions in that geographical location. The best way to ensure you're offering competitive pay is to consult on compensation data from that country. However, having your hiring team dig through piles of pay data from each country where you might hire an employee simply isn't efficient.
Instead, you can rely on Oyster's Salary Insights Tool to provide data-backed salary recommendations so you can make streamlined compensation decisions at a global scale. To use the Salary Insights Tool, you simply need to select the job role, seniority level, and the country you’re hiring from. Oyster has over 120+ job titles for you to choose from.
Based on these details, the tool will then recommend a gross annual salary range. You'll see three figures—a low, mid, and high salary for the position you described. Use this range to inform your salary offer. If the salary you're offering is below the lowest figure, it probably won't be competitive in the country you selected.
Where do these salary recommendations come from?
Oyster uses a comprehensive dataset and proprietary scoring system to develop the Oyster Pay Bands. Using cost of living data, Oyster's own global salary information, and other country-specific data, we score each country in the Oyster Band Index (OBI). We then use that OBI score to classify countries into Pay Bands of high, mid, and low:
- For high OBI countries, we aim for mid-market salaries in the 50th percentile
- For mid OBI countries, we target above mid-market salaries in the 75th percentile
- For low OBI countries, we target top-of-market salaries in the 90th percentile
The goal of these salary recommendations and Oyster's broader compensation approach is to help companies hire people anywhere at fair salaries. Employees should be able to expect the same relative pay for the same work, regardless of where they live. Using the Salary Insights Tool, you can ensure your company offers competitive and equitable pay to your international workforce.
What is salary benchmarking?
Salary benchmarking involves matching the salaries you offer to the compensation other companies provide for similar roles. This approach involves collecting relevant payment data about employees with similar job titles, seniority levels, skills, and responsibilities in your industry. If you're hiring internationally, you also gather cost-of-living data to adjust salaries for similar quality of life.
All this data helps you determine the average or standard pay—the salary benchmark—for your open position. Meeting or exceeding this benchmark will make it easier to attract the best candidates for the job.
Importance of salary benchmarking
Some companies choose not to use salary benchmarking. They may take a location-agnostic approach to compensation that offers the same salary for a given role regardless of where the employee lives. Or they may simply rely on internal salary data to determine their compensation offer for an open role.
Salary benchmarking is the better approach for both employers and employees. Benchmarking your salary offers ensures you're competitive in the hiring market and your employees receive fair, sustainable compensation.
It's even more important to benchmark salaries when hiring internationally since you may not be familiar with the compensation standards and expectations in a new country. Salary benchmarking helps you align with what other companies pay for similar roles in that area.
You'll struggle to attract the most qualified candidates if your salary offers are too low. The person you do hire may soon leave because they found better pay elsewhere. On the other hand, offering salaries that are too high can also cause problems. Overly high salaries unnecessarily raise your employment costs and can strain your budget. Salary benchmarking makes it easier to find the right salary range.
Salary benchmarking best practices
To implement salary benchmarking in your company, follow these steps:
- Carefully select your data: If you're gathering your own salary data instead of using a tool like Oyster's Salary Insights Tool, choose your data sources wisely. Inaccurate or outdated data will skew your salary benchmark and undermine your efforts.
- Match job descriptions closely: When benchmarking salaries, make sure you compare apples to apples, not apples to oranges. If a job's description and responsibilities don't closely match the position you're hiring for, that salary is irrelevant. Only consider salary data from jobs that are very similar to your open position.
- Choose your compensation strategy: Your global compensation strategy is about more than just the base salary you offer. You also need to consider whether to provide incentive-based compensation, premiums, allowances, or additional benefits. Since these all are part of your employee's total compensation, factor these items into your salary benchmarking.
- Determine a salary range: Salary benchmarking provides guidelines on competitive pay, but you still have to decide what compensation you're going to offer employees. Setting a range around the salary benchmark may be helpful rather than sticking right in the middle. Using a range gives you some wiggle room to negotiate and weigh other factors.
Build your global team with competitive salaries
Don't let concerns about offering appropriate salaries get in the way of building a global team. Using Oyster's Salary Insights Tool, you can consistently make competitive and equitable offers to international hires. Wherever you want to hire employees, Oyster will help you compensate them fairly.
Learn more about the Salary Insights Tool and see how it works. Or reach out for a personalized consultation to discuss your global hiring needs and goals.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.
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