Exploring the Data on Global Geographic Pay Differentials

Post-pandemic, there has been a continuing shift in how companies approach their geographic pay strategies. As organizations lean into distributed workforces, location is an important factor in compensation benchmarking. 

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While we have discussed location-based pay strategies in the US on this blog before, let’s now look farther afield. If you’re a company that hires in multiple countries or has plans to begin hiring internationally, understanding global geographic pay differentials is key to developing your approach to international pay.

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Here, we’ll explore some considerations as you approach designing a global compensation strategy. We’ll also analyze some benchmarks from Pave’s dataset to understand trends in geographic pay differentials by metrics like job track and job family. Let’s dive in.

Considerations for Implementing a Global Pay Strategy

If your business is considering implementing a global pay differentials strategy, there are several important questions to answer when building your compensation philosophy. Here are some ideas to get you started.

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Competitive recruiting considerations:

• Are you going to maintain a global compensation philosophy, or are you going to differentiate your market position by geography? 
• Do you want to differentiate your philosophy between Individual Contributor (IC) and Manager tracks?
• How will you treat Engineering vs non-Engineering roles?
• Does the strategy align with the talent availability in those markets?

Pay mix analysis across regions:

• What are the geographic differentials for base salary relative to the US?
• Are you going to grant equity internationally, and, if so, how much are you going to grant?

Technical Design Considerations 

Your primary focus when it comes to looking at data internationally should be the same as the US, and with a focus on cost of labor data. You’ll also want to factor in the competition of the talent market in a given region, the type of talent you want to recruit, and affordability.

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Once you’ve decided how you’re going to approach pay internationally, consider how you will monitor market movements on an ongoing basis. Set up a process for regularly refreshing market data, assessing the impact of various currencies, and tracking the evolution of local markets and industry trends. This will help you to ensure your global pay strategy stays current and competitive moving forward.

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Keep in mind that legal and regulatory requirements differ by country, so it’s always crucial to check on local laws and work with legal counsel to ensure compliance.

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Key Insights from Market Data

What might this look like in practice? We analyzed geographic pay data from Pave’s dataset to help illustrate how companies approach this issue.

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When expressing geo differentials, there are two main ways to think about them. Taking the UK as an example, we can think of pay levels as either 90% or -10% of the US. For our visualizations, we are displaying data using the former approach.

Global Geographic Pay Differentials by Track

First, let’s explore how geo differentials can vary by track—in this case, ICs vs Managers. The analysis across countries with the highest sample sizes in Pave’s dataset shows that IC roles demonstrate wider geographic pay variations (40-67% of US median base salaries) compared to manager roles (48-72%). This may not necessarily mean that companies are creating separate differentials for ICs and Managers, but the data does indicate that in practice, companies are differentiating their pay internationally based on career track, which is also a trend we observe in the US.

This analysis also shows that Israel, the UK, and Australia maintain the highest compensation levels for Managers, at ~70% of US rates, when compared to other locations.

Global Geographic Pay Differentials by Job Family

The data shows that R&D roles demonstrate greater geographic differentiation than Sales roles, pointing to a trend of location-based differentiation in the tech sector by job family. Relative to the US, international geo discounts are more extreme for R&D roles than for Sales or G&A. This dynamic could be coming from the high cost of labor and the demand for tech talent in certain US markets. 

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Sales compensation also tends to be more compressed and show less global differentiation, typically because compensation for Sales roles is defined by how much revenue an individual generates for the company. Of course, when it comes to Sales roles, looking at the full package of OTE and pay mix is critical.

Global Compensation Benchmarks at Your Fingertips

Building a global pay strategy is no small task, but Pave can help bring it to life.

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With Pave’s real-time compensation market data, you can access compensation benchmarks for your global team, which helps you pay in line with the market—no matter where your employees live and work. 

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Ready to get started with Premium Market Data and access global insights for 55+ countries? Request a demo today. 

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