How to Attract & Retain Top Talent with a Remote Compensation Review
It can be tricky to benchmark compensation and benefits when your employees are working from different corners of the globe, but getting it right is critical to the growth of your company.
US companies continue to add remote talent, which is helping them scale, better serve customers, and innovate. But when it comes to level-setting how you pay your remote employees, that’s a can that often gets kicked. With the competition for global talent being what it is, it’s more important than ever to make sure that they are compensated fairly and competitively. Regular compensation reviews of your remote workforce can help keep them happy and productive, while preventing attrition and allowing you to avoid the costs of finding, onboarding, and training new hires. Maybe you already know why you need to level-set remote compensation. The question is how?Below, we walk through the best practices for conducting an effective compensation review, especially for companies managing a distributed workforce across different countries.
Establish clear objectives
Before you get started, you’ll need to define your goals for the compensation review. Do you want to ensure your pay scales are aligned with current industry standards? Do you want to assess the impact of inflation and cost of living across different regions? It’s also worth defining how valuable your remote employees are to your business. How costly would it be to replace them if they left? How critical are they to the long-term plans of your company? Clarifying context and goals will guide your compensation review and the actionable plan that results from it.Your top objectives might include:- Aligning pay structures with current market trends
- Ensuring compliance with regional labor laws and tax regulations
- Offering competitive pay to prevent turnover
- Addressing any internal compensation disparities to support pay equity
- Course-correcting to stay within your remote work compensation policy
Reference compensation data
To realistically benchmark the salaries of your remote employees, you’ll need access to reliable and up-to-date compensation data. When evaluating the pay of your international employees and contractors, this means gathering global data. And if that’s what you’re looking for, you’re in luck. You can use our free global remote salary data to benchmark salaries against job titles and geographies around the world. The database is specifically for salaries of remote workers, who — because they're part of a worldwide job market — typically earn higher pay than their non-remote, local counterparts do.As you pull the data, you’ll see that it’s presented as a range. You’ll need to consider factors like experience level, job performance, and tenure with the company as you decide where on the salary scale your employee should be. If you have some extra budget to burn, Pave, Aon, Salary.com, and other organizations also offer paid compensation management platforms (though note that they may only offer data for in-office roles rather than remote roles). Keep in mind that your employees have access to compensation data, too. They’re likely using Glassdoor, Levels.fyi, Payscale, or other salary tools to see if they’re making what they’re worth in the market.Consider cost-of-living adjustments
Cost of living can vary drastically from country to country. Some companies factor these differences into their pay model, while others only focus on the value the employee adds to the company. And, as you might expect, some companies do a little of both. Whether you consider cost of living adjustments or not will depend on which remote pay model you use:- With a location-based model, workers’ compensation bands are influenced by where they live. For example, a developer living in Berlin might earn a higher salary than one living in the smaller town of Otavalo, Ecuador, where the cost of housing, transportation, and food is lower.
- A location-agnostic model will pay workers based on the value they add to the company. They get paid the same no matter where they live, which means you don’t have to worry about cost of living adjustments as you conduct your remote compensation review. (But it also can get pretty expensive.)
- A hybrid pay model considers both the value of the work and the location of the worker. This is the strategy that Plane uses to pay remote employees, because it promotes pay equity among people doing the same job while also mitigating large pay gaps among employees across roles.
- Inflation rates in the region
- Currency exchange rates
- Local tax laws and social contributions
Go beyond the salary
Keep in mind that it’s not only the base pay or hourly rate that matters to employees. Benefits, too, can be hugely influential on a worker’s morale. When conducting your compensation review, take the time to evaluate whether your benefits package remains competitive, especially across different countries where the expectations may vary.To do more for your remote workers, consider offering:- Flexible working hours
- Health insurance plans that cover international employees
- Mental health support and wellness programs
- Professional development stipends
- Home office and equipment allowances
Ensure compliance with local labor laws and regulations
Managing a remote workforce often means dealing with a patchwork of labor laws and regulations across different states and countries.Compliance risks can vary by organization, but key areas to review often include:- Minimum wage laws in the employee's state or country of residence
- Social security and tax requirements
- Employment classifications (e.g., contractor vs. employee status)
- Statutory benefits, such as parental leave and paid vacation time
Listen to feedback from your remote employees
When it comes to understanding the effectiveness of your compensation strategy, your employees are your most valuable resource. As part of your remote compensation review, it can be incredibly valuable to gather feedback from your remote workforce to gauge how they’re feeling about their pay and benefits. To collect their feedback, you can conduct anonymous surveys, facilitate one-on-one interviews, and/or organize town hall meetings to discuss compensation openly and address any concerns.As you collect feedback, some points to consider exploring include:- Satisfaction with current salary and benefits
- Perceptions of pay fairness
- Opportunities for professional growth
Be transparent about compensation adjustments
You may have noticed that employer transparency laws are all the rage, as the list of US cities and states that must disclose salary data in certain contexts continues to grow. Transparency is a critical but often overlooked component of successfully making compensation adjustments. Whether you’re increasing pay, offering new benefits, or maintaining the status quo, communicate clearly with your remote workforce about how and why decisions were made. Some employees will be more valuable to your organization than others, and that will have an impact on your compensation decisions. It can be an uncomfortable conversation, but when you provide that transparency and connect performance to pay, it builds trust and shows your employees that you value fairness and want to see them succeed. When communicating compensation changes, consider providing:- An overview of the review process
- The factors that influenced pay adjustments
- A breakdown of any new benefits
- The timeline for implementing any changes
Make remote workforce compensation reviews a part of your larger pay strategy
Regular compensation reviews of your remote workforce are key to ensuring fairness, retention, and compliance—but they should be part of your broader, ongoing strategy. To successfully attract, retain, and nurture remote talent, your company needs a comprehensive remote pay strategy to remain compliant and grow over the long term. To get started, check out our guide to choosing a remote pay strategy. It will help you define your company's approach to remote pay, benefits, and rewards. A documented remote pay strategy isn’t just a one-time thing—it will guide your future HR decisions and provide a consistent framework for reviewing compensation, making adjustments, and communicating changes to employees.Related articles
From startups to beyond, US companies of all sizes use Plane for global payroll, benefits and compliance.
Looking back at 2024: A Year in Review for Plane
Here are some of our favorite highlights from a sizzling year at Plane.
Make Sure Your Global Payroll Vendor Can Answer These Questions From Your International Employees
When your global payroll vendor’s support team can handle common questions from your global contractors and FTEs, you can stay focused on your top HR and finance priorities.
How Founders Are Leveraging Global Talent to Grow & Scale Their Companies [Webinar]
Watch Matt Drozdzynski, Hebba Youssef, and Nadia Vatalidis as they talk about global hiring strategies, trends, and misconceptions.