The recent surge in U.S. pay gains has been remarkable. The March 2024 ADP® National Employment Report highlighted the largest increase since July 2023, with hiring up across all business sizes. In this competitive landscape, a robust pay strategy is crucial for attracting and retaining top talent. This importance is even greater on a global scale.

Research Insights

Pay increases have a direct impact on talent retention. A Harvard University study cited in the Randstad report, "Impact of Compensation and Benefits on Employee Retention," found that a $1 per hour pay increase among warehouse workers led to a 2.8% increase in retention. Conversely, high attrition costs are significant. The Society for Human Resource Management (SHRM) reports that turnover costs range from six to nine months of the lost employee’s pay, and for higher-level staff, it can be as high as 213% of their annual salary.

Benefits of Competitive Pay

Competitive pay is beneficial for any organization, regardless of its global presence:

- First Impression: Pay is often the first factor potential employees consider. Attractive salaries reflect your company culture and entice skilled professionals to join and stay long-term.

- Motivation and Performance: Fair pay motivates employees to be productive and innovative. According to Recruiter.com, fair compensation is a key driver of consistent performance.

- Geographic Flexibility: Inflexible pay structures are ineffective internationally. Successful global businesses tailor their pay strategies to local market conditions and cultural norms, avoiding common blind spots.

Developing a Global Pay Strategy

Creating an effective global pay strategy involves multiple considerations, which can be overwhelming for businesses expanding globally. Partnering with an Employer of Record (EOR) can simplify this process.

How EOR Services Help

EOR services can help your company address the challenges of escalating wage demands and craft competitive, market-aligned salaries worldwide.

- Cost Efficiencies: EORs streamline hiring in new regions by acting as the legal employer, handling payroll, taxes, and compliance. This agility creates cost efficiencies that can be redirected to new hires’ pay.

- Market-Aligned Salaries: EORs conduct comprehensive market research to ensure competitive compensation across diverse regions, attracting top talent and mitigating salary discrepancies.

- Pay Transparency: According to Payscale’s Retention Report, perceived unfair compensation is a primary driver of job-seeking behavior. EORs help prevent pay discrepancies through pay equity audits and a unified interface for managing global workforces.

- Enticing Benefits: A global pay strategy must include customizable benefits packages that comply with local regulations and meet employee preferences. Tailored offerings foster loyalty and satisfaction.

- Compliance and Risk Mitigation: The complex regulatory landscape of global employment can be daunting. EORs ensure compliance with local labor laws, tax regulations, and employment practices, mitigating legal risks and allowing companies to focus on their core business objectives.

Strategic Value of Pay

Viewing pay as merely a cost is a mistake. Pay is a strategic tool for your global organization, directly impacting your ability to attract, retain, and motivate talent. It plays a crucial role in compliance with local regulations and alignment with business objectives.

As your company grows internationally, these concerns intensify. An EOR can help you manage these complexities, keeping your global expansion on track and ensuring competitive advantage in the talent war.