Keeping competitive across countries: How to develop a global compensation strategy

August 21, 2025

Drew Maginn

Disclaimer: To learn more about the basic financial and non-financial components of a compensation strategy, please review ‘Satisfaction guaranteed: How to prioritize the financial and non-financial components of your compensation strategy’. Readers should be sure to consult reputable sources and, where appropriate, professional advisors to ensure your approach aligns with current laws and best practices of the different countries where your employees work

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Planning and implementing a high-quality compensation strategy is critical for any company hoping to stay competitive in their industry. For companies working at the international scale, however, this task immediately becomes more complex. Thinking through the components of international compensation requires revisiting the core financial and non-financial components of your strategy and examining several additional factors, including cost of living, taxation, inflation, cultural values and economic conditions. While certainly not easy, this task is by no means insurmountable if the proper steps are taken to understand the unique experiences of your workers across the globe.

What is a global compensation strategy?

A compensation strategy refers to everything your company offers to your employees as part of their work arrangement to ensure they are fairly compensated. The “global” component takes into account the prevailing conditions in each country where your company employs people to ensure you remain competitive to attract and retain high-quality employees. Each country has a unique operating context, and the credibility of your company’s compensation strategy could quickly become jeopardized if some locations fail to provide a comparable employee experience.

What stays the same with global compensation planning?

At its core, a global compensation strategy retains the same financial and non-financial components to incentivize employment.

Financial
- Compensation (base pay and variable pay)
- Benefits
Non-financial
- Feedback, development opportunities, and advancement
- Status, recognition, and work importance
- Control and autonomy
- Workload and work variety
- Security and work conditions
- Social interaction

Compensation strategies are typically most effective when both financial and non-financial components are valued and companies avoid over relying on one aspect as the sole driver of their approach.

” While certainly not easy, this task is by no means insurmountable if the proper steps are taken to understand the unique experiences of your workers across the globe ”

What’s different when implementing global compensation programs?

Global compensation programs differ in that human capital management (HCM) professionals need to perform benchmarking to understand additional factors that may require location-specific adjustments to some financial and non-financial components of your compensation package.

Financial considerations may include some of the below.

Cost of living and inflationary adjustments: This includes investigating how pay bands or grades should be adjusted to equitably reflect cost of living, inflation and strength of local currency. A competitive pay range in one country could mean living paycheque to paycheque in another.

Payroll withholdings, deductions, and local regulations: Managing employee payroll becomes more complex with an international workforce and requires a thorough understanding of withholdings, deductions, local regulations, and reporting requirements. While this requires HCM professionals to be well-informed, technology solutions that can assist with processing, compliance and monitoring on an ongoing basis can support in addressing these differences.

In some instances, companies may also support relocated employees in managing their specific tax situation, often referred to as tax equalization. This can include assisting them with understanding any differences in their filing, as well as how to manage their tax obligations in both their work and home countries.
Expatriate benefits: For employees who are relocated, expatriate benefits cover the transition from one work location to another and may include paying for relocation expenses, providing enhanced healthcare coverage, offering transportation allowances, and enabling family visits by covering flights and providing additional time off.

Non-financial considerations may include the below.

Cultural differences and values: Different countries may have cultural differences and values that require adjusting compensation practices. For example, in some countries, enhanced financial components such as salary increases, bonuses, and flexible benefits might be appealing. However, in other countries, non-financial components might hold stronger value, such as work-life balance, recognition for work accomplishments, and strong social connections with colleagues. It can also be common for work arrangements to shift, as some countries do not follow a traditional 9-to-5 workday.

Social interaction and connection: The meanings and social norms attached to a job vary in different countries. For some, work is kept separate from home, and work relationships may be more arms length or transactional. In other countries, companies may invest time and resources in creating a strong bond between employee and employer to build loyalty and trust.

For relocated employees, moving to a new country may be extremely challenging and has the potential to impact not only their work performance but their quality of life. To ease this transition, many companies provide language and cultural training and invest in a more thorough orientation process that is intended to orient them not only to their job but also the environment in which they will be working.

What is the best method for evaluating effectiveness of global compensation?

To understand whether a global compensation strategy is effective, a variety of monitoring methods can be implemented to ensure your company’s approach is using the best information available and meeting the needs of a global workforce.

Conducting international compensation benchmarking: Engage expert consultants or access global compensation data offered through companies such as Mercer, Willis Towers Watson, Aon, and Korn Ferry. Just be sure that the provider has adequate data and expertise bases to address compensation that aligns with your company’s geographic locations and industry.
Monitoring compensation metrics: Continuously monitor compensation metrics such as turnover rates and employee engagement to evaluate the strength of your strategy across different locations.

Gathering employee feedback: Connecting directly with employees, if done in a trusting and transparent manner, can provide the opportunity to understand what specific elements of a compensation package motivates them to perform at their best. This might require prioritizing different components depending on any location-specific trends or needs identified by employees.

In some ways, the process of creating your compensation strategy is a lot like assembling, and re-assembling, a series of puzzles. While the pieces may vary, when properly arranged, they fit together to create a clear and compelling picture for your employees of why your company is right for them. As you move onto the next one, you don’t lose the knowledge you’ve gained in the past, you simply apply it differently to create a new picture.

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