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Best Compensation Approach for a Global Remote Workforce

One of the most pressing challenges faced by organizations today is ensuring fair and competitive salaries across various geographical work locations. A recent survey conducted by Shelby Wolpa, among tech-enabled companies, sheds light on the strategies and priorities that are shaping compensation of a distributed workforce in 2024.

Top Compensation Priorities for Companies

Among survey participants, 47% said market compensation adjustments were a priority for them in 2024. Job leveling was a close second as a popular compensation priority, where 42% of participants were focusing on leveling employees accurately in 2024. Additionally, 40% of companies want to either clarify or refresh their compensation philosophy, and 38% plan to prioritize pay equity and fairness. Interestingly, a third of companies are prioritizing variable compensation pay within their organization likely to make sure they are driving the right behaviors. These statistics underscore that organizations are focusing significantly on their compensation strategy and in particular, ensuring internal fairness and equity

Compensation Priorities in 2024 for companies: 46.6% say it’s market compensation adjustments, 42.2% say it’s job leveling, 40.4% say it’s compensation philosophy, 37.9% say it’s pay equity/fairness, 33.9% say it’s variable compensation (bonus), 33.9% say it’s commission and sales compensation, 31.4% say it’s pay transparency, 28.9% say it’s equity compensation (stock options), 11.2% none of the above

Common Pay Transparency Practices

The survey also reveals intriguing insights into pay transparency practices. Only a small percentage of employees have knowledge of salary ranges either for their team or their own job: Only 15% know the compensation range for their own level, and even less (10%) know ranges for all levels in the company. When it comes to job level transparency, only 13% of participants say that employees’ levels are generally known internally and even less (11%) are in an organization where employees know their own level.

For many organizations (36.5% of survey participants), salary ranges and job levels are held tightly and only HR and Finance have full visibility into them.

Companies seem to still be ruminating on where in the spectrum of pay transparency (from secretive and fully open) they feel comfortable choosing to be in and what aligns best with their company’s culture and goals. 

Pay Transparency: 1.1% of employees know how much everyone makes at the company, 1.8% of employees know ranges for all levels in their team, 2.5% of employees know the range for their level and the level above, 8.4% of companies say pay is secretive and flexible, 10.1% of employees know their own job level, 13.4% of employee levels are generally known internally, 15.2% of employees know the compensation range for their level, 36.5% of companies say levels and compensation ranges are used by finance and HR only

Compensation Approach for Distributed Workforce 

There are various pay approaches for a workforce that is distributed across multiple locations. The survey found that the most popular approach was leveraging local market data to determine salaries by location, followed closely by paying everyone the same regardless of location. Still, 26% of companies group salaries into similar cost of labor tiers/zones. 

Amongst Kamsa clients, we see that companies most commonly use the local market data approach in most cases, and a geographic differential approach within the U.S. if hiring across the country; companies also use the geographic differential approach when either local market data is not available (i.e., countries in Africa) or when they want to be slightly more competitive than the local market data (i.e., They want to pay a slight premium above local market data) to ensure they are able to attract and retain the talent they need.

Geo-diff vs. Local market data: 35.4% of companies use local market data, 32.5& of companies pay everyone the same regardless of location, 26.4 use geographic differential tiers for different locations, 1.4% do not hire across multiple locations

By reviewing their compensation strategies regularly, organizations can ensure they are striking the right balance of market competitive,  internal equity and budget consciousness.

About Kamsa

Kamsa's proprietary global market compensation data, along with our consultative approach, provides unique solutions for companies compensation strategy including ensuring the right balance of local market data vs. geographic differential methods that align with their business goals and talent needs

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