Dive Brief:
- Volatile markets — including inflation spikes, currency fluctuations and stubbornly high costs of living — remain challenges to any employer building a compensation plan, Radford noted, particularly for employers spreading globally. To gain insight, Radford interviewed several companies to learn how they managed these types of situations.
- Some of their shared guiding principles included setting wages based on the local market's cost of labor rather than its cost of living, using inflation rates and cost of living as an indirect factor when determining salary budgets. Many tend to pay workers in their local currency and not peg their wages to the US dollar, other hard currency or a currency exchange rate.
- Additionally, when the home country of the employee is experiencing an unexpected, volatile or extreme event, many companies said they focused on finding out what competitors in the region were doing. They may also use temporary rewards intervention, reviewing with legal when appropriate. Notably, a significant theme included partnering with local management and HR teams to talk "about fact, not emotion."
Dive Insight:
As more businesses look to mobility programs to attract talent who may want to experience life outside the United States, compensation can become more of a challenge. Looking to expand their reach globally — and to respond to the desires of top talent in a tightening market — many companies are looking outside the U.S. to hire and transfer employees. In turn, companies will need a strong compensation plan and guidelines to navigate foreign markets.
While the U.S. Department of Labor has loosened some visas to help U.S. businesses meet headcount, at least for some seasonal workers, many businesses are looking to foreign talent to meet their productivity needs. Expansion of remote work has also enabled employers to hire workers from all over the world without transplanting them, thus pressing the need for a global compensation strategy. A report by OWL Labs found that 56% of employers worldwide offer some form of a remote workplace; a separate IWG survey showed that most respondents consider flexible work the norm.
Whichever approach an employer chooses, the key is recognizing the increasingly global nature of the marketplace, experts previously told HR Dive. And that may require HR to adjust not only their compensation strategies, but how they approach productivity over all. "Since remote work is much more viable," Monster Career Expert Vicki Salemi previously told HR Dive, "it's important to focus on the quality of work getting done, instead of where and when it gets done."
