Guide to salary benchmarking for global hiring

Key takeaways

• Salary vs. compensation benchmarking: Salary benchmarking involves comparing base pay for similar roles across organizations or industries. Compensation benchmarking is a broader view and includes total costs like benefits and employer contributions.

• Why salary benchmarking matters: It helps you attract and retain talent, reduce legal risk, and forecast costs.

• How to start: Strong benchmarking starts with defining your compensation philosophy, sourcing accurate data, factoring in cost of living, and auditing regularly.

• G-P can help: G-P Gia™ gives you location-specific pay guidance for various job roles, while G-P EOR streamlines the hiring process based on those benchmarks.

Paying local talent is straightforward. You know the market, the numbers, and the expectations. But paying global talent without benchmarks is a risky guessing game. Underpay and lose talent. Overpay and destroy your budget.

Salary benchmarking ensures that pay is relevant to the country and city you’re hiring in, the job scope, and local requirements. With pay equity and transparency laws tightening around the world, data-driven salary decisions are more critical than ever. 

In this guide, you’ll learn what salary benchmarking is and how to set competitive pay for global teams.

What is salary and compensation benchmarking?

Let’s start with what is salary benchmarking. Salary benchmarking involves comparing pay for a specific role across different markets. Compensation benchmarking takes this a step further. It extends beyond base salary and looks at bonuses, equity, and benefits to understand the full cost of hiring. 

• Salary benchmarking = base pay comparisons (and sometimes variable pay)

• Compensation benchmarking = salary benchmarking + equity (where relevant) + employer-paid costs + mandatory benefits + supplemental benefits 

Let’s say you’re hiring two professionals in different countries for the same role. Miguel is based in Brazil and Claire is based in France. A salary benchmark reveals what a compliant offer should include for both candidates.

Miguel’s compensation should include a 13th-month salary. This is a legal requirement in Brazil . Other common benefits could include meal vouchers, transportation vouchers for on-site work, and a life insurance policy, depending on local rules and applicable collective bargaining agreements (CBAs).

For Claire, France has no legal requirement for a 13th-month bonus, but an industry-specific CBA may include one. You also need to consider social contributions and provide private health insurance that complements the public system.

Benchmarking salaries against market rates is the starting point. Then, compensation benchmarking helps you build offers that consider the true cost of hiring global talent.

Why it matters for global employment

Salary benchmarking can improve global hiring outcomes, reduce risk, and strengthen cost control.

Attract and retain talent

Benchmarking helps you land great people and keep them. If salary ranges aren’t reviewed, they can lag the market and create quiet dissatisfaction that shows up later as attrition. Regular benchmarking highlights when role compensation drifts below market values. 

Pro tip: Use reliable sources and schedule regular updates. Most companies do annual compensation reviews, but consider benchmarking more frequently if: 

• There are major changes in the labor market or economic conditions

• You’re expanding into new regions or industries

• You experience high turnover or challenges attracting talent

• There are sudden regulatory or compliance changes affecting pay

Mitigate legal risk

Compensation decisions should align with local labor standards, pay equity rules, and pay transparency laws. Benchmarking helps you document the “why” behind your offering. 

It also helps you stay compliant, making sure you factor in mandatory bonuses, allowances, and employer contributions required by law or collective agreements. For example, countries like Guatemala and Portugal mandate an extra 14th-month payment on top of a 13th-month paycheck. This requirement is easy to overlook without a formal benchmarking process. 

Cost optimization and financial predictability
Hiring globally is a cost decision as much as a talent decision . Compensation benchmarking helps you compare like-for-like by looking at the full cost of employing someone in a specific country. When done well, it gives HR and finance teams insight to make strategic hiring decisions.

How HR and finance teams can use benchmarking data

Key components of a global compensation benchmarking strategy

If you’re hiring globally, taking a total rewards approach to benchmarking helps you answer two questions:

1. What offer will talent respond to in this market?

2. What will this hire cost once local requirements are included?

Total rewards cover the full package an employee receives, including the financial and non-financial benefits, plus employer-paid costs. A total rewards benchmark typically includes:

✅ Base salary
A local market range based on the role, level, and location.

✅ Mandatory benefits
These change by country (and region) and can include social security and pension contributions, and other statutory requirements.

✅ Voluntary benefits
What’s competitive in one market may be baseline in another. Choose perks based on what’s common and valued locally. 

✅ Employer burden
Employer-paid costs can include taxes and social expenses. Use our AI-powered global HR agent, G-P Gia™ , to get instant compliance guidance and employer burden rates across 50 countries and all 50 U.S. states.

How to conduct international compensation benchmarking

Follow this four-step guide to learn how to benchmark salaries.

Step 1: Define your global compensation philosophy

Think of your compensation philosophy as the principles you’ll apply to every new hire.
It should answer:

• Why you’re hiring in that location. For example, skills shortage, time zone coverage, language requirements, or expansion plans.

• Whether this is one role or the start of a repeatable hiring motion

• How you’ll approach salary across locations: location-based, location-agnostic (same pay regardless of location), tiered/zoned, or hybrid

• What your market positioning is. Whether you aim to lead, match, or lag the market:

Step 2: Collect localized data

This is where many teams struggle. Good salary benchmarking depends on good inputs. If a source can’t explain where the data came from, how roles are matched, or when it was last updated, tread carefully.

A practical approach is to use a mix of sources so you can cross-check ranges:

1. Reputable compensation surveys and consultancies
   Examples include Mercer , Aon Radford , Willis Towers Watson , and Korn Ferry .

2. Government or statutory sources
   These are useful for baseline requirements like minimum wage rules, statutory pay items, or mandatory contributions.

3. AI platforms
   AI salary benchmarking tools can help you filter salary data by country, region, role, and industry. But make sure to choose an AI platform that uses verified data. Gia is built on a proprietary knowledge base of 100,000+ legally vetted sources and 1,500+ government articles. Get trusted guidance on pay requirements, benefits, and pay equity across 50 countries and all 50 U.S. states to support compliant decision-making.

Step 3: Factor in cost of living and location

City, region, and local labor-market conditions matter.

If you’re aiming to localize pay across countries, purchasing power parity ( PPP ) can help you sense-check decisions. PPP is a way to compare currencies by adjusting for the cost-of-living differences between countries. 

If your global compensation philosophy is location-agnostic, you may choose to keep pay fixed when professionals move. With this approach, pay is tied to scope, level, and role impact rather than geography. This approach can reduce frequent re-leveling and recalculations, but it comes with trade-offs. You’ll need:

• A clear internal leveling system 

• A plan for fairness conversations in high-cost locations

• Local compliance checks for required benefits and employer obligations

Step 4: Audit and adjust regularly

Global compensation ranges will shift over time, but regular audits keep offers competitive, protect budget accuracy, and reduce turnover.

Here’s what this looks like in practice:

• Run a full review at least annually.

• Consistently check markets characterized by high inflation, rapid salary movement, or currency volatility.

• Track outcomes, including offer acceptance rates, time-to-fill, and early attrition. 

• Age your data.

If your salary data is out of date, you can age it forward using the salary increase budget you’re working with:

Aged rate = Old rate × (1 + salary increase %)

Example:
If the market rate was USD 80,000, and your reference increase is 3.5%, your aged estimate is USD 80,000 × 1.035 = USD 82,800.

It’s best to only age data 1–2 years and to stay alert to market shifts, supply or demand changes, and any regulatory or CBA changes.

Applying the 4-step process

Now that you’ve learned how to conduct international compensation benchmarking, let’s revisit our hiring scenario with Miguel and Claire:

_{* Disclaimer: The salary rates in this example are for illustrative purposes only. They're not actual cost estimates for these locations, industry, or role.}

Base salary is only the starting point. When you account for employer burden and required benefits, two identical offers can land at a very different total cost. This changes how you evaluate the best hire.

After you’ve defined and applied the steps above, you can make faster hiring decisions and align offers with local expectations and requirements. Once you have your ideal candidate, let G-P handle the rest. 

As a global employer of record (EOR) , we make international hiring easy. With us, you can hire, onboard, and pay talent in 180+ countries, without setting up local entities. 

Expert tips for compliant salary benchmarking

A credible benchmark should stand up to scrutiny from candidates, internal stakeholders, and regulators. Use the following practices to strengthen your strategy.

Prioritize local expertise
Pay rules, statutory benefits, and employer-paid costs change by country, so validate your benchmark against local requirements and market norms before you finalize the range. 

Pro tip: If you’re hiring in a new market, tools like Gia can help you validate local requirements and norms. Once you’ve found your ideal candidate, G-P EOR can put your plans into action by giving you a quick and easy way to hire talent, without setting up an entity.