As companies hire talent across borders, they’re also having to figure out how to pay people fairly around the world. There’s a lot to consider—local market rates, statutory requirements, employee expectations, cost of living, pay transparency laws, and more. If you're a startup scaling your team internationally, how can you navigate global compensation in a way that's fair, transparent, and scalable?
That's what we explored in the latest episode of Oyster's New World of Work podcast with guest Matt McFarlane, former Senior Director of People Experience at Oyster and now the founder of FNDN (Foundation), a consultancy dedicated to helping startups and tech companies master their pay practices. As a thought leader in compensation strategies and pay transparency, Matt shared his insights on how to build a compensation philosophy, ensure fair and competitive pay, and navigate pay transparency in the global talent market.
Below are the key insights and strategies that Matt shared to help startups nail their global compensation strategy.
Compensation is both analytical and emotional
What makes compensation challenging, says Matt, is that it’s both highly analytical and emotionally charged at the same time.
From a business perspective, compensation is often the largest line item on a balance sheet, so People leaders need to be able to speak to how they’re maximizing that investment and what it’s delivering for the organization. On the other hand, compensation is deeply personal because it’s tied to people’s livelihoods, so people naturally have strong feelings about what they’re being paid.
This means it’s essential to develop a fair, thoughtful, and transparent compensation strategy that strikes a balance between what’s right for your company and what’s right for your people.
Take heed of societal and legislative shifts
Pay transparency laws are coming into effect in various countries and jurisdictions around the world, with requirements ranging from disclosing salary ranges on job postings to reporting on gender pay gaps.
At the same time, there’s also been a significant societal shift in terms of employee expectations around fairness and transparency. With Gen Z making up a quarter of the workforce, more and more people are talking openly about their salaries—especially as they struggle with high inflation and the rising cost of living—and asking companies to justify their compensation practices.
In other words, companies are facing pressure from both sides, says Matt, and many are feeling unprepared for that conversation. Companies need to evolve their pay practices in order to successfully navigate these cultural and legislative shifts.
Define your compensation philosophy
If you want to build a compensation strategy that’s fair, compliant, and competitive, the first step is to define your compensation philosophy. This involves gaining clarity on your approach to compensation, or how you think about pay as a company, as well as how you plan to deliver on it.
Your compensation philosophy should be aligned with your mission and values so that the way you reward people is consistent with your core principles. It should also take into account the industry and market you operate in and how competitive you want to be.
Articulating your compensation philosophy early on helps you build out the structures and frameworks that will ensure that your pay practices are clear, consistent, and fair. You’ll be in a better position to implement pay transparency and answer compensation-related questions from employees and candidates.
💡 Need an easy way to benchmark salaries around the world? Check out Oyster’s Salary Insights tool for compensation insights across 130+ countries.
Communicate early and often
Building and implementing a thoughtful compensation strategy is a huge undertaking, so once you’ve achieved it, you might feel like your work is done. But in fact, a major task still remains—communication.
The importance of communication can’t be overstated, says Matt. You need to explain your approach to compensation to your employees, such as the reasoning behind pay bands, job levels, review cycles, total compensation, and more. Since compensation is an emotionally charged topic, people want to understand the pay decisions that affect them, and the best way to reassure people and build trust is to communicate about compensation as clearly and transparently as possible.
Managers are often the ones fielding questions about pay, so be sure to train and enable your managers so they’re well equipped to have those conversations. Managers should have a solid understanding of your compensation philosophy so they can answer questions about salary bands, compensation reviews, external benchmarks, and more.
Get ready for pay transparency laws
Traditionally, compensation practices have tended to be opaque rather than transparent, which creates a huge power imbalance between companies and their employees. That has started to change in recent years due to the increasing awareness of racial and gender disparities, and the resulting social and legislative pressure on businesses to be more transparent.
Companies need to prepare so they don’t get caught off guard when pay transparency laws come into effect. Keep in mind that it’s not as simple as popping a salary range onto a job description. There’s a lot of internal work you have to do first—develop a solid compensation philosophy, ensure that it’s being applied consistently, communicate your approach to your employees, document policies and processes, find and fix any pay disparities, and more.
This internal work lays the foundation for implementing pay transparency so that you’re prepared to answer pay-related questions from both employees and candidates. It’ll also ensure that you don’t face awkward situations, such as if a current employee finds that they’re being paid less than what’s advertised on a job posting for the same role.
Final thoughts: Start small and build gradually
Matt acknowledges that it can seem overwhelming to design or overhaul systems. His advice is to start small, such as by simply documenting your current compensation policies and practices. The next step might be to look up market data that’s available for free. Taking it one step at a time lets you build gradually and iterate as you go along.
Already taken the first steps and want to dive deeper into building a compensation strategy? Check out the full conversation with Matt McFarlane on the New World of Work podcast.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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