Salary banding is the cornerstone of any effective compensation strategy. By grouping jobs with similar value or responsibilities into predefined salary ranges, businesses can ensure fair and consistent compensation—boosting both talent attraction and retention.
In this blog, we’ll offer a comprehensive guide for companies looking to create salary banding policies that ensure fair, competitive, and compliant global compensation structures. We’ll explore a framework for creating salary bands of your own, while also examining some benchmarks you can set your salary bands against.
Before we start, however, a word on why salary banding is more urgent than ever. Increasingly, it’s not just about getting talent on board but also complying with regulations. Consider the EU Salary Directive, which will come into force in June 2026, requiring employers to conduct thorough assessments of their compensation and report their results publicly. US states such as California and New York are following suit. Read on to ensure you don’t get caught out.
Develop a salary banding policy
Let’s start by first understanding salary banding within one country.
We spoke to Multiplier’s Product Director – Payroll, Michael Nierstedt, who recommends this be outsourced to consultants who have all the information to hand. But, as he acknowledges, that expense simply isn’t possible for many organizations.
His advice? “Act as a consultant.” If you can’t afford the expertise to help you figure out where you want to land, then you’re going to have to build an MVP of that in-house. Here’s where to start.
1. Buy compensation data solutions
The first step is purchasing software, such as a compensation data solution. However, Nierstedt cautions against putting too much stock in their findings. “Their data sets are a little problematic, especially because they use voluntary salary data.”
2. Look at job postings
Another, potentially more accurate source to give you some direction is to look at job postings. But you have to be careful, because jobs with the same title aren’t necessarily equivalent.
“Look at the qualifications. See if they’re like yours and see what the pay ranges are,” he says. It’s particularly useful to look within those states or countries that require transparency like California or New York. “That will give you a good sense of at least the range you’re looking at and whether you’re in the ballpark.”
3. Utilize your network
Finally, no business owner is an island. Founders, especially, should be asking their peers: “how much are you paying?”You should focus on enquiring into the companies having the most success – which can be gauged by those with strong cultures, as measured by services like Glassdoor.
As Nierstedt says, diving deep into this data can help you dial in what you should be paying. “Also ask some companies that have really low glass door ratings what they’re paying. If it’s significantly less, you can say: ‘I don’t need to be a five star company, but I do want to be a four star.’”
Localize salary bands across the globe
Salary banding’s usefulness only grows for companies practicing global hiring, because it enables them to harmonize wildly varying salary expectations across the world. Little wonder salary grades remain the most widespread method for developing global compensation structures, with 59% of companies opting for such an arrangement.
Salary banding a global company is a harder process, however, involving more steps and complications. For example’s sake, let’s say the following table represents the salary bands for a company hiring in one location in a given field, separated by experience:
For a global company, these roles would then need to be tailored to meet local expectations. While the mid-level role might command $70,000 to $90,000 in one city or country, it might need to be $85,000 to $110,000 in an area with high living costs, for instance.
Start localizing salary bands by looking at local market rates, and adjusting pay structures to reflect regional living costs, market demand, and talent availability. As Global Payroll Strategist & Advisor Ian Giles recently told us: “Organizations need to balance global fairness with local relevance, ensuring employees in different regions feel valued without overpaying or underpaying in specific markets.”
Benchmark salary bands for market competitiveness
We told you salary banding at a global company was harder, but help is at hand. We’ve sourced some preliminary benchmarks you can set your salary bands against in terms of role and region.
Our talent trends page is a good place to start. By helping businesses employ thousands of remote employees across the globe, we’ve found insights and trends from across the globe to help you find inspiration to expand your teams.
Let’s use software engineers being hired by companies in the US as an example. Depending on the country in which they are based, there is significant variation in their monthly median salaries.
It’s clear based on this data that businesses must build in significant variability in their salary banding efforts, depending on where they are looking. It’s not enough to take a blanket approach, with significant variations even among ostensibly similar societies (Canada and the UK, for example).
It’s worth noting that assembling accurate data on this can be hard. Salary transparency in job postings varies significantly across Europe. In the UK, 69.7% of job postings include salary information, while Germany and Italy are behind at 15.8% and 19.3%. As Nierstedt suggested, try for multiple sources if possible.
Don’t assume that these figures are static, either. It’s important to stay aware of where skill shortages exist – as this can quickly ramp up prices. In Asia, employees experienced an average salary increase of 5.2% in 2024, with India leading at a 9.3% increase.
Fair, compliant, and competitive compensation
Global salary banding ensures fair, competitive, compliant pay structures across the world. To stay ahead in a competitive talent market, all businesses should have clear strategies for proactively creating and continually updating salary bands.
With incoming regulatory changes and the increase in volume of global workers, expect salary banding to only become more prominent over the coming years.
Multiplier is here as your Global Payroll provider. Our offering is a way to automate and streamline routine payroll tasks, reporting, and compliance, so you can focus on more strategic work like salary banding. Find out how today.
