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QUESTION:  How should I approach comparing pay in two different countries? Can I use Assessor Series data to compare a position in Canada with its counterpart in the United States? If I'm trying to develop geographic differentials for my company's US branch offices, as well as some branch locations in other countries, how do I translate US pay levels for foreign offices?

 

ERI recommends that local national area differentials be used to adjust branch pay amongst cities in the same country as compared against that country's national structure (equals 100%) or local national headquarters (equals 100%).  It is not advisable to take a pay system from one country and then try to simply "adjust" it for a foreign branch office using the general geographic differentials.  It is a better practice to set up separate pay systems for each separate country.  

 

When establishing wage and salary differentials, it is important to note that each country's industries and employers value jobs differently than their foreign counterparts.  The relationships between positions (internal equity) are not transferable across borders.

 

For example, in general, Canadian unskilled wage workers earn much higher pay relative to their US counterparts and Canadian managers and executives earn much less relative to their US counterpoints.  Additionally, you don't find the tremendous range between unskilled wages and executive pay that is found in the US (where, for instance, executives may earn hundreds of times the income of wage workers).

 

The Geographic Assessor database does allow users to view general wage/salary levels between the US and Canada, plus other countries around the world.  These general wage level comparisons, however, should be considered only a "first step" in determining competitive pay internationally.  When it comes to assigning salaries to positions, ERI recommends that separate compensation practices for each country be established.

 

The Salary Assessor and Executive Compensation Assessor databases, on the other hand, do provide position-specific remuneration data.  For companies administering pay in the US and Canada, or other countries worldwide, the Salary Assessor and the Executive Compensation Assessor data are the recommended tools for comparing and setting individual position pay.

 

The Salary Assessor and Executive Compensation Assessor databases display all remuneration in local currency.  Unlike the Geographic Assessor database, where a conversion between national structures is necessary after an exchange rate conversion (in order for pay data of different countries to be compared to a single base city), fluctuations in exchanges rates from quarter to quarter will not influence the pay levels reported in the Salary Assessor and Executive Compensation Assessor databases.