The Ultimate Guide to Hiring In Spain: Finding the Right Compensation
Known for its sun, tapas and kind people, Spain also offers a wealth of talent and opportunities for businesses looking to expand their operations.
Whether you're an HR professional seeking to enhance your country knowledge, a talent leader in search of global team members, or a business owner looking to establish a European presence, the Spanish market has much to offer.
In this 3 part series on Hiring in Spain, we will guide you through the process of finding top talent in Spain and explore how you can prepare to compensate fairly.
When it comes to remote compensation, there are three primary options: equal pay approach, cost-based approach, and localized pay.
Equal Pay Approach:
Under this approach, all employees receive the same salary regardless of their location. This method is suitable for companies based in the US that generate revenue primarily within the US. However, considerations arise regarding fairness, spending power, and the scalability of salaries if the company expands to different countries or cities.
The cost-based approach entails spending the same amount of money on each employee, regardless of their location. While this method focuses on recruitment and employer costs, it does not prioritize employees or consider the cost of living. As a result, it is not widely popular in practice.
Compensation is adjusted based on the location, including city, country, or continent. There are two common methods for implementing localized pay:
#1 Determining local salary ranges using local data and benchmarking (best)
If you really want your offers and compensation to reflect the market and remain competitive, then we recommend that you use a reliable, real-time salary benchmarking platform like Lucca or Malt did to scale up.
However if you would like a temporary solution, then here’s your next best option…
#2 Defining a salary grid for the main location and applying a location factor (easiest)
Reminder: this has the limitation that it is not based on market-data or reflect any further distinctions that you would like to have.
To move forward with this option:
Define a salary grid in a main location
Adjust it to a local rate by selecting a location factor based on the cost of living or cost of labor (see definitions in FAQ)
Cost of Living: This factor takes into account the expenses an employee would typically incur in a specific location, including housing, transportation, food, healthcare, and other essential goods and services. By considering the cost of living index for different cities or countries, you can adjust salaries accordingly to ensure employees can maintain a similar standard of living across locations.
Cost of Labor: The cost of labor refers to the prevailing wages and compensation levels in a particular job market. It takes into account factors such as local labor market conditions, supply and demand for specific skills, and industry standards. By benchmarking salaries against local market data, you can align compensation with the prevailing rates in a given location.
Should you use the major city in the country to determine salaries?
When determining salary conversions based on location, it's common to focus on major cities within a country. Major cities tend to have higher costs of living and may also serve as economic hubs with more competitive labor markets. Therefore, using major cities as reference points can help ensure that salaries remain competitive and reflective of the local market conditions.
And now onto the other two major topics on hiring in Spain: finding the talent and navigating the legal details...
Finding Top Talent in Spain
To tap into the local talent pool in Spain, it's essential to leverage effective recruitment strategies.
Circular, a platform that connects companies with a community of over 7,000 recruiters, offers a valuable resource for accessing tech talent in Spain.
These recruiters recommend pre-vetted candidates who match specific hiring criteria, enabling you to connect with active and qualified individuals efficiently.
Circular has helped companies like Troop reduce their time to hire by achieving an impressive 80% response rate.
Before hiring employees in Spain, it is crucial to understand the legal landscape. Spain categorizes jobs into different groups and enforces regulations regarding salary ranges, working hours, and vacation days within each category.
Two types of employment contracts are common in Spain: indefinite and fixed-term contracts. While both options are available, employees generally prefer indefinite contracts due to higher compensation packages and increased job security.
While legal intricacies may initially seem overwhelming, there are solutions available to simplify compliance management.
You learned about compensation and turned to our expert partners Oyster and Circular for enriching your knowledge... so what's next?
If you haven't already, watch our full webinar replay where we dove deeper into hiring in Spain 101
You will be sure to learn:
Why Spain is becoming a popular hiring destination
Sourcing great talent in Spain
Compensation and pay
How to set up a remote employee in Spain and why it's easier than you may think!
So whether you're an HR professional looking to expand your country knowledge, a talent leader in search of your next global team member, or a business owner looking to grow and expand your European footprint, we hope you feel empowered to take in all that the Spanish market has to offer!
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