Hi Puja,
To know the actual answer, it will take full-time work over several months. Let me share a brief snapshot:
1. Standard position description (referred to as JD in normal language): one of the finest resources is "O*NET."
2. Job evaluation: read a minimum of two different systems; good examples are Hay Point Factor, Job Grading. For job grading, check any of the government departments for definitions/salary levels, etc. For Hay Point Factor, I'm afraid I cannot share copyright info. It's an exhaustive version of how we compare jobs in real life (e.g., education/experience levels, information complexity, span of control, budgets, and so on). To give a brief indication, there are 24 compensable factors and 4-10 levels on each factor.
3. Salary survey: this helps us in taking care of "external equity," i.e., in layman's terms, what others are paying.
4. Wage arbitrage on a global level: hiring stats/industry studies reveal patterns in global equity (e.g., nurses are required in a particular country abroad, the home country will feel the shortage, and salaries will rise). On the contrary, in the place of posting with the coming of expat staff, locals will face competition.
5. Technology: ITES is a good example and spans across almost every known function.
6. Income tax regulations.
7. Social compliances (e.g., PF/ESI/bonus, etc.).
8. Individual motives: there are nine career anchors. We know the priorities by a scientific test "RSI."
9. Business needs of the company: every company is unique (refer to SWOT analysis) and so on. We have a cutting-edge methodology that takes care of all the variables mentioned above. It's known as a "cafeteria" or flexible benefits plan. I am a certified Compensation and Benefits Manager (CAMI) with exposure in EMEA/APAC regions. Feel free to raise specific queries.