As an optional part of pay grade configuration in the Pay Grades tab of Org Setup > Jobs and Job Assignments, you can use org differentials to configure a differential percentage to a pay grade's rate values for specific org units. You configure org differentials in the Org Differentials subtab in a pay grade’s details in Org Setup > Jobs and Job Assignments.
For example, you can configure a differential percentage of 110% for a pay grade and apply it to locations in New York City to pay employees who work there more because of the increased cost of living.
When you assign an org differential to an org unit, it also applies to the org units under it in the hierarchy. For example, if you select a region, the differential applies to its locations.
Only one differential can be active at a time. You can apply separate differential values to different org units.