12 Experts Discuss If Remote Salaries Should Be Tied to Cost of Living
The Covid-19 pandemic is transforming how and where people work. Although it’s hard to pin down long-term trends, many are considering moving away from expensive cities. This migration has created an impact on real estate markets across the world and left companies trying to figure out if having their employees set up in more affordable locations will translate into savings from their payroll expenses.
On one hand, we have social media companies like Facebook and Twitter promising to cut the pay for employees who choose to relocate from the HQ location. On the other, companies like Reddit have taken a decisive stance guaranteeing the salaries of its over 600 U.S employees regardless of where they chose to live in the country.
To adjust pay, or not to adjust pay? We sat down with 12 experts in their respective industries to learn just what their experience has been on the subject at hand at Pangea.ai.
Clemens is an experienced solution architect and technical business analyst in enterprise blockchain use cases specialized in Corda and Ethereum. His approach towards fintech and everything blockchain stems from his background in electrical engineering, AI, eTrading and start-up consultancy.
“Setting a salary depends on the type of hire. If I am strategically trying to convince a key player like a VP of an engineer with experience in large successful companies in the industry to continue their journey with us; then the offer would be competitive and likely match or surpass their current salary bracket.
If we have set positions carved out, then the applicants would be entering the hiring process with expectations on salary established by the seniority of the role and types of activities.
We expect results to be the same regardless of remote or in-office situations as ConsenSys is a remote-first global company focused on protocols and coding. We had major offices that closed down since the pandemic started and we do not have plans to reopen.
We've built a model that allows team leads to schedule local meetups and either ask for reimbursement of team activities or use a WeWork location with a day pass when conference rooms are needed for workshops or whiteboarding. Larger conferences have mainly gone virtual, so travel and commuting expenses for attendees have also been reduced. We have more or less allocated the budget for real estate and travel to better home-office equipment (which by now has been lowered after everyone has gotten better cameras, extra monitors, and more ergonomic chairs); and to funds for one-off team events.
We don't think individuals should be punished or rewarded for working from home as long as the individuals have proven performance with their OKRs.”
Clemens Wan from ConsenSys 📸
Lasse Hamre serves as the CTO and co-founder at Aloe Care Health. As a tech advisor and engineer, Lasse has developed engineering solutions, and coordinated technical activities at major companies like iHEARTRadio, Grid Capital Partners, Picticular, and Pangea.ai, among others.
“In general, I think I would assume that we would have to pay a little extra for people living in expensive locations such as New York City and San Francisco.
Nevertheless, we would not adjust salaries for existing employees based on location. For key employees with expert skills, we would pay salaries independent on location (I.e. for senior/lead engineers, VPs, etc).”
Pablo is a transformation and innovation-driven CTO with a consistent track record of helping CEOs and Boards shape technology organizations to; address new verticals, drive product innovations, reach global customers, and uncover product adjacencies. His deep background in software engineering and leadership has been demonstrated at iconic enterprises like Vonage, iHeartRadio, and Apple as well as trailblazing startups like JW Player, Danger Inc, and WebTV.
“Our salaries have always been based on the employees’ office location. If an employee is working from home, then the salary is based on their local ‘home’ office location.
An employees’ location dictates their living expenses, taxes and other factors of their local economies and this all has an undeniable impact on what their expected competitive income would/should be. This is a bit more complicated in large metropolitan areas where people may live far from the city center but still demand salaries of the nearby market.”
Erik started WeVideo in Norway back in 2011 to disrupt the video industry by creating the leading online video creation platform, providing editing, collaboration, and sharing capabilities across any device and multiple users.
“Whether an employee works from home or office, companies should strive to reward high performers based on their contributions or risk losing these employees to the competitors who are willing to pay more.
Therefore, we believe in having remote employee salaries similar to those who are based at the HQ offices.”
#5 - Kjartan Rist I Co-founder at Concentric I Linkedin
Kjartan has spent the last two decades focusing on the technology sector as a founder, advisor, board member, and investor. Through his international profile and network, he works closely with investment portfolio companies to support the development and accelerate growth. Prior to Concentric, he co-founded the venture fund DN Capital and the merchant bank Korral Partners. In his career to date, he has been instrumental in 100+ transactions.
“The payments should be done according to local cost-base and market conditions. If employees located in cheaper areas are paid less, the company saves on salaries. These savings can be reinvested, allowing a company to expand or reach its goals more quickly.
Conversely, paying staff more to live close to a big city-based corporate headquarters can also be in a company’s interests, preserving in-person collaboration and supervision, and reducing reasons for employees to scatter.”
Kjartan Rist from Concentric 📸
#6 - Tahj Malone I Co-Founder at TrainingHub I Linkedin
An entrepreneur by nature, Tahj has been battle-tested in the various attributes and skills needed to form and run a company. He is currently building an app for people to monetize their knowledge in their respective sports, in a welcoming way, while connecting athletes to them - ultimately creating a hub for sports and fitness.
“The salary would be dependent on how much work the team member is assigned and their performance. Obviously being able to work from home is a benefit but should not take away from the employee’s efficiency and proficiency.
As a tech company, having your team members work remotely can save on having to pay for numerous office supplies and unnecessary size of office space. This way a large portion of the company funds can be allocated towards recruiting top talent.
Ultimately we would determine how much value an employee brings the company in terms of both money and workload in their day-to-day role. That would be a major player in determining the appropriate salary.”
#7 - Antoine Boatwright I CTO at Go Instore I Linkedin*
With a career of 29+ years in IT/IS Development experience, Antoine has been involved in practically all the areas of the tech sector. From DevOps to Compliance, he has been advising and coordinating in the space, oil & gas, business, travel, and retail industries.
“I think that the question is slightly more complex than it might first appear, i.e. a binary choice between paying the same or less. The reasons why this is more complex are because:
- Taxation is not the same in all jurisdictions.
- The overheads for remote and local employees for an organisation can be different.
- The cost of living is not the same wherever you go
- Policies need to be fair to all employees, not just those who choose to be remote.
- Time zones and availability could impact the ability to do a job or an employee’s engagement
- Remote can be “same region, same country”, “other region but same country”, “other country”, or “totally nomad” and they all present different considerations.
- By going remote you might be putting yourself into a new labour pool and positioning yourself in a totally different market.
- Company culture and the “value” it places on proximity varies from company to company
- The amount of remote working experience a person has can significantly impact the effectiveness and therefore salary
For all the above reasons and many more, I think that the only real thing you can say is that there will be a market adjustment that will flow through a natural supply and demand process. This will take into account factors like: rarity of skill sets, the “cost” and “value” of flexibility both ways, the value of the actual individual to the organisation (not the same as the rarity of skill set), differential cost of recruitment, the impact of the role/person and many other factors.
So my view is that although the location of work can change, the method of determining salary has, and should, largely stay the same. People should be paid according to the value they bring to the organisation which takes into account all possible variables tangible and intangible.
This may/will lead to a different $/£ figure by individual perhaps but the method of deriving that number should be consistent across the board. Over time this will inevitably lead to a “grouping” of salary/pay across work modes and locations.
Ultimately, I believe in a fair day's wage for a fair day's work. The two key players in the employment relationship will determine what that looks like. Where they agree, there will be engagement and if they don't, then there should be no hard feelings.”
*The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of the Go Instore or its members. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the Go Instore concerning wages or salary compensations.
Buster is a very passionate and highly motivated team player constantly looking for a challenge. Since the early years of his career, he has focused on building a team to drive growth among multiple companies. As a manager and C-level officer, he works on providing the best platform for his team to succeed and achieve global sales objectives.
“I would pay them for what they are worth. It doesn't matter if they are based in Stockholm or in Belarus, if they have the experience and track record I'm looking for, they would get paid the same no matter the location.
Additionally, if a team member chooses to work remotely 100% we also make sure that they have the best setup at home possible. It's cheaper to supply them with a good desk, office chair, screens, etc. at home than paying for sqm in the city center. Work remotely or in the office has no impact on the salary, we see it as a perk and we know that our teams are more effective being flexible with their work set up.”
Buster Hägg from Sudio 📸
Way before it was hip, Casper was a dedicated mobile entrepreneur, and it led him to found Intent almost 13 years ago. Since then, he has been leading the company to work with major international brands and numerous startups on their mobile strategies and app development.
We pay for talent and their performance. I don't see how them coming to the office changes that.
The office should be a space people are drawn to and we are using it as a platform for creating bonds between the beautiful people working at Intent, bonds that will help the teams work and live better.”
#10 - CTO at Enterprise/Corporation
“The starting point for setting salaries for remote employees is the local market salaries. So we try to stay within the local range. However, for top talent, we will go above that as long as it is not above the range for our HQ.
We try to be conscious about not disrupting the local market dynamics and we are responsible in regards to how high we go as compared to the local ranges. I.e. If the local market range is significantly lower than our HQ range, we will not pay the same in the local market.
IMHO the practices of Basecamp and Reddit are irresponsible since they can unnecessarily disrupt local economies.”
#11 - Avi Latner I Co-Founder at Sloyd I Linkedin
Avi Latner co-founded Sloyd based on a shared passion, between the founders, for creative tech. Sloyd is automating 3D creation making it faster and easier to create beautiful 3D scenes and to render performance efficient 3D at runtime.
“Being an early stage startup we are not big on policies. We do however have a guideline on how we conduct our relationships with employees, customers and investors. We try to keep it simple, straightforward and transparent.
When we interview a candidate, we ask the person how much s/he expects. We assume that s/he'll take into consideration her/his living expenses. If there's someone specific that we want to hire, we'd only look into whether we can afford that salary.
However, as a remote-first company, we can have multiple candidates from multiple locals. In that case, the candidate’s salary expectations, which is probably also dependent on location, is one of the considerations.”
Avi Latner from Sloyd 📸
#12 - D’arcy Jade Whelan I Associate at Outward VC I Linkedin
Being invested in helping to scale companies that solve significant problems from an early age, D’arcy has been in the venture capital world to make a difference. Her focus on FinTech and enterprise technology in Europe has given her the right background to help companies achieve scale rapidly.
“In general, I do not have control over salaries in my day-to-day life.
However, the way I would assess this is based on competition for great talent and understanding what it takes to hire the best and my willingness to pay."
Thank you to our experts for their thoughtful insights and for taking the time from their responsibilities to share them with us!
With the economic repercussions of the pandemic still playing out on everything from real estate markets to supply chains, it is fair to say that long-term effects on the labor market are yet to be fully comprehended.
Covid-19 has forced many industries to wake up to the possibilities of remote work, forcing them to join the conversation about how best to manage this growing phenomenon. Salary expectations, in particular, remain highly debated.
Clearly, different companies vary in their approach to this growing dilemma, but the one thing they all seem to agree on is that remote work is here to stay. So, take care to decide how much to pay remote workers, since this is one of the key questions in the post-pandemic job market.
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