Conclusion
Remote work compensation:
Which pay strategy is right for you?
As you can see, choosing the right remote pay strategy depends on a number of factors, including your company’s values, projected growth (in terms of company finances, size, and locations), and legal considerations.
Which pay strategy should you choose? There's no perfect strategy. Location-based pay policies can help provide similar lifestyles to your employees around the world, but they can also seem inequitable for employees in areas with lower costs of living. Location-agnostic policies take an “equal pay for equal work” approach, regardless of where remote workers live, and thus can seem more equitable. However, they can be expensive in practice, particularly if a company wants to offer a competitive salary for high cost-of-living locations like San Francisco and New York. Hybrid pay models can be a more affordable compromise, combining elements of location-based and location-agnostic strategies. However, because they can still pay according to different markets, some employees may still consider them to be unfair.No pay strategy will be flawless, and what works for one company doesn’t work for all. As We Work Remotely’s Kevin Kirkpatrick says,
“There’s no one size fits all. In the long run, I think a lot of companies will default to what works for them and the constraints of how a company operates.”Kevin Kirkpatrick, CEO at We Work RemotelyRegardless of which policy you choose, it is vital that you clearly communicate the policy with your employees and solicit their feedback. Remote Works’ Ali Greene emphasizes the importance of communication: “Communicate your strategy and rationale internally often. Especially if you’re not going to be super competitive with a market rate, I think there’s really great ways to explain why that is from the get-go and immediately let people cut themselves out of the running if money is going to be a top priority [and] you’re going to totally miss the bar for what people can live off of in certain markets…Being really honest about your limitations as a company can go a really long way.” Greene has seen companies, for example, say that they want to pay everyone the same salary, but cannot compete with the San Francisco market. Being clear and upfront about your company’s limitations – and sharing what you hope to achieve in the future (and ideally what milestones you’ll look for to get there) – can go a long way toward building trust and transparency with your team.
Ali Greene - Co-author of Remote Works
Also, a remote work compensation policy is not static. You’ll need to update the policy as the needs and values of your company and employees change. A decade after setting up their remote pay strategy, Float has continued to update their model. Georgie Roberts, their Director of Operations, says, “It’s been an experimental process. It’s something we’ve definitely modified along the way.” Roberts and her team review their pay strategy annually, coinciding with their annual pay reviews in June. She says,
“We look at our current team and also the talent market, and we review stuff like this constantly. And so we don’t necessarily put a strategy in place and set and forget. We look at these every single year…We actually don’t ever say that it’s done.”Georgie Roberts, Director of Operations at FloatSimilarly, Kirkpatrick recommends setting goals for your remote pay strategy and then regularly reviewing the strategy to see if you’re meeting the goals: “Be prepared to iterate, and know that you may not get it right from day one, but the goal is to keep improving it. By setting your goals, you can see if the change worked for the company and employees. It doesn’t have to be quarterly, but you should have a regular cadence to see how it’s working. The market is changing a lot, and the ones who are reviewing are the ones who’ll have a competitive advantage.”If you’re ready to create your own remote work compensation policy, download the checklist below!