The future of distributed compensation
What do you see the world as in 5 years?
As Gen Z is gaining power in the active workforce, this tech-savvy, values-driven generation opting in for meaning and purpose in life and work and rejecting the 9-5 at the root, is joining forces with Millenials forming the majority of the workforce over the coming decade. This might just give us a critical mass to a better brighter future. And let's face it - we aren’t in the greatest of the ordeals - climate crisis, debt, overwork, increased cost of living in hot spots, and financial markets could all be improved.
The world is emerging from the pandemic in a new light and with a bright perspective. The silver lining that we see is the startups that kicked off at that time by being flexible, transparent, direct, and (you guessed it) remote-first in everything - from raising the funds for the idea to hiring their first employees. With, 73% of all teams expected to have a remote workforce by 2028, it’s hard not to guess where the ship is moving and yet the implementation of remote work and changes that come with it demand a deeper discussion.
How do we benchmark the compensation for remote-first companies hiring globally?
Option 1: Office HQ Location
Benchmark all salaries against one HQ location for all hires. Same pay for all with the same level of contribution irrespective of where they are choosing to base themselves or move to.
Option 2: Location I am hiring from.
What is competitive in the market I am hiring from? This will call for a deep dive into salary benchmarking in each country in the world, and that is a continuously moving train.
Option 3: Derive global, location-independent remote salaries.
Some of Buffer salaries are derived like this.
Option 4: You give what the candidate asks irrespective of where they are based.
If you are at a crossroads, Oyster HR might be helpful for you to move to the remote.
Seeing the discussion go for all of the above, I wonder what your perspective is on this? How would you solve the challenge? Would you mix and match some of the strategies or select a particular one?
Comment on this poll to let me know your thoughts on this.
There are few closing notes I’d like to add to the ongoing discussion:
9-5 isn’t adequate. Learn to trust your employees and move away from hour contribution/remuneration to outcome-driven pay. Flex your way through to what works for your employee’s lifestyle and hits your objectives.
Embrace the self-employed workforce. The public gets more educated on taxes, pension, registering a business, and in some countries sees a lot of benefits of flying solo rather than being a full-time employee. That doesn’t mean you will engage with a talent for 1 week, rather you can engage with them for 10 years on conditions that are beneficial to both of you (take Poland b2b arrangement for instance).
Gain trust with transparency. Sitting behind the walls is becoming a thing of the past. Be open to what you can offer (financially and non financially) from Day 1. Take a look at what Buffer does as an example.
Equality. Same contributions same pay. Irrespective of the 4 types of diversity. You will lose on Gen Z hires otherwise.
People want to spend time thinking about what they do, not how they will pay the bills and save for retirement. One idea could be to offer coaching on financial planning and investments for your employees to help them plan for the future.
Find deeper motivations of the people you hire. To me - product and engineering are creatives and have a greater sense of where they want to dedicate their time to and what they want to build. Seeing beyond the comp will help you retain and propel the talent in your team forward. Behind every person, there is a need to belong and socialize, for example, gift group experiences in the form of getaways and regional meet-ups.
Focus on lifelong learning, continuously reskilling, and upskilling your talent. Contrary to the common belief of job-hopping, 83% of Gen-Zers want to learn skills to perform better in their current role
