How do you design work culture and systems for equity in the remote workplace? What does the quick shift to remote and hybrid work mean for compensation and opportunity?
The world of work has changed over the last few years, leaving everyone grappling with how to navigate global teams. The equity challenge of having people in different places is a big part of why Pando was started. I sat down with two innovative thinkers from the People space, each with deep knowledge and expertise in this area.
Kim Roher is responsible for Employee Experience at Oyster. They are a global employment platform that helps companies hire anywhere in the world without having to set up legal entities in multiple countries.
Enrique Esclusa is the co-founder and CEO of Assemble—a next-gen compensation management platform. Their mission is to help organizations make better compensation decisions that are steeped in fairness and equity. They believe that employees need to be able to trust not only the person making compensation decisions but also the systems used to support those decisions.
How can we think about fair compensation with remote work?
It’s important to have a compensation philosophy early on in a business because then you can build in equity from the start.
We know that practically speaking, businesses need to be profitable, and they need to be able to afford to pay their staff. On the ground, this means that sometimes in distributed teams, people will be paid different amounts based on the cost of living where they are located. According to Kim, “You also have to think about how your pay practices are going to support or harm your company's growth.” This means looking at compensation and runway at the same time, factoring people operations into discussions about business success.
In the current economic environment, thoughts are shiting from paying top dollar for talent to reining in costs. Enrique says, “The most important question as it pertains to logic to location is not whether to be location agnostic or not, but rather, why and then where and when.” Remote companies with asynchronous communication can hire worldwide in places where they can pay more competitively. But, office-focused companies may want to look at incentivizing with higher pay. Regardless, he says, “It's really important when it comes to the compensation philosophy to really understand the why and not just copy/paste a comp philosophy.”
Emphasize transparency and accountability
For organizations to move towards fair compensation, they need an underlying structure that calibrates the organization to clear job levels. Employees should have a sense of what each level entails and how to move between them.
For Kim, working with Pando has been really helpful in getting managers to understand the importance of job leveling, not just within their teams but across the organization, “using the same decision-making framework and the same criteria.” At Oyster, a level one employee in different roles will not have the same salary band, but they will have the same framework with criteria for career progression, with salary bands determined by role, team, and location. Put concretely, People Ops can now see a person “is a [level] seven, they're in Thailand. They're in a customer support management role. This is what their compensation should be.” This removes the subjective aspect of managers evaluating that good performance on their team gets a specific percentage raise. These types of decisions bring in multiple types of bias.
For Enrique, transparency and consistency lead to trust. When employees know they are “subject to the same clear guidelines and assessed the same way, you're removing bias, and you also give people predictability.”
How does geographic location affect remote work compensation?
Remote and hybrid work arrangements allow employees to work from anywhere, which impacts compensation. Before the COVID-19 pandemic’s impacts on work, Enrique says, location-based pay was the default for remote or distributed workers.
In the last couple of years, we’ve seen some compensation much higher for lower cost of living areas because it’s leveled out a bit from big cities like New York and San Francisco. Companies may pay higher wages to a Miami-based worker than they saw before, attracting talent. With the COVID-19 pandemic, there was also a hiring spree where companies went remote and paid top of the market for many different types of locations.
The current trend, though, is about dealing with a recession. Companies are reflecting on whether their processes are sustainable, which brings location-based compensation back into the mix as a possible avenue for cost savings.
For Kim, companies are now asking, “Are we location-specific or location-agnostic?” And what does this mean at scale? For Enrique, it may not be helpful to find a global midpoint that works for an unreal, idealistic average person. His company has “come to the decision to define fairness and equitability, very specifically, and for us, fairness means fair across positions and locations…Equitability is, regardless of your demographic, if you're doing the same job and your performance is equal, then you should have equal pay…For fairness…96% of our customers still have a location-based pay policy.” They may be location-agnostic within a country (e.g., the US), but location-specific globally, factoring in benefits, home office stipends, and taxes because they impact total compensation.
Enrique and Kim shared that companies should:
Establish a compensation philosophy—are you trying to be the most competitive in the market, or does your powerful mission lead others to you?
What is considered fair in your company? Equal work for equal pay? Or equal work for equal purchasing power/lifestyle where the employee lives?
Find data sets—or triangulate data with similar roles and locations—to support establishing compensation frameworks that align with your job levels.
Importantly, these changes will lead to operational efficiency.
The quick shift to remote work has significant implications for compensation and opportunity in the workforce. Employers need to find ways to balance compensation with sustainable operations. Overall, designing a work culture and systems for equity in the remote workplace requires a commitment—and the systems to support—inclusivity, transparency, and fairness.