Compensation for contributions, not location
Now, more than ever, remote work is on the rise. Recent research from Gallup shows that a whopping 54% of office workers say they’d leave their job for one that offers flexible work time.
Alongside Dribbble, companies like Creative Market, Basecamp, Buffer, Github, Automattic, Zapier, and InVision have long embraced remote work and eschewed office-centricity. But in the wake of this global pandemic, with COVID-19 forcing this spontaneous remote work experiment, more and more companies are coming to terms with the fact that employees are increasingly looking for flexibility in their jobs and that a team’s collaboration and productivity aren’t dependent on being in an office.
For many companies, this is a whole new landscape. As we move to location agnostic employment this is our time to rewrite the rules on employee compensation.
Traditionally, tech giants like Google, Apple, Facebook, and Adobe, to name a few, have set up shop in Silicon Valley, where the labor market is pricey and highly competitive. They’ve seduced their workforce into enduring multi-hour commutes and one of the most expensive housing markets in the United States and lured them into the office with the promise of glamorous amenities like free lunches, massage therapists on staff, nap rooms, beer kegs, and ping pong tables. Now, however, those luxurious-sounding perks are quickly becoming less alluring.
Facebook CEO, Mark Zuckerberg, recently announced that the company will allow most of its employees to request a permanent change in their jobs to let them work remotely.
This announcement initially reads as exciting — but there’s a catch in the fine print. If employees opt to work remotely and choose to relocate outside of the Bay Area, Facebook will benchmark your salary to your new location. In most cases, the expectation is that this will result in pay cuts for employees.
According to Facebook, in a recent survey, 40% of Facebook’s 50,000 employees said they would permanently change to full-time remote work, and over 75% of these employees said they might choose to relocate — meaning they could face a decrease in pay.
Skeptical over how well this will work out for Zuckerberg? You’re not alone.
At Dribbble, we have shaped our remote culture around the firm belief that creativity, productivity, and collaboration can happen anywhere, and that we should empower and encourage our team to work where they feel most comfortable and inspired. The contributions and abilities that each member brings to our team are not limited by location, and we believe that this shouldn’t be the case for their compensation either. To that end, we’ve built out remote salary bands using data from national salary databases to determine a salary base for each role that’s both competitive within the industry and is location agnostic.
Rather than benchmark each person’s salary to their home city or town, we aimed to build a remote-company salary framework using national averages in Canada and the United States, the two countries where we have payroll today. We have built remote salary bands for our teams in both these countries to ensure we are compensating our team fairly and equitably regardless of location (within a country), gender, race, and other contributors to pay inequality. To stay competitive, we aim to land everyone within the 75th to 90th percentile for their respective level based on the national average. We have standardized annual raise processes and when we have people reach over the 90th percentile, we encourage managers towards promotion decisions so that people move into a new band, with more expected seniority and responsibility in the promoted role.
This system provides opportunities for growth for both those that want to move into a management track, or wish to remain as individual contributors, and helps us avoid situations where tenured employees aren’t automatically pigeonholed into management roles.
Not only is this system much more simple and sustainable to administer in comparison to the effort put into benchmarking each individual hire to their specific location, but it has also allowed us to take full advantage of a wide, truly remote pool of candidates.
We’re not limited to looking within San Francisco for great talent, and we’ve found amazing talent across all of North America.
Our location-agnostic salary bands encourage the growth of a robust, flexible, and equitably incentivized team. This approach has supported us in minimizing subjectivity in our compensation decision making and has helped us connect hiring and incentivizing our team to our remote-first values. It also allows us to formally recognize contributions that are typically undervalued or ignored in traditional career ladders, but are nonetheless valuable and needed. And — it helps us avoid the sticky situation that Facebook’s found itself in, of needing to adjust salary when someone moves to a new location.
Buffer, who has up until recently, maintained pay benchmarking by location, has also made the shift towards a remote-first, location-agnostic salary strategy. They’ve realized that “over the past four years, a primary challenge was keeping up with pay benchmarks across a vast number of locations. It was complicated to explain how the formula worked to existing team members receiving promotions as well as new team members. With this level of complication, subjective decisions were made which put us further away from the intent of the formula”.
While there’s still a lot of uncertainty about what the world will look like post-pandemic, it’s safe to say that remote work has gained significant traction in the past months, and for many companies, it will be the new normal. In this new era of remote work, companies who are willing to truly support and empower their people in working where they feel most productive, comfortable and inspired will be able to attract and retain the best talent as candidates will opt for companies who will treat them well and compensate them for their contributions, rather than their location. For remote teams, investing in a compensation strategy that allows you to be consistently equitable and fair will play a crucial role in helping incentivize and align your workforce with your company goals and values.
