Ready, Set, Remote Salaries by Alex Bouaziz
When it comes to setting salary bands, especially for remote companies, my opinion may not be the popular one. While I don’t think you should pay San Francisco rates to someone in Nepal, I believe you should be fair and understanding. Be a real person, not a salary catfish. Pay people their worth.
Salary bands, pay range, whatever you want to call them are just the amount of money you have in mind for a role you’re looking to fill. Work is worth a certain amount. Salary bands exist to help you bucket this work by skill set, what you’re trying to build, and the capacity you have. To me, salary equates to what you’re worth, the job you’re doing, plus your output multiplied by your location (that was an equation).
There’s no perfect way to go about deciding pay scales for remote teams. The larger a company grows and the more positions that open up, the more you’re going to need a rhyme to your reasoning to fill specific roles and make pay decisions.
Whether you’re beginning your business journey, in the startup phase, or going through the interview process, hopefully, you’ll find some of this info, insight, and (some) straight-up opinions helpful.
How do we do it at Deel?
At Deel, we have a formula we use for our remote team. It’s not one I’m 100% married to, and it’s by no means perfect, but I like to think it’s reasonably fair. There are always outliers and particular circumstances where you have to throw everything out the window, but it’s essential to use your windows wisely. Just remember, empathy wins.
In a nutshell, we hire by looking at the pay rates in specific areas for distinct industries. For example, we’d look at X job in Sydney, London, New York, and Berlin. From there, we take an average and create a pay range based on the percentile we’d like to hire in. It could be the 60th percentile or 80th.
Yes, this equation gives you some insight into our scale. It’s by no means perfect, and it’s crucial to point out that, to me, hiring with integrity, reasoning, and with talent in mind are the bigger deals here. Know their worth, know what you’re willing and wanting to pay, and go from there.
It’s also important to note that, frankly, we have a bit of an unfair advantage compared to most given the data Deel has, but don’t worry. We plan to fix that for the worldwide workforce.
First, salary bands help regulate and be fair towards my team. Second, they help set expectations. We’re great people, hiring great people. I look at it like, “This is how much we’re willing to pay, and if you buy into the mission, think it’s a reasonable salary, then you should join. If someone believes they should be making 3x the offer, we’re probably not the right fit. It’s as simple as that.
Okay, now that you know how we do things. Let’s get into the details of how to hire and pay what feels right to you and your company.
Why is setting salaries for remote work so difficult?
While remote work’s not anything new, the recent influx of potential global jobs caused by the pandemic has opened up opportunities everywhere. However, with that comes a challenge. Yes, you have companies that have been doing this for a while, and chances are they have a system or structure they stick to when making remote hires. What works for them may work for you or may not. There’s no right answer when it comes to creating pay ranges, which is what makes it seem daunting. Things you should consider, though, are where your talent is, exchange rates, cost of living, experience, and market averages.
It’s worth mentioning Netflix (since I’m reading No Rules Rules). They’re famous for their culture. Their compensation is unique because they pay “top of market,” aka the highest end of your role’s bracket. When they work with someone, they try to understand the market rate and pay you top of the market. If your position changes from the market in one year, your pay goes up. If the market doesn’t change for three years, your salary remains the same since you’re still top of the market.
The reason I’m mentioning this is we’re not Netflix. You’re probably not either. If you’re Netflix (or like them) or want to work there, it works for them (and you). If you’re starting to or navigating salaries, it can be a goal, but it shouldn’t be your start. If you want to find out why it works for them, you should read the book. I’m not trying to turn this into a book report.
Where do I even start?
If you’re confused about where to start, your brain and budget are an excellent place to begin. You know what you can afford, and you know what concessions you’re willing to make given the right person. Resources on LinkedIn, Glassdoor, all those websites are helpful but shouldn’t be a driving factor in creating your payscale. It’s an individual jigsaw puzzle, and there are tons of parts to piece together. Salary calculators should be a guide. Don’t let them drive decision-making.
Remember, nothing is permanent. What’s working one day may not work next month. Prepare to be flexible and realistic. Take GitLab’s Compensation Calculator, for instance. You may be willing to pay more for a role than them because the position is more core to your business’s growth and goals. Take salary calculators with a grain of salt. A company standing behind the numbers of other companies isn’t the right move.
How to manage potential remote employee expectations?
The interview and hiring process can be draining and sometimes a time suck. Finding good talent and the right culture fit can be like finding a needle in a haystack while only using Zoom. *buffering* At Deel, hiring completely remote candidates allows for almost zero bias. If you’ve made it to us, you’re good at what you do. It allows us to create an environment for diversity and equal chances to thrive.
Most potential hires have an idea of what they see themselves getting paid. Like them, you should have a number too. Chances are they’ve done their research, have benchmarks from previous roles, or at least used their free trial of LinkedIn Premium to check out “the market.” Be prepared to talk numbers sooner than later. No one likes wasting their time, but be transparent about your flexibility and what compromises you’re willing to make.
Everyone has their way of being empathetic. Listening, being aware of a potential hire’s situation, and understanding the life they require to balance work, and a career properly are essential factors.
At Deel, we’re very transparent about the bands we’ve established and how we’ve benchmarked certain positions. For example, if we are looking to hire a Software Engineer, we open the role globally, focusing on finding the best candidate. Once we have found a candidate we want to extend an offer to, we look at the local averages for the role in the place they live. As a company, we determine what percentile we want to pay. Some companies pay in the 90th percentile, others the 50th; find what makes sense for your business and growth stage. After that, we cross-reference the two numbers and make an offer.
After all, you’re a human wanting to hire another human for a role. Be a real person and let them know where you’re at; they’ll appreciate it.
But am I doing this right?
The answer is “Probably, maybe, yes and no.” Again, it’s not a one size fits all process. However, there are some things you can avoid. Keep in mind, equal and fair pay does not equate to a competitive salary. If you’re paying minimums and matching averages, it’s not competitive.
Of course, you should take into account where someone lives. Yes, someone in San Francisco will make more than an employee in Idaho. It sort of goes without saying. Be prepared to explain these things and why your rates are where they are.
The buck doesn’t stop at salaries. Equity and added benefits are great ways to create an attractive offer. You can even offer signing bonuses (these usually come with a clawback), Build a competitive package and offer desirable incentives. People who work remotely, or want to, are sold on the idea. Flexibility comes with the offer. It’s not a selling point. Don’t get stuck on that. After all, they applied.
Should I care about the competition?
Sharing isn’t always caring. Keeping an eye on your competition is healthy, though. Maybe you have a friend who owns a business or aunt in HR. Those are great resources, and they can be helpful. Monitoring what competitors are doing and how they’re compensating can be useful; just don’t let it discourage you. Let it guide you.
Some companies (I won’t name names) take a standardized approach to salaries. Maybe you’ve heard of this, and perhaps you haven’t. It’s just paying everyone, at a specific level, a uniform amount across the board, no matter where they reside. I’m not a fan of standardized rates. You can’t apply them to distinct roles. For instance, say you’re bringing on a VP of Operations. How do you standardize a one-person job?
I do think there’s merit to standardizing pay for certain types of roles. Ones that are, for lack of a better term, more standardized. From that, you’ll have people who get a higher raise because they’re better — this makes the most sense to me.
Um, what did I miss?
My advice is by no means my legal, binding, or the only way you should approach hiring and paying your remote team. It’s just my opinion. Take it, leave it, but if you’ve made it this far, you’re at least reading it. A few more things to mention before exiting (virtual) stage left.
Sharing wages internally, in theory, sounds nice. If you look at places that have done this, it probably causes more harm than good. I’m not saying to be shady or lack transparency–you should have nothing to hide. Your team should trust you, the company they’re working for, and know their pay is fair. They should be happy with what they have. And if you’re doing things right. They will be. If you’re going to share anything, share your ranges or a tier system you use for hiring.
Hiring excellent talent is one thing. Keeping valued team members on board is another. When you develop your salary game plan, consider pay increases, room for growth, and what an evolving package should look like — after all, if you’ve made the initial investment, you should consider how to nurture it. Different departments have different ways of thinking. Some may cap based on experience or stick to a percentage. My way of looking at things is: “You’ve been doing well, and I think based on market data and based on where you’re at, X salary would make more sense for you now.”
Okay, my closing statement for real.
The worldwide workforce is changing. That’s obvious. With change comes hurdles. Correctly compensating remote hires is one of them. While it may not be like riding a bike, it does get easier over time — kind of like holding a plank (if you’re into that, I’m not). If you do it every day, you’re going to get better.
The most useful thing you can do as a company is to listen, adjust, and trust your gut. If you can’t afford someone, don’t hire them. It’s not about keeping up with the competitive horses that raised tons of money, and it’s not about competing with the Facebooks and Googles of the world. Every company has a goal they want to achieve, invest in the areas critical to your business and give people a culture they love. Suppose comp and equity can stand independently, the determining factor’s culture. So get your pay sorted and concentrate on finding the ideal fit.
Onwards, upwards, and remote-wards!
Alex
*Senior Copywriter, Tyler Bradley, helped write this piece. You can follow him on Twitter @tylerfbradley (or not).
