A Guide to Setting Remote Work Salaries | ChartHop

Workforce Trends

Around this time last year, I conducted a poll of this newsletter’s readers on the topic of location-based pay. Given the rise of remote work during that time, I asked readers: If an employee relocates to a geographic location with a lower cost of living, should their salary be reduced accordingly? Based on 117 responses, 42% said that it would depend on the job, 37% said salary should not be adjusted, and 20% felt it should be adjusted (all numbers are rounded). I mentioned in a previous post how firms had taken different stances on this topic: while Facebook, Twitter, Microsoft, and Google base pay on geographic location, smaller companies, including Reddit and Zillow, have shifted to location-agnostic pay models. These mixed results reinforce the complex nature of this topic. But as firms think through the implications of these decisions on their ability to attract and retain workers while ensuring fairness, they must be deliberate about these decisions. This paper provides ideas firms can consider when determining their philosophy and practices around location-based pay. The authors recommend that firms first ask three questions when considering a location-based pay model. 1) Are enough employees working remotely to warrant location-based compensation? The authors note that if fewer than 25% could work remotely, a firm should maintain its current salary structure. 2) How would we adjust compensation when employees move? 3) How would we ensure pay disparities are strictly based on location or experience? One fundamental question I would add is:  how would adjusting salaries of remote workers impact our ability to attract and retain key talent, particularly in the areas that disproportionately enable our business strategy? Since the topic of location-based pay for remote workers is influenced by many factors–ranging from talent strategy to fairness–firms will need to think through the right set of questions to ask as they explore this topic.

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