Developing a Geographic Pay Philosophy: A Tool for Building a Resilient Workforce | BDO USA

With remote work becoming more common, organizations are increasingly determining how geography might affect the compensation of remote workers. I mentioned in a previous post how firms have taken different stances on this topic: while Facebook, Twitter, Microsoft, and Google will base pay on geographic location, smaller companies, including Reddit and Zillow, have shifted to location-agnostic pay models. Zillow’s CHRO, Dan Spaulding, wrote “when you work for Zillow, your long-term earning potential is determined by how you perform, and will not be limited by where you live.” Proponents of location-based pay say that if an employee was paid a premium due to living in a high-cost area, the premium should discontinue when an employee moves to a location with lower labor costs. Opponents argue companies are paying workers for their skills and output, not their location. But as noted in this article, “the issues are more nuanced than one might realize and have implications that may not be immediately apparent for either the employer or the employee.” The article helps firms consider various factors when developing a geographic pay philosophy and offers alternatives for applying geographic pay differentials, such as national averages.