Compensate remote workers ‘fairly’
Employing people all over the world is super, super complex — as Dee Coakley, cofounder and chief executive of Dublin-based Boundless, knows well. Her startup helps companies “employ anyone, anywhere” and comply with local HR standards and manage payroll. This week, she shares some guidance for startups beginning to hire people all over the world.
The most important thing is to have a philosophy. Then write it down — and stick to it. Some companies pay the local market rate; that’s historically most common. There’s a real logic to that — if I have a person in California who I were to pay the same as somebody in rural Croatia, the person in California would not have a roof over their head, and the person in Croatia would be living like a king — but they’d be doing the same job. You also have to take into account competitiveness; that person in California could access other jobs at the California rate. But then again, that person in Croatia can now maybe also access the California rate at another company, now that the global workforce is more mobile.
Other companies use a formula. They use that to adjust pay based on, for example, the country the individual is living in, whether they’re in a city or more rural and what their cost of living is. I haven’t heard of people factoring in tax — tax rates vary hugely worldwide so you as an employer pay 1.25% on top of the salary in Denmark, whereas in France it’s almost 50% — but I can imagine that’s coming down the track.
Don’t forget about the cost. It is quite astonishing how many people make hiring plans and assume the cost of employing somebody to the employer is the same everywhere. It’s wildly different. Factor that into calculations.
Every company should strive to be fair… although “fairness” is an incredibly challenging thing to deliver on. Sometimes when we’re hiring for a role, the market rate is higher than we thought it would be. We then go to the other team members in a similar role and bring them up. We review everyone’s salaries once or twice per year, and bring them all in line. You will just lose people otherwise; members of your team will have a chat at some point, and you will have to be able to defend why this person earns this and that person earns that.
When it comes to benefits, you need to be competitive. You need to provide what people would expect if they were to go to an alternative employer. Find out what’s the norm in the territories individuals live in: what seems like a great benefits package to you might not be well received locally. Be aware that statutory entitlements vary hugely from country to country. Paid time off varies massively: in most states in the US, there’s no entitlement to time off; in France, it’s 41 days. If you’re an employer in the US, health insurance is a big heavy line in your financial plan — but if you have team members in the UK, they wouldn’t expect it. In France, people expect to get money towards lunch every day — and that’s held very dearly. In the UK and Ireland, people really want a bike to work scheme. At Boundless, we produce an infographic for each country setting out the statutory minimum, what the norm is for a good employer in that country — and what the norm is for a really great employer in that country.