Introduction
In today’s ever-evolving business landscape, remote work is more than a trend—it’s a transformation that’s here to stay. As companies adapt to this change, setting appropriate compensation for remote employees presents new challenges. While it might be tempting to focus on the cost of living as a significant factor, at Second Degree, we believe it’s not even relevant. Here, we’ll discuss what variables managers should consider when setting remote compensation and why.
Forget the Cost of Living, Focus on the Competition
Like we said before, one of the biggest mistakes is tying compensation to the cost of living in an employee’s city. The real game-changer is the other offers your potential hire is looking at. You ain’t just fighting local businesses, but companies across the nation and even globally, depending on the skills we’re talking about. Offering a competitive package on a broader scale is key, not just in that specific spot.
The Inevitable Challenges of Distance
When hiring from afar, two kinds of distances get in the way: the actual (tangible) distance and the cultural one.
Tangible Distance
Sure, tech’s made collabs easier, but let’s not forget what’s missing: the in-person exchanges that add a special kind of magic to the workday. Whether it’s bouncing ideas around at lunch or those unplanned brainstorming sessions, there’s a spark in face-to-face that just doesn’t happen over Google Meet. So, while remote work has its perks, it also leaves out some crucial stuff you only find in an old-school work setting.
Cultural Distance
Don’t underestimate this one. Working with someone who gets your customs, holidays, and the little things is a whole different ballgame from working with folks from a totally different background. From culture-based misunderstandings to different holidays, cultural distance can throw you some curveballs.
If you’re going remote, you’re “buying” one or both kinds of distance. The cost of a remote hire oughta be lower than a local one. Why pay more for a “service” that’s easier to get from someone down the road?
Language Considerations: The Price of Proficiency
If you’re eyeing candidates from places where English ain’t the first language, like India or Latin America, being good in English is a big deal. A candidate who’s fluent in English isn’t just a local prospect; you’re competing with remote offers from the U.S., Canada, and Europe. In other words, proficiency in English broadens the playing field, and your compensation offer better reflects that.
Be Wary of Below-Market Compensation
An essential aspect to weigh is the danger of offering low compensation to remote hires, particularly those who are new to the global job market. Let’s say you find someone willing to work for less because they haven’t yet ventured beyond their local market, and they’re mistakenly comparing themselves to that local standard. While it may appear as though you’re getting a deal, exercise caution. Within a few months, this individual will be fully embedded in the international job scene. Once they update their LinkedIn to reflect their new position and experience, they’re poised to catch the eye of recruiters with more lucrative offers. The resources spent on their onboarding and training could be wasted if they’re enticed away by a better deal. Often, by the time you learn they’re entertaining other offers, it’s too late to persuade them to stay. So keep in mind that what looks like an initial cost-saving could turn out to be a poor long-term strategy.
Conclusion
At Second Degree, we’re all about competitive compensation. Forget about the cost of living where the candidate is; focus on the offers they could be getting. It’s all about striking a balance between tangible and cultural distances. By keeping these factors in the mix, you can whip up a compensation package that’ll turn heads, no matter where they’re located.