Setting compensation is something every employer has to consider and the decisions they make ultimately affect everyone they will go on to hire. This makes deciding how to approach compensation complicated no matter the makeup of your team, but with more companies embracing remote-friendly policies and expanding their hiring pool internationally, the layers of complexity naturally increase. In an effort to unpack all the competing arguments and intersecting elements, our Journalist, Bree Caggiati, is sharing a seven-part article series on Compensation for Global Teams.

One of the significant components of compensation discussions and something I haven’t spoken about much in this series yet is attraction and retention. Of course, we can talk about the philosophies of compensation approaches and which is more or less reasonable, but at the end of the day, whatever you decide has to work for your recruitment goals. What you offer has to be attractive to the talent you’re looking to acquire and good enough to make them stay long term. 

In this article, I’ll unpack what employees think about the different compensation models and how talent acquisition works in a remote world.

A remote talent pool removes local markets 

One of the major benefits, and indeed arguments, for a remote workforce, is the ability to broaden your talent pool. Organizations are no longer confined to hiring just those living within their city or those willing to move. Instead, as long as they comply with international labor laws, they now have access to the entire talent pool, worldwide.

This was something Mark Zuckerberg made note of in his now infamous address in May last year when stating Facebook’s intentions to go remote.  

“When you limit hiring to people who either live in a small number of big cities or are willing to move there, that cuts out a lot of people who live in different communities, different backgrounds or may have different perspectives,” he said. “Certainly being able to recruit more broadly, especially across the US and Canada to start, is going to open up a lot of new talent that previously wouldn’t have considered moving to a big city.”

The benefits of a broader talent pool go both ways. Underrepresented groups and those who are less able to move locations now have access to a broader range of positions. There are opportunities to reinvigorate small towns and economies by decentralizing the workforce and increasing the need for localized community amenities such as coffee shops and gyms. It also means employers can cherry-pick their new recruits by talent, not constrained by proximity to the HQ, and experience the many benefits of a more diverse team.

Conversely, it creates more intense competition for both employees and employers. 

As it stands, there is still a large portion of companies working co-located, but as we shift towards remote becoming more common, it makes sense that this would also shift what is considered a “market” too.

When companies are decentralized and indiscriminately hire across borders, potential recruits in Australia (for example) are not just competing against those in their local market anymore, but also those overseas in the US and India, and the UAE.

Under these conditions, if an organization opts to localize their compensation, they’re receiving the benefits of borderless hiring but not passing those on to their employees (by means of compensation). It’s almost as if they want to hire without the constraints of the market but impose it again when it comes to salaries. 

You can imagine examples where two identical candidates are vying for the same role — the one living in the cheaper market would likely win out. 

In fact, this is often a significant factor as to why companies go international in the first place...read more

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