In the first article of our compensation series, I briefly outlined the three major compensation philosophies a company may hold. Namely a globalized approach, a localized approach, and a hybrid version that incorporates some elements of the previous two. I also mentioned some of the elements that affect how compensation is set, such as calculators, data sets, and particular company values. 

While this article can be read on its own, the series will make the most sense together so if you haven’t had a chance to read the previous article I recommend taking a look. 

Over the next few articles, I’ll be unpacking the arguments for (and against) each of the significant compensation philosophies and sharing the different perspectives of companies and advocates who hold each viewpoint. 

An ongoing argument for paying a localized salary

This year brought the argument over how to compensate employees to the forefront of HR dialogue as the coronavirus pandemic caused a mass uptake in working from home and remote work policies. Major companies like Facebook and Twitter publicly announced their permanent move to remote work. They shared how this would affect their compensation strategies—many advocate for localization. 

However, despite its recent presence in mainstream media, this isn’t a new concept. 

“This conversation has been going on for a very, very long time, it would be naive to say that we haven’t already seen companies going into new regions to build up things in less expensive labor regions,” says bethanye McKinney Blount, the Founder and CEO of Compaas, a compensation software and consultancy firm.  

“For example, there are companies that would build call centers in Arizona, in Utah, or in Montana, right? It’s not because Montana is the hotbed of call center eliteness it’s because they were looking for a less expensive place where they could build out that particular kind of work.”

So, if localization is already standard practice — why are people concerned now? 

“The thing that makes this complicated is the idea that in a call center, they expected people to come into that office. That’s why they were building it in that region,” bethanye says. “But what happens when people are not expected to physically come into an office?” 

Should working remotely change how we feel about compensation? And if so, how? Is a globalized approach really the only ethical position? And is saving money the only motivation for all those pro localizing?   

Lower cost of living 

Perhaps the first argument that you’ve heard for a localized approach is that cost of living and expenses vary from city to city and country to country. Earning the same salary as your Bay Area counterparts while living in a small town means teammates will have vastly different lived experiences because of their purchasing power in these disparate locations...read more

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