A few years ago, Basecamp published an article on how they pay their employees. In short, they pay everyone the same, regardless of where they're located. Then last year, Nick Francis, founder of Helpscout, doubled down on this idea with his article titled "Remote employees shouldn’t be paid less based on geography."
Sounds great, right?
It probably resonates with startup employees working anywhere but San Francisco. Your work is literally the same, so why wouldn't you deserve the same benefits as Bay Area employees?
We employ people from all around the world at Slite. And the reality is I believe a bit more tricky, for 2 main reasons.
Only the US can afford this.
I'll put it simply: If a startup's baseline is not the one of a US tech hub, then their funding is probably not at that level either. The problem is that the sentence "Remote Employees Shouldn’t Be Paid Less Based on Geography" eventually translates to Your remote employees should be paid at San Francisco, or at least US rates.
If we applied this, every new startup would face a serious struggle to get off the ground—leaving success for a handful of generously-funded startups. And every company moving to remote would need to raise dramatically their monthly spends overnight to keep hiring.
But there's more.
It's a threat to our cities.
As growing companies, I feel we have a responsibility to preserve the fabric of our local environment, of our cities.
I lived in San Francisco for 6 months and have been going back frequently over the last 8 years. And every time—especially in comparison with European capitals—I'm surprised by the city's rampant inequalities.
As the world's tech capital, it's not the ideal I think we should be striving for. I'm not San Francisco bashing. I love San Francisco, for the quality of its people, for its diversity, its arts, and its cultural mix (on top of the scenery of course!). But I'm not sure how the soul of the city will survive when rents have tripled over the last 8 years, along with the tech salaries that pay them. There's no way locals can afford this anymore.
Of course, there's only 30 of us at Slite, while companies like Helpscout have hundreds. Our direct impact won't be massive.
But whether it's on climate or social aspects, we need to be agents of change by leading the conversation on the standards we should uphold as fast-growing companies, especially as we see the standards of remote working being defined today. And that starts with asking companies that are going remote to not think in isolation. If we start giving crazy high US salaries by default in remote, I'm personally afraid we're going to replicate the San Francisco phenomenon over and over, to cities elsewhere in the world.
Let's start paying employees fairly, not equally.
The spirit of Nick's article was the right one, and as him, even if the status quo doesn’t change, I’d like to be part of a constructive dialogue about the right way to do this.
Based on the 2 issues I've mentioned above, here is my perspective so far on the topic: remote employees should be indeed be paid fairly, but not equally.
By fairly, I mean that the same work should be given a similar standard of living level, and give the feeling that it's appreciated the same way—no matter where people live.
While it's an incredibly difficult exercise—after 2 years we are at v4.0 of our salary calculator—taking location into account is probably still the best way to achieve this fairness.
Location-based salaries retain talent.
We lived through this situation a couple of times at Slite—a person went from from Spain to Canada, while another moved from London to Lisbon. One move lowered the salary, while the other increased it. In both situations, their quality of life remained the same. I believe that this is what real freedom of location looks like.
Keep salaries consistent within countries.
When we started to open our hiring to different locations, 90% of our remote employees were in France. Places like the outskirts of Paris, Lyon, Marseilles, St Malo, etc. It felt logical to adapt to their cities as well.
It was a bad idea.
Inside the same country, we saw that developers were paid very similarly, but indicators like Numbeo's were not showing that. Here's another reason why intra-national location salary adjustments are not 100% relevant: you could be working in the same city, but living in the suburbs and have less costs. Should you then be paid differently?
Where do you draw the line?
And that's why the original idea set forth by Basecamp & Nick is attractive. It's very simple, you don't need to do very small adjustments, and when it come to topics as sensitive as pay checks, that's a big win. In our case, we settled on paying salaries indexed on the top percentiles of the capital of the employee's residency.
It's quite simple, makes us able to hire wherever, and has the massive benefits of making sure people will benefit from a great quality of life, no matter where they live. Cherry on the cake—they'll be able to move anywhere inside their country and be sure to have a good-to-great quality of life. Or even move to another country and maintain their standard of living.
If you've read though the whole article, you probably understand how tricky this topic is. So as Nick said it in his article's introduction: I’d like to be part of a constructive dialogue about this. Maybe my intuition on the impact of our ecosystems needs refining, maybe tech employees won't be willing to accept my argument(s).
I'd appreciate any thoughtful take on the topic.