Most companies are adopting a remote workforce to increase their talent reach and adapt to employees’ demands. But how do you structure compensation for a global team? Char Miller, Sumit Singla, and Jules turn the mic over to Sam Reeve in this episode. Sam is the CEO and Founder of CompTeam. His core focus is leading companies through transformational change by optimizing talent initiatives with reward programs to achieve long-term strategic objectives. Today, he shares the different compensation strategies used by companies as we advance to a future where working anywhere will be the inevitable norm. Join in on the conversation to learn all about them!
I don’t know what webinar number this is because we do this every week. We’ve been doing it for a long time. I know we have a lot of people that help each and every week, but for those of you that are new, welcome. I help to host these sessions. If you don’t know what we do here, to give you a rundown, it’s a little mastermind of leaders.
We get together every week. We keep it conversational and we answer any questions you have along the way. We want to help create better workplaces where people will thrive, employers to reward their employees and a place that customers love coming to. I’m going to introduce the rest of the panel here, starting with Char.
Char is our HR expert, Talent Management expert, Founder and CEO of Rocky Mountain Health Advocates. If I told you about remote stuff, Char could help lead this discussion as well because she’s lived it and is about to go through it again in Mexico. We have Sumit. He helps on quite frequently as well. We love having Sumit.
He is an HR expert and HR Consultant. He works with many companies around the world of all different sizes. He’s tuning in from India. It’s always nice to get a bit of an international perspective here on the show. I just met Howard. I know Sam said you’re a pay expert. We are talking about paying the remote workforce. Do you want to give a little intro and then tell us something new as well?
I’ve circled this on many years, especially focused on compensation and rewards. I work both in-house in law and financial service companies as well as a consultant. I’ve been working with Sam and his team for years. I’m looking forward to this conversation.
It’s good to have you on. We’re changing things up a little. We try to keep it fresh here. We don’t have a guest speaker, but we have a lovely Sam Reeve who will lead this conversation. I know most of you are familiar with Sam. He’s here every week. He’s dedicated to this. If you are not familiar, a quick refresh. Not only does Sam help run the show, but he is also the Founder and CEO of a company called CompTeam, which helps companies restructure their pay, compensation, talent initiatives, and rewards.
He’s a Global Certified Compensation Consultant as well. He has over twenty years of experience in this area. It only is fitting that he’s leading this discussion on paying the remote workforce. Stick around. We all love to talk a bit about money. The title of the discussion is Paying the Remote Workforce. I will let Sam kick things off here and enjoy the session.
There’s a lot to talk about here. To start things off, we were talking about being road warriors and people living and working out of vans. It’s the new lifestyle nowadays. The work from anywhere phase has entered in full force through the pandemic and is expected to continue to a greater degree than before. Let’s look back through history and see how this all started. How did we start working in workplaces anyway? Back in the early days when companies started coming together to try to have some consistency in their approach, if you’re a tailor and you’re manufacturing tailored goods, you want them to be consistent.Top employers are trying to provide employees the flexibility to do their best work wherever they are. Click To Tweet
You have a certain style or methodology that you’re trying to promote to the marketplace. It was easy to bring people together so that they could replicate that particular methodology style and so forth so that you have a consistent product or brand that’s going out into the marketplace. That evolved later when business machines came in, whether it was a typewriter, computer, or copying machines like Xerox and fax machines. That was all part of the office environment where we got together and used those machines together. They were often owned by the company.
It made sense to come together and use those machines. Entering the 1980s or so, we had an introduction of what’s called the knowledge worker. We’re getting out of the manufacturing era. We’re starting to tailor work around the individual. This is a reason why we’re thinking more about how do we attract and hire this particular individual. We started thinking about the right office environment and providing more flexibility. That’s where we are now. The pandemic was the catalyst that created the great flexibility we’re looking at in which employees are demanding.
What our company is trying to do to attract people back is they’re trying to create more dynamic workplaces that are meant for collaboration where they can come in and be innovative with others. Most of all, top employers are trying to provide employees the flexibility to do their best work wherever they are. If they feel like they need some quiet time to be focused, whether they’re doing some computer programming, either providing them a quiet place in the office or they can do that at home at any time that they choose.
When they want to come together and collaborate, they can do that at work. Sometimes they may want to get out of their home environment and go to a more professional environment. Maybe they’re getting their house built like yours, Char. They don’t have a place to go to, it’s loud, or their companion is also at home, so they need to go to a WeWork or a coworking space.
Companies are providing that flexibility. I’ve been to the Googleplex in California and it’s very similar. They’re trying to create a creative environment. This is the basic trend that many companies are trying to provide their employees. If they want them to come into the office and they’re attracting them to come back in the office.
A lot different than a sterile boardroom because of the typical office chairs and sterile look.
We spoke about the environment that certain companies are still looking for to keep their employees in a workplace and are providing facilities to keep them there. This is not unlike what Google was doing in the past, but we’re entering a new marketplace where people demand flexibility or work at home.
We were talking about some people that we know are being called back into the office and they’re thinking about, “Do I want to go back there? I’ve moved to this one location. I’m making my life here. I’ve enjoyed it for the past year. I’m close to family now. Do I want to go and leave this place to go back at a week’s notice to work at the old company?”
I’m always looking at houses. I should have been an architect instead of what I got into, but it’s interesting in the new home build environment if you go out and look at new home models. There’s a lot of houses being designed where you can have your study. My new house will have a study and an entire workroom. I can do an entire staff meeting in that room. I have all the technology.
Against the walls will be all the technology of multiple screens and monitors and that office environment where you can host employee meetings right out of your home. That’s a new trend. Remember, a few years ago, you had the next-gen models where you could have your in-laws sleep at your house. Howard, I see that you’re going to have a home office conducive to working from home.
We have the technology to do this effectively. There’s no excuse for knowledge workers in a large sense to maybe where they can work from anywhere. It’s making sure that they’re doing their best work if there needs to be innovation and so forth. As we know, we have internet speeds. Our phone speeds have expanded dramatically since 2010. We’re into 5G. Most of you have probably used the phone. I am starting a video call on the phone to talk to my mom or my sisters. It seems to be the more natural way. I want to see their face. I rarely put the phone to my ear anymore.
Phones are better than computers and laptops these days because many computers have better technology than our laptops.
It is on a global basis that is true as well. When we think about how we use our phones, we are spending a ton of time on our phones. Worldwide about seven hours a day are spent interfacing with our phones or the internet in some fashion. It’s what’s going on. In other countries, such as the Philippines and Brazil, it’s almost part of the regular daily regimen. You’re on the screen up to eleven hours a day. It seems like a lot of time there. This is all made possible because of those connection speeds. We’re going to see those areas that have those broadband connection speeds that are significant. We’re going to see more business and commerce in those areas and more desire to work from anywhere.
That’s the critical thing to be thinking about. Working from anywhere is the face of the future, but we can’t work from anywhere by all jobs. There are still those agricultural positions where you still have to show up to do the farming or construction, things like this. There are certain industries that are more right for remote work than others. We’ll see this coming into place. The main theme is how do we pay remote workers? What are the methodologies that we should start thinking about to pay different people? Sumit, I know in India, remote work is not as desired as much as that. Is that correct?
Yes. Pre-pandemic, a lot of remote work has been synonymous with outsourcing. We tend to outsource low-end or mid-end jobs, let’s say, software to coding and even some aspects like social media marketing, etc. However, during the pandemic, one because of the Great Resignation, people were saying, “We need more flexibility and balance in life.” Also, the talent supply has dried up, so people are starting to experiment a lot more with remote jobs. I’m one of the examples of remote work.
I did start a little before the pandemic and I wanted to do the same work, but a lot of people in my organization told me that, “It probably did not work out well for you because gig work is typically for lower-end works and not for somebody who’s a senior industry professional.” That was ironic because the organization was famous for doing a lot of research into the future of gig work and placing our bets on how gig work is becoming a lot more strategic.
Part of it has to do with cultural readiness. Are our managers ready to manage remotely? Do people have the infrastructure at home to do remote work? What is the mindset of the culture as far as what people want from their workplace?Working from anywhere is the face of the future. Click To Tweet
I recall working for a larger organization. It was very limited in terms of the number of people who were allowed to work from home and had to go through a whole review process in terms of submitting information about how their home office was set up. Exactly how they’re going to manage their day and that it goes through multiple levels of approval. In a flash, everyone is working remotely. Not only are we working remotely, but in most cases, we have a higher output because there are less distractions, less commuting time, and greater employee satisfaction because they have a little bit more control over their lives.
They can take a break during the day and do something with their family. It’s been interesting watching this play out in terms of the initial resistance by a number of companies to evolve to where it is. Everyone is jumping on the bandwagon and some are saying complete work from home. Others are going to a remote hybrid model. There are others that still think, “Let’s go back to the way it was.” Those are the companies that I think are going to face the biggest challenges in this market.
The bottom line is that we’re looking at the future and competitiveness of companies if you think about our restrictions. McKinsey did a study not too long ago looking at remote work and competitiveness. If we look at companies in a traditional sense where they require everybody to work on the premises, they have the high cost of maintaining that building whether it’s rent, they own that, in the city or wherever that might be. If they require people to commute to work, they can only hire people within commuting distance. They’re significantly limiting their labor pool and their access to talent. They typically have to pay higher for that talent to come into the office.
Also, productivity is a problem. These people who are commuting into the office spend 1 to 2 hours of their day commuting into work. Some leaders I’ve spoken to said, “That’s their time.” That’s time away from their families and doing the things that they love. You require those times to be dedicated to work or support work versus what they rather have in their regular lifestyle. I know that some people enjoy the commute to make and listen to books and stuff like that. If you can sit on your back porch and listen to the same book, you’d probably prefer that better than being in traffic.
There’s that factor. Companies that embrace remote work can hire talent from anywhere on the globe. They don’t have the overhead to be much more competitive and pass on some of those savings in either research and development, creating new products and services, and having better service levels for their clients. There are a lot of things that they can reinvest those funds into.
One of the elements is pay. What are some companies doing? We heard about Google’s approach, which Google mentioned nothing different than what their strategy is. Google was focusing a lot on ensuring people are coming into their workplace. Their preference is that people come into those areas that they’ve invested a lot of money into for innovation and creativity. They want people there, but they realize that some of the best talents out there are going to demand that flexibility to be in different places.
What they are providing is they released a program saying that, “We are going to allow flexibility. Go onto our portal and make a decision. Are you going to be in the office, maybe working out of a different office or fully remote?” They’re providing this level of flexibility for their workers. Also, they’re stating that, “If you choose to be remote, we’re going to pay you for the location where you’re currently are working from.” They’re looking at doing the traditional geographic differential approach.
That means they’re dividing up the country or the globe, and they’re paying specifically what that cost of labor is in that particular location. From a pay administration standpoint, it’s pretty expensive to manage all these different locations because your comp people have got to go in and you have to buy all these surveys for all these different locations around the globe.
Those surveys aren’t cheap. If they’re high-quality surveys, they’re going to cost depending on how many countries you have, but anywhere from $3,000 to $15,000 to $20,000 for a survey package that is going to look at different locations. I’ve been with companies that spend almost $100,000 on surveys if they’re global. Usually, it’s because they’re trying to triangulate. Not every survey is going to have all the jobs they want, so they have to buy 2 or 3 surveys per location to cover the different jobs they require.
I wonder what they’re going to do when an employee says, “Instead of being in Montana, I’m going to spend four months of the year down South because it’s warmer.” Are they going to adjust their pay for the four months that they’re downtown?
That comes in different forms. If a person is moving to the same country and going to a different location, that might be better suited for them for climate, be near family for a certain time of year, or if they’re moving outside the country. The first thing to ask is, do they have the legal right to work wherever they’re at? I’m not a payroll professional, but if we had payroll professionals on here, they would want to know if a person is going to go from Colorado to Texas and spend three months out of the year in Texas. Of course, Texas wants their taxes.
You have to set up that location. There’s some administration involved to do this right and effectively. Some smaller businesses are like, “Nobody is going to come after me.” If you’re at a certain scope, you’re going to draw attention. When we talk about globally, it’s a lot of countries, and this is not quite on their radar yet as far as working. If a person’s coming into my country and they’re working for a significant time, they don’t have the infrastructure to track to see if that’s happening.
There have been stories of certain places where there have been global nomads or people moving across the globe and they’re working from here or this other location for a couple of months. They used to be a niche type of thing. It’s become much more commonplace for people to do for a couple of years of their lives.
It gets you to thinking, “If I’m paying someone for a job, for what they deliver and the talent they bring, do I need to care where they are in the world? Do I need to differentiate if they’re providing a function and then doing everything they need to do? Do I care where they’re sitting?”
From a legal standpoint, the company should care because if they have a person working in a certain country, that country considers that, “You’re not operating in our country as a business and you have to establish an entity here.” It depends on ensuring that you’re doing it right and the company is mitigating the risk by going through the proper channels. If you can hire talent from anywhere in the globe, there’s a lot of advantages to that.
We’re not isolated to our particular town or state. We can look across the globe for talent. We can use services like Upwork for gig workers and other types of providers. There’s a lot of advantages there. What has to happen to be able to support that is the big question. Traditionally, some of the large firms you’ve worked at, Howard, how have companies managed global pay?
Traditionally, they based it on where the person is sitting. That was before all of what we’ve gone through with the pandemic. You had to get approval ahead of time in terms of relocating to another area.Companies that embrace remote work can hire talent from anywhere on the globe. Click To Tweet
Part of the reason for hiring people in different locations is because there’s a difference in pay levels. There’s a big drive. We’re hiring a bunch of people in India, out of the United States, and in China. They were looking at that pay or labor arbitrage. They’re trying to provide more jobs to our business and more service to our clients by hiring people that have the same expertise at a lower cost. There’s a lot of things that we could talk about. Is it fair to hire a person who does the same job? Should we pay them the same? What do you think, Jules? From your perspective as a non-practitioner in pay, if we look at actresses across the globe, should all actresses across the globe be making the same amount?
It’s not location-based. I hire freelancers to do my editing and things like that as well. I’m paying for their skillset. I’m not paying for their location. If I’m hiring from Asia or Africa, I’m bound to pay a little bit less than I would have freelance from the US. It’s normal. I’m also happy to pay if someone is good because I’m paying for their years of learning a skill and developing that skillset. The fact that they’re saving so much of my time because I don’t have that skill, rather than me ripping my hair out and trying to figure out that skill, I can pay someone of what they think they’re worth.
With pay, it’s hard. You could pay actresses all the same around the world, for example, and that would be fair if they’re on that same skill level, but we have different skill levels. On top of that, a lot of people don’t charge what they’re worth. A lot of freelancers undervalue themselves a lot. I see it all the time. People have accorded me $10 to edit a video. I know you live maybe in the Philippines, that’s a lot of money for them based on their location, but I also feel like a lot of people undervalue themselves a lot. Pay is such a murky place to be because people will always undercut to get that client.
It’s tricky. For me, when I freelance and do my production stuff, I know that it shouldn’t matter where I am because I can do the work all the same whether I’m down in Mexico, LA or England. It shouldn’t matter. My skillset is always going to be the same. I’m still taking that same amount of time to learn that skill that person doesn’t have because they’re coming to me. That’s where I feel like location shouldn’t be a factor in it because you can do your work all the same.
I do like that you brought up that point about the legalities of it. Are you on the right visa? As a freelancer, that’s on you to figure out, but it’s harder on the companies. If you’re hiring someone who’s working in Malaysia and is a remote worker down there, that has to be addressed and figured out. It doesn’t matter where you are if you can do the job all the same.
There’s a great argument for that. Should we pay all jobs the same based on the value that it contributes? We’re looking at things from a global perspective and we’re looking at things in theory. That seems to make a lot of sense. We’re using our bias in areas where we are more developed as a country, whether we’re in the US, India, or the UK. We are benefiting from the fact that our market is more structured. We’re saying, “I expect that person in the Philippines to charge what I think is the value that’s delivering to me.” That makes complete sense.
When you pay that person $50 an hour when they were asking $10, they can take that $50 an hour and live like a king. They’re getting much more value than you can get that same amount of value locally. There’s that to consider. Let’s switch the tables. We’ve decided that we’re going to pay everybody $50 an hour to do video editing. Suddenly, the person in the Philippines that needs to hire a video editor, they used to get this at $10, and now it’s at $50. Suddenly, they’re not competitive.
They can’t afford to hire these people anymore. They can’t grow as a company and they can’t compete on a global scale. Suddenly, the US is taking all the business. There are ways if some companies have made a choice that, “We’re going to pay US rates across the globe.” That has damage to those local departments.
That’s one perspective, Sam. Let’s say you’re a digital marketing agency and you require $100 to expand. You have the choice of hiring two editors from the US or you could hire one from the US who could come into the office and take care of urgent assignments and you could have five understudies to that person working from the Philippines with the understanding that they could progress in their career. As a business, you’d end up creating more jobs in the US and the Philippines because you’d have a much better cost structure and operating model than trying to pay everyone $3 across the world.
There’s also the angle of making that service unsustainable for the future by setting the wrong expectations. I brought this opinion because I started my career working in the business process outsourcing industry in the early part of the century. I don’t know if American businesses were outsourcing tech support to India. There were mixed opinions at that point of time. There were people who were unhappily saying, “I don’t know how to talk to somebody with an Indian accent. They don’t understand English. They don’t understand my culture.”
There were also people who were happy because it allowed companies to provide support plans for cheap and provide 24/7 support. There was always somebody available either in the US or India or in different parts of the world to take those tech support calls and help them with urgent queries. Overall, it is a win-win for everyone. Although, a lot has been made out of Google saying, “We are cutting pay for remote workers.” Ultimately, if you’re working remotely, you’re saving on things like gas, lunch, coffee money and the company saving on real estate.
Maybe it would be a better idea for companies to structure, pay better and say that while we intend to reduce some of your fixed components, but based on performance, we can consider increasing variables quite a bit. An example that comes to mind is that of American Express. They found remote workers took 26% more support calls than people who are in the office. If companies could consider passing on some of the benefits to people who are doing a fantastic job, it would still be a win-win and they won’t get the negative publicity they’re getting now.
I like to mention that again, Sumit, as far as being able to provide more jobs and opportunities for some of these areas that have been disadvantaged or behind compared to the rest of the world as far as economic status. We can look at India as a great example, too. There was a time where there was a huge amount of labor arbitrage and we were looking at India. What we found is that Indians are highly coveted as part of our overall workforce. These are people who are super skilled and highly intelligent. It’s driven the country to provide more jobs in that area, and pay has increased significantly year after year because of that demand.
Arbitrage is a current term that is very common in the financial industry and financial instruments. In the old days of currency trading and stock trading, we used to think about currencies in currency arbitrage. That means that we would look across different currencies for the same good and buy the good in a cheaper currency and so forth and take the money out of the inefficiency and put it in our bank account.
What happens is it makes markets more efficient and eventually, those goods will become similarly priced. That’s what we would expect to see in a global economy some years in the future. Our prices of jobs and the economic status of countries will start coming together as we arbitrage out the differences in pay and quality in the marketplace.
Another example to give to you, you can’t do away with the differences in the cost of living. My Engineering degree cost me a little less than $5,000. My Master’s cost me maybe about $25,000. You’d laugh at those figures. It could be an unequal comparison for salaries to match up to those in the US. Secondly, before the show, we were discussing on the global supply chain issue. I was reading a The Economist report. They cited one of the reasons as a lot of governments give out stimulus packages and helping people out by giving out money to folks who are struggling and that’s pushed up demand.What we would expect to see in a global economy some years in the future is that our prices of jobs and the economic status of countries will start coming together as we arbitrage out the differences in pay, quality, and marketplace. Click To Tweet
Demand for tech products like the Ford and laptop examples we were talking about. One of the reasons for that shortage and the world struggling with the supply chain is because consumption certainly picked up despite the pandemic. Therefore, it would also be unsustainable for the global economy to pay at par irrespective of location. I’m a huge fan of location-based pay. It creates value for everyone as long as we’re not falling into the domain of slave labor and sweatshops.
I do see changes happening already. The gig workers and so forth, I see pay coming up significantly in many locations due to the global approach to work and more companies hiring gig workers already. The pay levels are coming up. Let’s talk about the different strategies overall as far as what companies are doing. We did talk about what Google is doing and they’re looking at each specific location where a worker is and they’re paying on that location. Some other companies are trying to simplify by providing a national rate. The national rate is very common outside the United States.
We have a company that we’re paying a rate in Turkey. We may choose to pay the national rate. Why do we do that? There’s not enough good data for pay, specifically a city rate. We don’t know the difference between the city and national rates, so we group the whole country and target the same rate because of the lack of data. As that market becomes more developed, we’ll start seeing certain cities have different rates than a place in the country. That might be the actual reality that’s going on there. We don’t have the data in some of those markets.
Paying the national rate is very common in some of those underdeveloped markets out there. In the US, there is a desire to think about, “Maybe we should pay more of a national rate here if we’re going to allow our people to work from anywhere they want.” Instead of over-managing or trying to change their rate every time they relocate or move or maybe they’re doing it twice a year.
You’re going to spend half the year down at grandma’s house and then the other half at their granddad’s house because they’re not together anymore. That’s common in the United States. You might be changing locations and companies don’t want to go through and change pay each time, although they still need to do the payroll element like we mentioned. They could institute a national rate and allow them to flow wherever they’d like.
We have a question about how US companies would handle salaries for Canada. Would you apply the same strategy then with the national rate?
You can have a different rate for Canada, but I wouldn’t recommend that in most situations. It depends on how big your operations are. If you have five people in Canada, pay them the same as you do in the United States or wherever your host country is. That makes more sense as long as it attracts people there. If you have a US location and you have five people in Canada, you pay them the same. If we look at the map, most of the people who work in Canada are located right above Michigan and so forth. The change in prices is not that great.
Traditionally, there are different practices. If you have a large location in Canada, it may be more cost-efficient for you to recognize that pay difference because there can be a pay difference, but that is narrowing as we go through time. That’s one way of thinking about a national rate. Some companies are also looking at paying a slightly more granular rate, so by zones. This is a traditional approach. This is nothing new. This is a traditional approach to geographic differentials that have been handled in the US. Companies will divide the US up into certain zones.
This is an example of three zones where you’re paying different based on those locations. It’s a simple way to administer those locations at a lower cost. That’s a choice. This is what we were talking about what Google is doing. This has a higher cost of being able to do that. This is an example from Basecamp. Basecamp is a Software as a Service provider out there. They’ve chosen to pay San Francisco rates. They don’t have any equity, bonus plan or anything like that, so they pay quite high. San Francisco’s rate is 90th percentile, which is the top pay in the world.
They don’t even differentiate by location. As you can imagine, if you’re hiring 50 to 100 people, this might be affordable for you if you have a lot of revenue per employee. If you’re Amazon, this could be an extremely expensive pay strategy. That might not be suitable. Other companies are thinking, “Maybe we’ll pay a certain rate and then we’ll adjust it by the cost of living similar to what we do when we relocate somebody.” This is getting to somewhat of a global nomad type of philosophy. They say, “Our headquarters might be San Francisco or maybe London. We’re going to adjust people by the cost of living depending on where they are.”
Traditional comp practitioners cringe when you say, “We’re going to pay by the cost of living.” We all know that the true cost of a job in a particular location is based on the cost of labor, which captures the supply and demand of that job in that location. When we are paying by the cost of living, we’re not paying attention to the cost of labor. Pay can be dramatically off what the local rates are by this approach. Some companies, such as Buffer, use this approach. They take the San Francisco 50th percentile, adjust it by the cost of living and then, based on whatever that person is, that’s what their salary is.
It’s a nice formulaic way of looking at things. Some companies that want to reduce the amount of cost and administrate their pay are looking at more formulaic methodologies. This can be useful for your company or it could be harmful to your company. The useful area is that you can say, “We can have complete pay transparency.” You can calculate your pay if you’re coming into the organization and understand exactly what you’re going to get by location and level.
You can project out your career path, but it also puts you in a very confined position of you don’t have any flexibility to alter that if this person is a super and if they have any talent differences they’re bringing to that particular job such as good with customer service. Maybe you want to pay them higher in the range, but it may be more difficult if you’re doing it formulaically unless you have a complex type of formula.
In this particular company, GitLab has a formulaic approach. They’re using the San Francisco benchmark again. They’re applying a location factor, a level of factor, and then the exchange rate to come out this across different locations. This can be a very restrictive way of managing pay and may not give the flexibility that a lot of companies are looking for. Companies are continually trying to find how they can introduce AI or computer practices to simplify and make things more transparent. They’re leaning more in this direction than others. What do you think, Howard?
All of this is going to be interesting to see how it all plays out because, especially in this marketplace, there’s such a demand for talent. If I have a particular skillset and I have a choice of employers and I’m going to say, “Why would I go to this one that has regional differentials when I can go to this one and they pay the San Francisco rate all around the globe?” We’re in uncharted territory as this whole thing evolves.
We’re going to see a bunch of different practices until then. It’ll be interesting. These next few years, comp is very hot. The competitive pressures are going to change where we’re going to go in the future. Jules, you were mentioning something?
The compensation calculator, is that a free tool?
If you go to GitLab’s website, they have their Compensation Calculator. It goes through the methodology and that’s part of the reason. They’re trying to drive transparency and fairness so they have their full Total Rewards Handbook on their website. Should you use it as a company? Probably not. It needs to totally be calibrated to your company. There’s not a tool that you can grab, plug into your company and have it work. They’re going to have to be a lot of calibrations that match your particular compensation philosophy, where your people are located, and what jobs you are attracting out of the marketplace. All need to be calibrated to that tool.These next few years, comp is very hot. The competitive pressures are going to change where we're going to go in the future. Click To Tweet
Are there any other free websites that you would recommend to find all the salary data for both the US and Canada?
It depends on your size and the company you are in. There are some providers out there. There’s Option Impact if you’re a startup. If you participate and provide information, they will give you information back. Howard and I came across a new company called Pave. They’re also for those younger companies that provide free data and a free snazzy tool that goes with it. They have a paid version of that tool as you grow, but they start you with a free version. I would take a look at that. Those are pretty neat tools. It’s not suitable for all companies, so you have to see where you are in your development and growth.
Most importantly, the amount of rigor that your management, board of directors, and compensation committee require. Many of you out there is saying, “We don’t have a compensation committee.” You’re not subject to that much rigor. You could probably use some of these tools that are experimenting with new techniques. If you have a compensation committee or board, they’re often going to want to see a traditional survey that uses real statistical and validated methods of getting quality information from companies that can be defended. You probably have to go for Mercer, Radford, Culpepper types of survey companies that provide high-quality statistical data.
I could talk about this stuff forever. I hope I didn’t suck up too much oxygen. As we think about some questions here as we’re getting into things, I want to acknowledge our sponsor, the TMA Method. We’ve been talking about compensation and so forth. Why is the TMA method so important in this context of discussion? What the TMA Method does is help us understand our people to a greater degree.
That’s something that we should be all thinking about when we’re looking at retaining our employees and attracting that coveted talent. We need to know how these real human conversations understand the way that they like to work and have a good dialogue about their expectations for the future, what they want from your company and what you want for them in exchange. The TMA Method is a positive, psychological talent assessment that helps you have these productive conversations on style. It’s a great way to have a first discussion on where people’s careers and where their pay expectations are going to be for the future.
I’ve fully integrated the TMA Method into my organization. I had three debrief conversations with three different levels of my organization across the nation. One gentleman was in Montana. One employee is a real superstar blossoming and a brand new hire. Actually, she’s getting her PhD in Organizational Development and related to assessments.
It was fascinating that the types of dialogues that we’re having are very positive and focused on their development. Also, how do they integrate their talent with their passions outside of work was also very fascinating. We’ve seen the real fruits of using this process with the team and my company, so it’s been great.
Any other questions?
How would you manage employees that once they hit the $3 million mark, they’re all trained up, but then they hop to another firm for better pay and more career opportunities?
That’s the thing. Sometimes people are rarely going to move for pay unless it’s significantly different. There are usually other elements that are involved there. We talked about the importance of the state interview. If you’re seeing some turnover in your organization, the first thing you should do is open that discussion with your people to see what they like about your company. What can you do better and why would they think about moving to somewhere else? Some companies may say, “You don’t even have a good training program or you haven’t invested me in my career development. It’s hard for me to get work done here because you guys aren’t very organized.”
I don’t think leadership knows where they’re going.” All these can be part of it. All those things can’t be fixed overnight. The lever that people pull is the pay lever. If we need to keep somebody here, you can give them some assurances. You might have to pay more to keep them in their seat. Some of that is it can be a project bonus or also known as a retention bonus. You can give them more equity.
There are elements where you can pay them more and then give them assurances on certain types of whatever their concerns are as you shore up some of those practices internally. That’s what a lot of companies are doing. They’re also identifying their top talent. They’re saying, “Who can we afford not to lose in our company?” They’re identifying those people. They’re having discussions with those people right away because they can’t afford to lose them. They’re making concessions on how to keep them.
Daniel said he was at that session. Now he’s conducting state interviews. I love when people implement what we teach here.
It’s been a great conversation. I am so fortunate to be with so many talented people that are a part of these discussions. Thank you, everyone, for joining in.
Sam, you shine when you talk about all of these kinds of topics. People get into it. You should do more of these, but that’s what I think. We do this for you. Let us know if you loved it.
Everybody, see you next time. Take care.
Sam is the CEO and founder of CompTeam.His core focus is leading companies through transformational change by optimizing talent initiatives with reward programs to achieve long-term strategic objectives.
Sam’s diverse experience includes the design and optimization of performance-driven variable compensation plans for executive, sales and core employee populations of growing companies.
Prior to founding CompTeam, Sam has worked in compensation functions of notable firms such as BlackRock, McKesson and Automatic Data Processing (ADP).
Sam is a global certified compensation consultant (CCP, GRP) with over 20 years of experience in Total Reward Strategies.