3 Considerations For Location-Based Compensation Structures

Remote work is becoming more popular, with 60 percent of partially remote workers wanting to leave their jobs for a fully remote position. Remote work allows companies to reduce overhead costs, increase employee productivity, and reduce environmental impact. It also allows companies to hire the top talent in the U.S. or abroad without worrying about employee relocation. However, if you are considering hiring fully remote employees, it is important to develop a solid approach to location-based compensation structures. 

Location-based compensation structures offer employees various levels of compensation based on where they live. This allows you to attract employees in large cities while not overpaying employees who live in areas with a low cost of living. However, before you implement a location-based compensation structure, it is important to take the following issues into consideration. 

Salary Information Is Readily Available Online 

A few decades ago, it was difficult for employees to find out the average salary at various companies. However, now there are several websites that list not only the average salary for various positions, but also specific salaries at various companies. This information can make your remote employees resent the compensation that other employees may be offered. For this reason, you may have to offer more transparent compensation structures to help validate why you offer various pay rates in different areas. 

Remote Employees Can Cost Your Company More If You Need to Fly Them In For Meetings 

While you may save in renting office space if your employees work remotely, you may not save that much when you factor in the expense of in-person meetings. If you have to fly your employee to your location a few times each year and pay per diem expenses, then you may not be saving any money. Before you increase remote workers' compensation, it is important to take into consideration exactly how much it will cost to support a remote worker. 

A Full Package Consists Of More Than Monetary Compensation 

Local employees often receive compensation in the form of gym memberships and a creative office space to work in. Alternatively, your remote workers will have to pay for their own office and internet expenses, as well as other standard office perks. It is important to offer remote employees the best technology to complete their work, generous health and wellness benefits, and a competitive salary. 

As with any compensation structure, finding the right balance to attract remote workers can be difficult. A compensation consultant can make sure you are offering the right benefits without selling your prospective employees short. 


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