Global Pay for Global Work

Is it time to dump the pre-pandemic pay principles?

Career-wise: Geography is now history. COVID has not only accelerated the acceptance of work from home (WFH) but as also spawned a new subset: work from anywhere (WFA).

For Businesses and HR, WFH came along with complexity of employment laws, principles, taxation (home vs. office location) and the final acceptance that work continues, engagement does not drop, while team bonding and in-person collaboration take a hit.

With WFH comes work from anywhere, across the globe. This write-up will focus on the changes one will see in compensation principles as WFA starts becoming a norm for management roles.

The B.C. (before COVID) pay principles were based on the desired competitive positioning of the company, location of the role: impacted by cost of living, housing, commuting etc. and other globally consistent job evaluation principles.

With those BC principles, pay ranges differ by country and within countries by regions and cities. Large, multi-month projects run across the C&B world to calculate these pay ranges so that year-on-year organizations stays competitive in the dynamic marketplace. Pay ranges are impacted by local inflation, cost of living etc, so quite a complex grid to eventually pay competitively to retain and motivate talent.

So what happens when the location is not an anchor for a role? When work can be taken by anyone, anywhere in the world, should a resource who takes on the role in Turkey be paid the same as someone in the U.K.? Is local competitiveness of the pay relevant in a WFA scenario?

Here are my thoughts on how global WFA management roles compensation structuring:

Identify WFA roles: Organizations will need to have clear strategies, guardrails and documentation for which roles can be done from home or anywhere in the world. An ad-hoc approach every time there is a opening will have to avoided. Principles of keeping the role WFA and getting talent back into local roles when assignments end will be a key Talent Management watch out.

Global Base Pay: Organizations should set a global base pay for roles that can be done from anywhere. Apart from attracting the best global talent to apply for these roles this would ensure base-level equity irrespective of where the work is finally done from or moves to in the future.

Bonus and Incentives: For the WFA roles, the bonus and other long term incentives need be standardized too, and delinked from local plans. This would make the roles attractive and special, and again ensure global equity.

Cola Adjustments: COLA adjustments will be required for high cost locations. A tiered approach of COLA classifications (High, Average, Low), with adjustments added for High cost countries would cover for any location premiums. These would be adjusted and altered as the role moves across the globe.

Retirals: Final employment contracts offers will need to factor in local statutory requirements. This will ensure a smooth transition to local/domestic roles once assignments end.

Summary: Keeping a 4-tier compensation structure with documented talent management principles will make global assignments more equitable and attractive, hence, a talent management lever to offer global experiences from home locations even after COVID becomes a part of history.

What do you think? Does your organization offer something on these lines?