Avoiding the global ‘HR Nightmare’ of Work from Anywhere practices
Last week, Spotify became the first company to launch a ‘work from anywhere’ policy.
The streaming platform announced it will allow employees the freedom to work from anywhere while continuing to pay San Francisco and New York salaries. Employees will be free to live and work globally, so long as their working locations do not cause legal issues.
However, Spotify’s policy may end up causing problems for more than just the legal department.
Nicholas Colin, a financial expert, called ‘work from anywhere’ a potential ‘HR nightmare’ and wagered many companies would start to set limitations on remote work when these complications rise to the surface.
With over 25 years of experience managing global workforces and international payroll- Mauve examines how global HR teams can create fair remote pay policies.
How much should remote workers be paid?
Nicholas Colin points out that the question of what to pay remote workers is a domestic issue as well as an international one. For companies with previously centralised work locations, existing salary levels will be based on appropriate benchmarks for that local economy and labour market. Location-based salary is likely to become a major consideration when employees start moving to areas or regions with a significantly lower cost of living.
How does poor pay policy impact workers?
Feelings of low morale can arise when any worker feels they are being unfairly paid. This can dampen productivity levels, and some lab-based studies have even found pay-related stressors to cause physiological impacts linked to cardiovascular disease.
But it is not simply a question of blindly agreeing substantial compensation for the remote worker to ward off these potential problems. Local salary levels must be taken into account when establishing pay for remote workers, especially where companies also employ local staff members in that jurisdiction.
The 2016 ERSC-funded study Addup explored the wage gap between the salaries of local and expat co-workers performing similar roles for aid sector organisations in lower–income countries. It found pay disparities of up to 900% in favour of expatriates.
Local workers interviewed as part of the study expressed feelings of dissatisfaction and workplace injustice. They cited the pay gap as having damaged relationships with their wealthier co-workers, creating power inequities and ultimately reducing productivity.
In some situations, dual pay practices can lead to an ineffective, unhappy workforce – and could stand at odds with many organisations’ declarations of internal efforts against inequality and privilege imbalances.