Global Salaries may not truly be equal. remote compensation pt 3 w/ Tim burgess, founder shield geo
Updated: Feb 7, 2021
Global salaries sound even and balanced, but that might not be so true. Nor may it be fair. The global remote salary model may not take into consideration local legal requirements, or treat employees fairly.
Here's the recap...In today's episode, we chatted with Tim Burgess, Co-founder of Shield GEO about remote compensation models. This was an eye opening 👀 conversation. Tevi & I had long solved the best solution as being the global salary option. Tim shared his experience and inside information on how the global salary part may not be as good as it sounds. By the end of the conversation, Tevi and I both believed salary needed to change to compensation. We'll discuss why below.
This is Part Three of our series on remote compensation. To listen to Part One click here or Part Two here.
Full Transcript Below...
Gitlab converting employees from contractors to full time employees
HelpScout's decision to pivot compensation to paying global salaries
Local laws and regulations and how they effect salaries
Depending on the country, an employee's total compensation can be drastically different. In the US total compensation may be 15% more than the salary, while in France it could be up to 40% above the salary. Dashing our idea that a global salary is 'all for one and one for all.' With a $75,000 salary, the employee in the US could be compensated $86,250 while their colleague in the same role in France is compensated $110,250.
The USA 🇺🇸 stinks when it comes to benefits
Though many startups offer unlimited vacation, they aren't paid for that unused vacation if they leave. Unlike in other parts of the world. In the US, an employee can be immediately fired without being provided compensation. While in some European countries, the employee must be provided notice or paid severance for X months moving forward.
Some European countries have also reduced the weekly hours below 40. At the same time realizing some roles simply can't work less than the 40 hours. Those employees are compensated for the extra time worked with additional paid days off.
Remote salaries historically were linked specifically to location.
Location, location, location. It's not only for real estate. Historically salaries paid were specifically linked to location. Companies in San Francisco were forced to continually pay higher and higher salaries in order to attract the best talent. There hasn't been major booms or centralizations of tech hubs in other parts of the world to balance out global salaries.
You're paid for where you work
If you travel for short amounts of times, you'll continue to be paid against your permanent residency. However, if traveling over a certain period where a local tax law requires residency you need to be localized. That goes for digital nomads, or someone moving in between states in the US. Since each state has different tax laws, you may need to change tax residencies, and open files within a different state.
Contractors are missing out
Those companies historically paying the global salary have treated all employees outside their incorporated country as contractors vs employees. This allows the company to pay an employee a lump sum higher salary. Putting the onus on the employee to take care of their own local compliance, legal, and tax requirements. This of course may not be as fair to the employee. In addition, they are missing out on potential rights and protections provided by their local government to employees vs contractors.
This last point is the epicenter of the fairness of the global salary compensation model. While they may get a higher salary, in the end, they may be paid less. Due to missing out on additional benefits. In addition, they miss out on rights and protections afforded to employees vs contractors.
Tevi and I both took this point to heart. Changing out written in stone stance of using a global salary to a global compensation model. Meaning paying a total compensation package of $100,000 to a 10 year full stack developer regardless of location. So in the US that could mean a salary of $85,000 while their colleague in Paris receives a salary of $68,000.
We'd love to hear your feedback on today's show, and remote compensation as a whole. We'd love to hear from you about your onboarding experiences. What model is your company using, and why are you using it? Do also feel free to share any feedback on topics you'd like to hear us discuss.
Scott: [00:00:00] Hi everyone. Thank you for listening in to today's episode of Leading from Afar. I'm Scott Markovits with my co-host Tevi Hirschhorn. Tevi, how you doing on this sunny and lovely day?
Tevi: [00:00:10] Doing well, Scott. Great to be here. How are you?
Scott: [00:00:12] Doing all right. Got my first vaccine shot last last night. So very happy about that and hoping at least here in Israel that we're through this whole thing in the next six weeks or so.. It would be great to move on with life again. So today we're going to be doing our part three of our series on remote compensation.
Today we're happy to have Tim Burgess, the CEO of Shield Geo joining us. I've spoken with him a few times over the last year about different topics on remote leadership. So Tim we're super happy to have you and have a chance to speak with you. Someone that has experience not only building and leading an all remote company yourself, but actually building a product that supports remote work. The first step is maybe you can do a little bit of introduction about yourself and Shield Geo.
Tim: [00:00:57] Sure. So I'm a co-founder. We don't actually have a formal CEO. So the other founder and I split those duties. I ' m a co founder of Shield Geo. We're e an employer of record service . We just turn six I think like tomorrow, actually 23rd of January, I think it is the sixth birthday.
Tevi: [00:01:12] Happy Birthday
Tim: [00:01:13] Thank you. Thank you. So we've got a team of about 60 people in something like 16 countries. 15, 16 countries I think it is. We were about 80% remote before COVID hit, and we had a couple of small offices that we wound down. When we were worried, we're going to have to save costs and so on.
People aren't gonna be able to use them. So now we're a hundred percent remote. Probably just coming out of that to the point where people are starting to explore, whether they might want to go back into a co-working space or something.
Scott: [00:01:42] Interesting. We spoke about that in a previous podcasts, and I think that will be one of the series that we dive into next. The future. one the hybrid model being remote version two. Number two, the future of offices. I am extremely opinionated on both of those topics, but not anything for today.
Shield GEO is an employee of record service. People who are listening this probably don't understand what employer record services. To me, it's core into building out the future of remote work and being able to hire people anywhere. So maybe start off with defining exactly what an employment record company is.
Tim: [00:02:17] Sure. Basically we help companies people in countries where they don't have their own entity set up. Common scenario would be like an American company wants to hire a sales person in Japan and they don't have a corporate entity in Japan to employ that person through. We do.
So they can come to us. We'll employ hire the person on their behalf. We make sure that everything is compliantly handled in that country. So we made sure that, all the legal boxes are ticked. That payroll is run correctly. That all of the Japanese employment regulations are met and all those obligations have been on behalf of the employer.
We do that without our client having to basically touch anything. So it's a pretty frictionless way for them to. To have people in a country and to do it in a way that is compliant with the local legislation.
Tevi: [00:03:06] Very interesting. So I'm curious is your company, distributed all over the world or is everybody located in one country?
Tim: [00:03:16] So we're in our place, a spread out. I think we've got a big cohort. We used to have a big cohort in Australia, so I think we've got half a dozen people in Australia. We've got about the same number in the UK, the US and Philippines . Maybe a few more in a couple of those countries. Then we're in another 10 or so countries. We went through a period where we would hire anywhere.
Then we started to run into a little difficulty with that. So we shrank it down to where we prefer to hire in a core set of countries.
Tevi: [00:03:45] Very interesting. You mentioned before that you were nervous about COVID affecting the business. You shut down some locations. Has it actually improved since COVID now that that more companies are probably exploring remote.
Tim: [00:03:58] Yeah, so basically we had a WeWork office in Sydney and our lease was up in April anyway. We'd been talking about, do we even need an office? People weren't really coming in. I was the only person who went in every day. So we were talking about, do we experiment with a smaller space or no space, or, what might we do?
Then when COVID hit and at the beginning we were really worried about what happens. If things shut down businesses start going bankrupt. What happens if the US goes into recession? So we did a bit of scenario planning on, what it might look like. Given that our lease was up, people weren't really using the office anyway.
We thought let's just shut it and we can save on that cost and see what happens. to be honest, it was a really good decision because with the shutdowns. Australia's been pretty steady, but it's still been a bit up and down. I think people have felt safe being at home, even if even if officers had reopened.
So that was basically what sort of drove it. I think we'll start to see people going back into co-working spaces, but I don't think we'll have any fixed offices again.
Scott: [00:05:01] You've touched on this previously. From the data and from your clients what has the remote hiring picture look like? Are companies or have companies been hiring the best talent anywhere in the world, wherever they may be? Or they've been maybe more focused on specific regions? No. Maybe in your case, in an APAC
Tim: [00:05:19] Good question Scott. So for us, it's our view is very tainted by what we see. So the clients that we typically deal with dealing with small employee populations. So it's mostly business driven. So they're expanding, I would say, stay hiring in places that typically it's about revenue.
It's about generating new revenue or securing revenue. So we see a lot of salespeople. We see a lot of country manages partnership managers and people managing supply chain. So it's about, a US company or a European company that's exporting into a new market, or that's trying to sell a service into a market.
They need a small group of people. One or three or five people in order to facilitate that. So they don't need all the machinery of setting up a company. So just to provide that context. In that scenario, it's not really about talent, and the location is key to why they're hiring. Because if they could hire someone in the US who could service the Japanese market, then why would they bother hiring in Japan?
They're hiring a Japanese person in Japan because they need a local and they need someone there who could work normal hours and be tapped into that local market. Now that activity has always been pretty strong. We've seen a big upswing in the last 12 months, which we weren't expecting at all.
Particularly like November, December for us was was off the charts. To be honest, I don't a hundred percent know why. I think globalization has got pretty strong fundamentals as a concept. For companies thinking, if you're an American company or a British company and you're thinking we might have a rocky few years here.
The idea of getting revenue from other countries is a good way to mitigate the risk. I also think that there's a greater awareness of what we do as a service. That's driven more business in. Because for a long time, the biggest issue we faced was people just didn't know it existed.
But to your point about remote specifically. Most of our clients wouldn't consider themselves remote companies. They're companies that have one or two big employee groups, and then they had a few people generally sales or within particular teams who are distributed around. So those employees, particularly ones distributed had a pretty bad experience to be honest. In terms of integration to the whole terms of communication.
A lot of those scenarios where everyone's sitting in a meeting room and there's the that Cisco thing in the middle. People are talking into it, but the person on the other end is up at three o'clock in the morning in India. They can never hear what's happening and miss all the context. We've employed a lot of people like. We service a lot of customers who have that sort of setup, which is not great.
What I think is going to change. Certainly what I hope is going to change is as the familiarity with remote work continues to improve. Companies are going to say we used to hire in Boston. We don't have to hire within a commutable distance of the office anymore. Maybe we're going to hire anywhere in Massachusetts.
Maybe we're going to hire anywhere on the East coast or maybe we're going to hire anywhere in that time zone. Which would then open up Latin America. I think we'll see more and more of that activity. I'm not sure that we've seen it yet. We haven't dug enough into our new customers to really work it out.
Scott: [00:08:26] Interesting. One of the thoughts that I've had for a long time now why teams are hiring US only is because they're afraid of the legalities and compliance work. If you're a US-based company and you hire somebody in Montenegro or Uruguay,
how do you pay them? How do you handle your own taxes. US taxes. Their taxes and things like that. Going back to the early days of InVision, there weren't any solutions out there. As you've mentioned, the space has definitely heated up with yourself and other companies who are now coming into that space. Allowing companies to be able to hire anywhere and not have to worry about those compliance issues. Legality issues, and how you're going to pay them.
Wire transfers, PayPal, things like that. So just an interesting thought there
Tim: [00:09:09] Yeah I think there's a there's a real issue around size of company and compliance and their appetite for risk. If you're a 20 person company, particularly for your startup, the idea of getting pinged for employment regulations in a different country is pretty low on your list of consents.
You're more worried about can we make payroll? Are we still going to be around in three months. If you're a 20 year old company with 600 employees. Particularly if you've been in a few different countries, then your appetite for risk is really low. Your expectations of how it should be handled are quite high.
That's more of our sort of client base. So that sort of companies that I think we're more familiar with. What I think those sort of companies are going to do, the 500 - 1000s of employees companies is. They will start hiring more remotely, but they will do it. They won't hire from anywhere.
They'll do it in regions. To your point. It's not just about compliance. There's also the logistics just of hiring and of being an employer and actually being a good employer. That's something that we've experienced even at our size. Is if I've got three different employees and one's in India and one's in the Philippines and one's in Mexico.
To name three high talent, low cost locations where people like to hire in. First of all, you can't get them all on the phone at the same time or into a meeting at the same time. Secondly, those countries have very different employment regulations. They're different culturally. So every time you add a new country into the mix, you get the benefit of diversity, and you also get the complexity that comes with it.
so I think that's something that at the beginning, you probably don't think about that much. As you start to scale you realize, wow, okay if we hire someone in India, then they're expecting that, for Diwali that's a week where absolutely they have to be offered. It's the biggest cultural event of the year.
You don't want to have to learn that for every single employee as you add them on. What's important to them. What are they motivated by? What do they think is table stakes for being an employer?
Tevi: [00:11:19] That's so interesting. It's funny because I've been remote for eight years. One of the things I've loved about working in a remote environment is that diversity and learning about new cultures. Where, I could be at the beach on the same day that a coworker is ice fishing. Like literally that's happened.
Learning just about other people is fascinating. That diversity brings an amazing creativity to the group. But you're saying that diversity is the complexity on a legal standpoint. On a logistic standpoint that can be just too complex for people to want to face. It's interesting.
Tim: [00:11:52] Yeah. It is a double-edged sword, like you say, and that's something certainly the way experience. I love having people from different cultures in the company. So one of the things that I really enjoy the most. If you want to hire in a specific country, or if you want to hire mostly in certain countries, it helps to actually have a pipeline.
So you want to be able to advertise or source talent in ways where they can find you. You might want to tweak the way that you go into the market. You might want to tweak the way that you. Structure your compensation or benefits. Any of your employment policies to to accommodate them, and the amount of work that it takes to do it.
Once you've done it, you're like okay. If we know how to be a good employer in the Philippines, do we want to go and learn that lesson again in Argentina for one person. Why don't we hire someone else in the Philippines because we know we're doing it. We know we're a good employee, and we know this talent.
Why don't we repeat it? So I think there's a bit of tension there between those two concepts.
Tevi: [00:12:47] Interesting perspective. So I guess you're answering one of the questions we had. Was like "Why some companies haven't embraced remote anywhere versus regional?" Kind of like you're saying, it's a spectrum. It's how what your appetite for risk is, outside of time zone, outside of countries and learning all of that.
Tim: [00:13:05] Absolutely. Yeah. And I think there's also other factors. Like if you're a small group. If you're coming together as freelancers or contractors. If it's a pretty unstructured environment, Then I think hiring from anywhere makes a lot of sense. Maybe time-zone and language is the only parameters there.
I think once you once you get to scale and particularly if you're worried about structure, reliability, and risk then I think it starts to get restrictive.
Tevi: [00:13:35] Very true.
Scott: [00:13:38] So maybe we'll start digging into the compensation piece. This is something that really came to the forefront last year with Facebook and their decision to go remote, but to start reducing salaries for people who moved out of the Bay area.
There are three compensation types for remote teams. You have actually have the global salary which Tevi and I are the big fans of. You have your localized one in one country. Your third option is a pegged option. You both from you to leadership perspective.
Tevi: [00:14:07] Sorry, can we clarify for our listeners what those options might mean for if they're not so familiar with those three models?
Scott: [00:14:13] Yeah. Great idea. So global salary is paying for experience wherever they are in the world. So let's say a full stack developer with 10 years of experience gets paid. $75,000 wherever they may be in the world. Whether San Francisco or in Thailand or something like that. It's one salary for the specific role, and experience. You then have the localized option, which for the same use case. The full stack person in San Francisco may be getting paid a $125,000. While in Prague, they may be getting paid. $70,000. So that the salary is based on the location and cost of living and probably some other kind of criteria there.
The last of being the pegged option which is you maybe using a standard of San Francisco. So that full stack in San Francisco, let's say a hundred thousand dollars based on criteria like location and experience . Then you will adjust that amount. Tim correct me if I'm wrong.
Tim: [00:15:06] Yeah, I think that's a pretty good summary. To be honest, they're basically there's two real models. There's a paying one salary for the regardless, and then there's paying different salaries for different factors. Location being the main one. I think how you get to that different salaries is it gets complicated.
Scott: [00:15:29] So you as a leader, what are your thoughts on the best model to use, and you as the business person who runs a business that pays remote people what are your thoughts? Is there one optimal model? Is it based on maybe life cycle of the company? Something, anything like that?
Tim: [00:15:44] It's a really good question. There's one of the lens here and certainly one that, you know, from the business that we're in, we can't remove. That is how are people paid? So one of the factors for us is, were always hiring employees. We're always paying people as employees through a payroll.
So for us, you can't separate that from location? You can't pay someone as an American, if they're not in America. You can't pay a Japanese person the same way that you were paying an American person. Different countries. Different structures. Different setups. So once we start to unravel that, we can't separate the country and system from the salary. The best example would be comparing San Francisco to Paris. If you tried to pay someone a $100,000 in San Francisco, your employee costs are going to be maybe 15% on top. In terms of social security and so on. In France, it's going to be closer to 47%. Your person in the US doesn't get any leave as statutory. You might have an unlimited leave policy, but they don't actually get any leave by law.
They're not entitled to any. When they lose their job, they don't get paid out for any leave. Because even if you have unlimited leave, there's no balance. The person in France gets five weeks. I think it is plus RTT leave. RTT is oh, I'm not going to be able to say it in French, but basically when they reduced the working hours to, I think it's 35 hours a week.
As part of the deal, they went some roles we know we can't reduce the hours. So those people get extra leave days per year, and it's treated the same as normal leave. You don't take it, you get paid out for it. It accrues and so on. Then obviously in the U S you can lose your job tomorrow.
They won't even let you come back to your desk. They'll escort you out with security. They put you out on the street and they'll bring you a box. In France, your protections around employment, maternity leave, paternity leave, and unfair dismissal are super strong. In France you might take a lower salary because you've got this excellent social safety net.
You've got excellent social security. You've got excellent employer protections. In the US you might get paid more, but you don't have any of those protections. You could lose your job tomorrow and and you're on your own. The debate around compensation models, particularly in the light of Facebook was very much around the tech focus. Very much around engineering. Software developer focus.
It's a pretty privileged set where they're not necessarily struggling to find work again. I also felt like the discussion doesn't take into account those nuances. As an employer, I can't remove location as a factor from how I have to employ and engage somebody. So the view that we have is that we want to try and engage people in a way that's respectful of their local market.
Salary is a part of that. We want to give people the leave that they're entitled to for the country that they're in. We want to make sure that they're given the employment protections that they're entitled to in the country that they're in. Then we also want to be a competitive employer in that market in terms of how we compensate them.
sometimes we win on that on a global scale. Sometimes it's less than we would pay in the US, Australia, or the UK. Sometimes it's more . That's the way that we approach it. Does that make sense?
Tevi: [00:19:06] Yeah, that's really a fascinating perspective. Definitely a lot of food for thought since Scott and I have discussed. We also generally felt like a global salary is a great way to level the playing field, but you're totally right. It's not a level playing field. Different countries have different laws and that's a factor.
Scott: [00:19:24] Earlier this morning, I had gotten into a conversation on social media, around this specific. Someone who was a hardware physicist in France was complaining about how in France they're paid a third less than other places in Europe, and maybe half of what they'd be paid in the U S or here in Israel. .
So the conversation then ensued about global salary. Having that insight that you've shared with us about the protections and getting paid for leave that in the US you may not be paid for.
It's definitely eye opening and helps clarify . As Tevi said, just the salary itself is a level playing field, but all the things that are behind it maybe don't make it the level playing field we think.
Tim: [00:19:59] Yeah, and look, I live and breathe this stuff every day. Got a bit of a warped perspective on it because we're constantly seeing the differences and we're constantly trying to educate our clients . You can't fire someone in the Netherlands that way, or this person wants to take leave in Japan.
You have to let them. You can't stop them from doing it. So we're always aware of these sort of the differentials. There is one other element. Like it's something that I've really wrestled with, and I've had a lot of conversations internally about it. When we tried to come up with our compensation philosophy, we tried to do it from a first principles point of view, and think what do we believe and how might it apply and how might we be able to bring it into being. The argument that the person is doing the same job. The person in the Philippines is doing the same job as the person in Sydney is doing the same job as the person in San Francisco.
They should be compensated accordingly. I think is a really compelling one. I fundamentally can't disagree with that concept. I don't think it can be implemented in a way that's actually fair. The companies that do go down that route tend to be more paying people as contractors.
They're saying. You're in Lagos, Nigeria, or you're in Buenos Aires, Argentina, we're going to give you $50,000 US dollars. You do what you're going to do with it. That's all the involvement that we have. in theory it works in that sort of structure.
Scott: [00:21:17] It's super fascinating to me. With COVID we've seen lots of people running away from urban centers. San Francisco, New York, other places, moving out to different places. Do you see a shift in the data in the last 6 to 12 months of maybe a change of compensation models? maybe moving towards one model versus another model.
Tim: [00:21:41] I think the localization has always been a factor and the market is set by the biggest employers. When you think about compensation, it's not about cost of living. It's not really about anything other than the competitiveness of hiring. How much does it cost a company to persuade somebody to come and do a particular task for them. Out of the pool of people that are available to perform that task, and a pool of suitably talented people who are available to perform it.
I think within country borders, localization is a little tougher to swallow. I think internationally, the number of roles that are truly portable is still not that significant that it's going to see a lot of pressure on salaries. The number of people, for example, in developing countries who are able to compete.
Genuinely compete against a local hire on exactly the same terms is not huge at the moment. Like it's changing. It's getting better all the time, and it will continue to get better. It's still a fairly small sector of the overall employment market. I think that sort of shift of salaries increasing is going to take a bit of time.
Then you also have to think about the economic factors within a country. That's the other issue that I see sometimes with the pay one salary, everywhere argument is okay.
It's generally coming from two groups, right? It's workers in developing countries and it's employers in rich countries. Now they're the two parties that benefit from that model. Employees in rich countries can say, Hey, I think people in Philippines who do this job should get paid as the same paid the same as people in the US who did this job. Employers in the Philippines don't think that because they can't afford to pay US salaries. Employees in the Philippines think they should get paid your salaries because it's great for them. They get the money in their pocket. Employees in the US don't think that because suddenly they're competing against people in Philippines. So one of the issues, like if it did become really large in terms of volumes, then it could lead to some counter effects or some follow on effects that I don't think people necessarily fully thought through.
For example, if you can make five times as much doing customer support in Manila, as you could make being a brain surgeon, then what's that do for the Philippines society. Like you might have all of this trickle-down money that comes in. It's not necessarily going to be the best things in terms of how that society is structured and how people are compensated.
Because again, we're not talking about all jobs being given global comp it's only some jobs.
Tevi: [00:24:49] So it's I got a question for you. I'm going to throw in a couple of variables into this question. You're saying everyone should be paid based on where they are. Due to all the reasons we've discussed. If someone in San Francisco decides to relocate within the same country, or let's say they stay in California even.
They move to a more rural town, would their salary be adjusted? I'm going to throw into that. What about somebody who decides to be a digital nomad? Their residence is San Francisco. They start working for a month and now they decide they're going to travel to the Philippines for a month.
Then they're going to go to Iceland for a month. They get all the benefits of their San Francisco salary, but it's a remote company and they're not a resident of the Philippines or wherever else. Their residency is still San Francisco technically. So would that change anything? And the last variable on would throw you is, would there be a way that you would adjust somebody's salary so that you don't have neighbors who live next to each other making different salaries. How would you deal with that?
Tim: [00:25:53] The very difficult questions. The first thing to say is this is a super difficult topic, and there's no real right or wrong. Like I said, we've gone for a localized model, but I don't feel great about it. I don't feel great that there is this sort of disparity.
When we walk through the decisions, I don't think we have another way that we can we can compensate people that's in line with our values and philosophy that we can make work. So those scenarios, it gets complicated really quickly. I think where you've got a pretty clear case where someone moves tax residency.
So for example. One of the issues in the US is if you move from San Francisco to Wyoming, your tax changes. So as an employer, you have to register in Wyoming. You have to be able to pay someone in Wyoming. You can use PEOs or the US domestic equivalent of our company to do it, but the state taxes, municipal taxes, all of that stuff changes.
There's two parts of that are important. One is the employer has to know where their employees are. They can't just say, "Hey, work from anywhere you want. We don't care." Because as the employee, they have obligations to put people on a payroll in the place where they are and make sure that there are treated accordingly.
As a result of that, companies will tend to try vary the comp. The other factor here is that, the reason why salaries are so high in San Francisco is because of location. So when people say, "Hey, we want to have global salary." They don't saying, "Hey, I want a global family. I want a Mumbai salary." they're saying, I want a San Francisco salary, but why do people get paid so much in San Francisco? It's because there's a concentration of tech companies there. The tech companies are fighting over a small amount of talent, relatively. That they're all persuading people to come in and work there.
So they had to pay higher and higher salaries in order to get those people to come and work for them. You could say that if you remove that location as a factor, do those employees need to be paid as highly as they do? Then you're getting into more of a value based argument than a market-based one. If Facebook's employees deliver X hundreds of thousands of dollars or millions of dollars per employee and profitability, they should be paid the way they are.
That becomes a secondary argument. But to go back to your point when people are traveling around where they change residency. So for us, if someone wants to go from Australia to Canada to work, and we've been through this scenario. If they're in Canada long enough that we have to payroll them in Canada, then we're we're going to localize them. If they travel around and change countries every month and stay on an Australian payroll. and they spend all of that time in countries where they would get paid less if they have a local there. Then, in our system they're the ones who are winning. With all of these decisions, there are pros and cons. So for us, we put limitations around it. We say, you can have a digital nomad experience.
We're happy to support you in doing it. We put some restrictions around or guidelines around the visas people have and how long they can spend in places with those visas. We don't want someone spending a year in the UK on a 30 day tourist visa.
So if they're going to be there long enough that they become a tax resident, then they're going to get localized. That's how we approach it.
Tevi: [00:29:12] You're extremely pragmatic that it makes a lot of sense. You're saying that it's based on the legalized residency. You're also saying that there is some room for someone to game the system to some degree. Overall, you still think that it's important to stick to that localized salary structure and pay people based on competing with their market
they're in. There's a little wiggle room within that. If somebody really tries to beat the system.
Tim: [00:29:37] Yeah, because as you said we don't want a situation where we have two people doing the same job in the same conditions, in the same location, getting paid different amounts. So we redid all of that compensation last year and brought in fixed salary. Not bands.
There's no negotiation at all. It's you do this role at this level, you get this salary in this location. I was the one negotiating all the salaries. I hated doing. It was super stressful. I was constantly worried I was making a mistake, and I did make a few. That's really painful to deal with.
There are groups like historically women are not good at negotiating salary. Underrepresented minorities are not good at negotiating salary. We didn't want to be in a situation where someone was underselling themselves or wasn't aware of what the market was and ended up getting paid less than somebody else. Just because they were not as good a negotiator. Having that transparency and having fixed salaries is tied in for us.
Scott: [00:30:35] My final question for the listeners here. Any tips that you can share, especially as companies now are hopefully looking towards the remote model. Any parting words or advice that you want to share?
Tim: [00:30:48] Tread carefully. The hardest part if you're a startup is, do you optimize for making decisions that benefit you now, or do you plan for the future,? Which may or may not eventuate? One thing that we noticed with comp was, where we made short term decisions.
So we had some folks, for example, in the Philippines when we first engage people we had them as contractors. Then when we decided that we only wanted to have employees. We're an employer record service. We can't have people getting engaged as contractors. We had to shift them all, and that was super painful.
I believe Gitlab are going through that at the moment, or have been going through that over the last period of time. In terms of trying to bring people into employment, where they were contractors. It's a hard thing to see into the future to do. When you actually have to go through that process where people's compensation is being adjusted, in particular, where it's going to affect the amount of money they get in their pocket every month, it's painful.
I'd be a little careful around those things. The most important thing I think, and I tip my hat to Helpscout for this. Is they have a set of beliefs about the way the world should be and how they want to act in it. I admire their beliefs very much, and have for a long time. They act in line with those beliefs and I admire that a lot. They have a one salary per role anywhere in the world. It wouldn't work for us, but I give them full credit for doing it. And for being the change that they want to see in the world. In the same way for us, we made a set of decisions around compensation in line with our values and what we thought was important. I guess the one piece of advice is try and do that. Think about what is most important. Think about how people should be treated, and how you want to structure it. Because Tevi you did it to me in 10 seconds, right?
You can break any of these models with a tricky scenario, and they will happen because people are complicated. When that happens, what you really want to be able to do is go," I need some way to make a decision here on what to do." having those philosophies or values in place is super helpful.
Because you can go back and go well, okay. We're making a hard decision, but we're doing it for reasons that we've already agreed are important.
Tevi: [00:33:06] Love it. Fantastic conversation. Thank you, Tim.
Tim: [00:33:09] No problems. Thanks. Thanks for the questions.
Scott: [00:33:13] Thank you so much. For our listeners who are experiencing or have experienced one of the different models, we'd love to hear from you. So please be in touch and gentlemen again, thank you so much for being on the show today. Until next the next episode.
So have a great day, everybody.