Remote Compensation w/Rodolphe Dutel - CEO & Founder of Remotive.
Updated: Feb 7, 2021
Paying for value generated vs location. We discuss with Rodolphe what the historic picture has been around remote compensation. Which types of companies use what models, and why. Most importantly, are the trends for post CoVid remote work.
Here's the recap...In today's episode, we chatted with Rodolphe Dutel, CEO & Founder of Remotive about remote compensation models. Should remote workers be paid by experience or location? We talk about how remote teams pay employees, and what to consider when designing your remote compensation model. Remotive is one of the largest remote communities & job boards. So Rodolphe has plenty of data to share, as well as, thoughts on 2021 trends in remote compensation.
Full Transcript Below...
How Remote started & where it's going
Remote work started by companies needing specific one-off tasks to be done. Outsourcing short term projects to off-shore teams that were cheaper than the office team. Larger companies that have historically used a model like location based pay, will most likely continue using the same model. Based on historical data and operational ease.
Transparency is 🔑
Learning from experience at Buffer, being transparent with salaries is crucial. The information should be upfront and available during the application phase. Of course, ensuring employees with similar roles are paid within the same compensation range. It doesn't take long for employees to discover who makes what. So having different team members with identical jobs being paid significantly different can cause harm to the culture. You don't want to have second class citizens.
Any potential compensation range changes, whether positive or negative, should be transparent and discussed with the team.
Many larger companies have historically hired in hubs. So hiring a whole team in or local to major cities like SF, London, Tel Aviv, or Kiev. It's quiet likely that Fortune 500, and larger companies will continue using this option vs hiring anywhere. Likely being related to a hybrid remote model going forward. The smaller startups just launching and getting off the ground will favor the remote anywhere approach.
Grandfathering salaries 👴
Grandfathering in a salary is something companies should have in place. Whether due to setting a set range in place, or having to reduce a salary range in tough times your team shouldn't be punished.
Top talent and critical members of a team will be able to grandfather their salary if relocating to a cheaper community. Companies do not want to lose their prized talent when they move from SF to Bolivia.
HR vs Finance 🥊
Over the next few years there will be an internal battle between HR & Finance teams. HR teams want to ensure their compensation & benefits packages keeps their team happy, and help recruit talent. On their side being more in favor of global salaries, and expansion or pivot of benefits. Perhaps some of the money saved on in-office expenses is reinvested in remote benefits. They will also be more in favor of having some type of office space for teams to meet IRL.
While CFOs are looking to minimize and reduce costs as much as possible. Especially with the impact CoVid has had on most companies. CFOs will look to do away with all office space and related expenses. Not as interested in reinvesting those costs in co-working space or remote benefits.
Hope you enjoyed today's episode. We'd love to hear your feedback on today's show. We'd love to hear from you about your onboarding experiences. Whether awesome or not awesome. Do also feel free to share any feedback on topics you'd like to hear us discuss.
Scott: [00:00:00] Hello everybody, and thank you for tuning in today's episode of Leading from afar. I'm Scott Markovits with my co-host Tevi Hirschhorn. How are you holding up these days during latest lockdown?
Tevi: [00:00:10] I'm enjoying the lockdown tremendously.
Scott: [00:00:14] I can hear that enthusiasm.
Tevi: [00:00:16] A little sarcasm. Lots of sarcasm.
Scott: [00:00:18] Yeah. Quite a bit. Especially if you're a parent with kids learning at home or stuck at home like both of ours. It's quite an exciting time.
Tevi: [00:00:26] We are still improvising holding up now.
Scott: [00:00:29] Indeed. This is the year of improvisation. Today we're going to be doing part two of our series regarding remote compensation. Today were going to continue to discuss the options that teams have compensating their remote employees, and which one may make the most sense for your team.
So today we're super excited and delighted to be joined by Rodolphe Dutel , who is the founder of Remotive. One of the biggest and most active remote communities, and longest standing ones. I know I've been a member of it quite a while. I know to Remotive is part job opportunities part Slack, community, and part leadership forum.
There are probably some bits and pieces that I've missed in there. So Rodolphe most importantly, thank you so much for joining us today. Perhaps the best place to start off is introducing yourself and Remotive a little bit, please.
Rodolphe: [00:01:10] Of course. Thanks for having me. It's good to be here.
My name is Rodolphe. I fell in love with the startup world and ecosystem about 10 years ago, when I started to work at Google. Discovering that selling collaboration tools was a way for people to work from anywhere. So my job fresh out of college was to help companies transition out of Microsoft Exchange and IBM Lotus notes, and start to share documents. So that you would not have to go to the office in order to be productive.
That did set me on a path towards exploring how to work differently and how to live differently. I joined a company named Buffer that does social media. Whereas lucky enough to be a director for operation finance for about three years. Helping them grow from 15 to 90 employees. Discovering how a productive team of about a hundred people could operate across time zones. Across different countries and continents really inspired me to share and to set myself on a quest of finding more teams that operate that way. InVision was one of them, of course. Then I started to compile a list year after year and fast forwarding to today. I run Remotive that I started in 2014, a community, media, and job board.
Helping people want to work remotely connect with companies that are excited about remote work and we are a media and we need to share what it is. We'll learn and to be a good community member.
Scott: [00:02:44] Awesome. So before we dive into the actual nuts and bolts in dollars and cents. The first question that I had, it was historically, outside of this know recent COVID year. What has the remote hiring picture looked like? Meaning, have historically companies been hiring the best talent anywhere in the world? Have they been focused more on the regions? So USA only because they're a Pacific coast based team or maybe something of a mix or another option.
Rodolphe: [00:03:12] Yeah. I felt like we had three different scenarios happening. Really. The first scenario was a company trying to find someone to fill a position and basically pay them as little as possible. Which traditionally is being outsourced off-shoring that has happened. That did set off a way for people in various countries to work for a company willing to outsource a task. That wasn't remote work as we define it today, but it did get started on the basis of someone outside of your office could help you join and do a task.
Then we had companies that said "I want to hire in the country where I operate" in the United States, for instance. I also recognize that talent is not only connected to a zip code? So maybe I want to find people outside of the San Francisco Bay area, and it won't be expanding across all states for legal and compliance region reasons. I only want to be hired in the United States.
That's the second example. The third and last case is a company that said talent is everywhere. Yes, it may be complex,'re but we want to take a different stance and hire the best people wherever they are. So we will be facing hurdles. We will have difficulties at times, but we happy to welcome applicants wherever they are based. We'll work out compensation accordingly.
Tevi: [00:04:23] That's a really interesting perspective. On some ways you're saying that it started from outsourcing. Paying less for people that could help you out that are not in your office. Then on the other hand is saying, we want the best. Maybe that even costs more.
Now we're at a tricky point where we're remote compensation is a big topic. It's easy when you put it that way, it's easy to see that there's that clash of perspectives there. What do you think is the right way a company should go about trying to figure out salary for remote employees?
Rodolphe: [00:04:51] It's a tricky discussion in the sense that everyone can give you a different answer. My take on this is that. What's best is transparency. What I love is what is what you get. Meaning that from the moment you look at a company or apply, you do understand before committing to work with it, that you will be paid according to either where you live or what you do.
It doesn't matter where you live, and what I want to continue to be sharing more is transparency. Because sometimes it's going to be, a free for all where you're only going to be so much, and sometimes it's going to be the best salary ever. Like what Basecamp is doing. Pay top dollar a San Francisco, regardless of where you're based.
I understand there are economic constraints on both scenarios. I just feel like if you get transparency from the get-go as in applicant and then employee, then you will and vote with your feet. Like virtual feet, if you're remote but you can do that.
Scott: [00:05:45] So how much transparency do you see as the right mix?
I know Buffer where you were was very famous of being very transparent with salaries and a lot of other information. Over the time they moved away from that because there was a bit of friction potentially internally about their salaries. Do you see there's a right mix or a right place to have that transparency?
Rodolphe: [00:06:07] Transparency is tricky when it comes to salary. Because you can have either a spreadsheet with everyone's salary and everyone's name. Which has implication that what buffer did. The consequences of that is saying that well, someone is going to know how much you're paid as an individual. Which may be tricky.
Salary bands are another thing. So salary bands say s for this role in this geography, this is how much you're going to get. Which I think makes a lot more sense. So at Buffer, they decided to share a lot. That was based on the fact that existing employee knew exactly that this information will be shared. People that were not quite comfortable had the opportunity to say so, and to potentially exit the structure as well before this was even implemented.
So the rules were set from the get-go. I do believe that it's great to know what salary band you're going to have before applying. Then going down to the granularity of, Josh is going to make that much and Sal is going to make this much. It's a bit extreme for some, and I do get that.
Scott: [00:07:03] Interesting. I know that you personally through Remotive have been very up in the forefront of that transparency around remote salaries. The last two or three years, you've done the developer salary guide. Where you've posted in social media for developers to post anonymously how much they're making. Broken down by location and seniority and things like that. Which is quite interesting to have it because I haven't seen any other places online where you can get that data. Two questions off of that. One where'd that idea come from to actually start doing that? So far, what have you seen in that data that's been pushed on through?
Maybe you want to be benchmarking yourself against your peers. Meaning people that are working in similar size startup with similar number of years experience. Versus someone who's your neighbor. I think that finding that granularity wasn't really easy. So crowdsourcing felt like the most natural way to do it.
So I asked around and I said how about, we can anonymously share salaries from developers. Share how many years you've been on a job. What kind of pay you get, and how you feel about that pay as well? So I felt like combining that has been interesting. To date, I think we have a nearly a thousand entries, I would think.
So it's always an instant picture. Like a snapshot of the market, and the market is dynamic. You also get someone in FinTech is often paid more due to the industry than someone working in, events, for instance. It's just the nature of the industry just shifts a little bit. So it's not always apples to apples. But at least to give you a sense of say, I'm based in Berlin, Germany, and I know how the other remote developers based in Germany are commanding in the market.
So it's just one more reference point. It's not absolute, but I felt like it was lacking in the landscape.
Tevi: [00:08:59] What's your thoughts as a remote leader? What's your opinion on the ideal scenario? Should somebody be paid for their experience, or should it be linked to their geography somehow? What do you think are the implications for morale in a company?
Rodolphe: [00:09:14] I think the most important thing is making sure you don't have second class citizens. In a way that you don't create a two tier system. Because that tends to be very tricky and even toxic at times where you have people at HQ and then a bunch of other people that are in a different country altogether.
There's somewhat of an understanding that it's been chosen upon budget. More of a CFO decision rather than an absolute decision. I do believe that. My preference is for everyone to get the best salary for their skills. So should a startup be able to afford that, that's great. I also understand that startups and companies in general sometime are able to pay less, but they can still provide a good living for people that are happy to grab this opportunity.
So I want to see both ends of the spectrum. If you are a well-funded startup and you do manage to provide good salary, I think that expanding it is absolutely the thing to do. One thing I always say that when you get three employee in a room being virtual or physical, you down a couple of beverages. You just leave them chatting for two, two and a half hours. Everybody's going to know how much the other person is making. It's just natural. Like they're going to chat at some point about compensation. Maybe it's going to take a few weeks, but it's going to get known. Is this not such a thing as a big secret behind how much everybody's going to be making.
Scott: [00:10:33] That's great. I think it's right in line with Tevi and I spoke about in the last episode in part one. I'm getting the feeling you're going down the best option is the global salary. You're paying for the experience vs location. Something that you had said and I mentioned in the last episode, is do you feel that there's a use case to based on location or some other basis? Especially in the life cycle of the company. Of an early stage company with maybe five people with pre-seed funding. For $100K for a San Francisco developer, you may be able to get two developers just as good in Eastern Europe or somewhere else.
Is there a use case that you see that this is the best model to go at this point?
Rodolphe: [00:11:12] I think it's pretty tricky. Because as you said, like a early stage company development, can very dramatically depend on how you're going to allocate that $100K budget. I do feel like historically companies in the Fortune 500 have been very much hub centric.
You had a hub in San Francisco, Tel Aviv, and London. It is very natural and almost second nature to them to pay you according to where you are. Because they used to pay in local contracts. So as soon as they'd swapped currency in the visas, they changed how much you made depending on location and location bets.
So from a big corporation standpoint, shifting compensation when you shift location off a hire. You can see that through new decisions from the big corporations, the Facebooks of the world. It's been very natural. At the same time, if you're a small company you can have two developers.
That's a discussion I think that's nice to be had with the team. Also understanding that maybe you're going to be able to get top tier talents that have a different salary expectation. Maybe you do not want to compete with other things. Typical example is someone who's fresh out of college in the Bay area. Maybe commanding a salary that anyone else in other regions or areas will find outrageous.
Would you pay a fresh graduate $200,000 - $250,000 . With stock options included. To get started with someone who's got very few experience aside from a project. I think that's a biased view of the market. So I want to be fair and say that ideally I'd love everyone to get top dollar, but I also want to say that the Basecamp scenario where you pay top dollar everywhere is a scenario where you have a SaaS business.
That's basically unbreakable and that is making over $50 million US dollars a year for a team of 50 people. So when you have that kind of margin, you can make decisions that are different. To many SaaS business can do that. Not all businesses can do that. So it's hard for me to give a blanket answer because economic reality are going to be tricky here.
Scott: [00:13:10] Yeah. From the leaders that you spoken to, do you have any sense of why a company chooses a specific model and potentially why they may pivot? I think there's been use cases, like Buffer. From what I remember, it started off with a localized option and moved towards pegged San Francisco, and moderated from there. Helpscout also started with a localized salary and then moved to a global salary last year. Any thoughts on why a company would change midstream, and how these companies are making that decision?
Rodolphe: [00:13:37] I felt like most leaders that make decision around compensation have two things in mind.
First, they want to improve the status quo and second, they don't want to rock the boat. Rocking the boat means to be very specific. Anytime someone knows they're going to be a salary change, like in the model or in actual numbers, it's a sheer sense of panic. That's going to go through the Slack room or the remote team.
Like I've been in a position of being the person, one of the people in charge of adjusting Buffer's salary formula. It is very tricky for people that took out loans that adjusted the lifestyle and the given salary to get told we're going to change the salary formula. Because direct implication is you're going to make a different number.
So if you work under the baseline scenario that you're going to grandfather in, meaning maintaining baseline pay of what you get today. What you get tomorrow is more than what you get today. Then you can have a conversation. That's the company is doing well scenario where you want to adjust it to be more liberal and shifted up and down as people make different life choices. Then it brings more friction and more tough conversation. It's not impossible. It's just a very different framework. So Buffer, Helpscout, and others my sense is that's not privy to every conversation, but every time they shift, they grandfather everyone. Basically the new reality is going to be better than that.
So that gives you a sense of comfort and you can move things from there. So you find a new model. Maybe you say now we're going to have the countrywide instead of a statewide policy in the US, but based on the fact that nobody's going to lose.
Scott: [00:15:09] That's an interesting perspective. Thought of it being whether the company is doing successfully or having a little bit of trouble and potentially shifting from there.
One could make the assumption. If the employee knew that the company wasn't doing as well, potentially being more open to a salary change. But again, that's a conversation for each individual person. Are you seeing through the data, through Remotive, through the job site and the salary guide information any trends shifting towards one model? I think Reddit have gone to a global option. Facebook the opposite of localized. Are you seeing any trends in the big picture, moving in any direction?
Rodolphe: [00:15:43] My sense is that we're going to see a two gear system. With specialized job and high margin startups will probably capture best talent by offering great packages. So you're going to get more perks. Great ergonomics set up in your house. Great salary and so on and so forth. Whereas other jobs that maybe required less qualification and needed people to be in certain geographical areas are probably going to shift towards lower salary bend as well. So I feel like some part of potentially lower skilled jobs will shift to be paid a little bit less in different countries.
Whereas, software developers and that part of tech is probably going to be getting better and better offers wherever they live. So I think the market is going to shift a little bit that way.
Tevi: [00:16:31] Yeah, it's an interesting point. You raised before about the size of the company. Like a SaaS model with a certain margin. $50 million ARR being able to afford a global salary.
I could also see, Scott, you mentioned Facebook. I could see things going in a similar direction. Once you're at a certain size, you're a huge corporation like Facebook. You can't really go global either. You all, you have to go back into a more localized salary. Do you see any of those finance calculations becoming standardized? Where it's accepted that certain size companies will operate a certain way?
Rodolphe: [00:17:05] I sense that company that had any level of success being a global company, operating on localized salaries are probably going to remain that way, I think. Maybe they're gonna make exception for highly senior software development slash leadership position. I do feel like they have a track record. As a VP of compensation at Facebook probably had 30 years in the industry of going through the lense of localized pay is working well for me, and my people. Then we have newcomers. We have the Deel, the Papaya, the Remote.com, the Oyster. So people that are doing employer of record that going to make it easy for those companies to hire internationally. So that's where things may change from a legal and operation standpoint. It's easier to hire anywhere, but I wonder aside from top talent, whether those large companies aren't going to be giving. Great salaries anywhere. I think is going to be very much restricted to those hard to hire position.
Tevi: [00:18:01] Do you think that touching on that? Let's say someone was a VP of somewhere in San Francisco making $300 K and then they moved to Bolivia, should their salary be adjusted to where they are.
Is there any scenario where adjusting a salary because somebody moved would make sense or be a good idea for a company.
Rodolphe: [00:18:21] It's really hard not to lose talent when you adjust salaries down. Like I think you can argue it both ways. If you're a VP you can say, I give a certain value. That company was happy to foot my salary at $300K per year.
So if I move elsewhere and provide your same level of service, what would it go down? Tricky. The opposite can be argued. I'm mean developer in Bolivia and I make a great contribution to what's happening. So why don't I make so $300k as a senior developer working for leader. It may happen for specific jobs, but I don't think it's going to go towards old jobs.
Scott: [00:18:55] Interesting. I liked the word that you used; value. Tevi and I spoke about that a lot in the last episode as. That people should be paid for the value that they're bringing into the company. Regardless of where you are. If you were giving a certain level of productivity, of value of revenue to the company that's what you're paid on. versus where you are. It'd be interesting as we move forward, I think version two of remote is going to be the hybrid model. What are your thoughts on how the hybrid model may affect the salaries for remote employees?
Rodolphe: [00:19:28] I think remote is going to be like, with the hybrid model it's unclear what remote may mean. Maybe you're going to have the Stripe model where people work in offices and then you have a remote hub. So some people are a hundred percent remote, but sometimes they go back to a given location. That's one hybrid model. Second, a hybrid model is you tie to France. I'm in Paris, France. So you tied to the Paris office. You can be wherever three days a week, but I want to see you every Monday and Tuesday. So those things sought compensation by themselves because then you get original hook and a place where you connected. Versus, I'm remote but sometimes I'll travel for the occasional get together to the closest office you have.
So I think it's going to wonder whether it's dealt with locally, that's my hunch. How big tech is going to handle it. The second model where you going to have some flexibility. Depending on your role, but you'll be anchored into a regional hub. I feel like that's the easiest for them. Let's not forget they over-invested in real estate and training.
Most of those GAFA companies built campuses. The word is evocative of the continuing of the higher education model. Where after college, you go to the campus. I think a significant number of graduate are going to be willing to see colleagues face to face and to get mentorship and to make their husband and wife.
So just interact some more by seeing people and going back to the office, as well. So I think it's unclear. How is it going to be computed? I feel like those headquarters still going to have values. I think grow Dropbox call then the interactive studio or something like this, but basically we're moving towards shifting big buildings into large coworking space that are more flexible. When I was working in London 11 years ago, I had to book my desk by the half day working in a consulting firms. So I had to book for Friday morning if I wanted a desk. I could not get a desk by myself. That was true for all seniority except from top directors.
So I think that's going to be more and more what's going to happen. Hot desks with collaboration spaces. Then you work out of a hub and you're connected with your salary towards that hub.
Scott: [00:21:36] Interesting. The office ideas quite in line with things that we had spoken about. Let's say two employees that live in Paris or live close to Paris. One that would come to the office or to the hub a certain amount of times a week, and one that is completely remote. Doesn't come to the office. Do you see any difference in the potential salary each one of those is paid and the benefits? Meaning the company may have paid for a Metro or bus pass, or had a gym membership, or paid for coffee and snacks and treats and things in that office.
Is there the idea of putting some of that money towards the remote employee as well? We were spending a thousand dollars on an employee every month who was coming to the office on transportation, food, and snacks. But if you're not in the office you're missing out on the craft beer, fruit, snacks, and things in the office.
Rodolphe: [00:22:23] I think it head of HR would probably typically say yes, you need to match the remote experience. I think the CFO in a crisis environment, 2021- 2025 may have a different answer. Maybe we just managed to cut that office. We do not want to pay down in the first place and that's been great savings.
So I wonder how flexibility is it going to tie into the economic outlook that we have. Which isn't great for most companies. Certainly software companies that are very impacted by what we're discussing here are fairing better than others. I do wonder what's going to happen. My belief that it is necessary o have people that are outside of the office. The discussion around the title of Director for Remote that we've seen happen with Facebook and other places.
For me, it's not so much about deciding whether I should have a 20 or 25 inch screen to look at. Rather if I work remotely, am I going to get passed on for a promotion because I haven't been seen by the higher up for quite some time. I think that's what's gonna be the tricky part of 2020 - 2025 when it comes to carrier management and hybrid setup.
Tevi: [00:23:30] Yeah. I think if we're having a hybrid model discussion, I think the whole reason a company wants to have snacks in an office is to get people to come to the office. There's still always going to be that tug. They want people to be seen or to mix or to socialize or have water cooler conversations. Which I don't believe happened as frequently as people think they do.
But why would they want to give that snack and incentive to stay home? It seems like that would be something like if you want the snacks and craft beer, then come to the office.
Rodolphe: [00:24:00] That's a tricky thing. Maybe they'll do that. Maybe they'll just say we'll pay for you to come over once every so often.
We'll foot the bill for you say $1500 US dollar for setting up a place in your house or apartment to be comfortable with headphones and quality internet.
Scott: [00:24:18] That's where I'm hoping things go. The question about the future of offices or the hybrid model, and the point you made moving up the management chain by not being seen by managers?
Another thought that I have is when they do virtual happy hours or meetings with the hybrid model. The management team will make a lot of effort to make collaborative and engaging for everybody. But if you can just imagine yourself sitting there behind a computer screen. Seeing 50 people in the kitchen space having a good time, drinking, schmoozing, and laughing, and you're sitting on a screen all by yourself in an apartment. How does that affect in the employee happiness and engagement? My own thoughts. It's going to create two cohorts. Your in the office group, and you're out of the office group. It's us versus them. Then how does a company deal with that?
So maybe we'll have you back on another podcast to discuss the hybrid model. The last question that I have. Is after the developer salary guide, do you have any plans to extend that to other roles? Product, People, Support, and Executives.
Rodolphe: [00:25:12] I think it'd be great. I think that we want to be crowdsourcing more data in 2021. It's been good with developers because it's a cohort that's going to be over presented on social media. So very responsive to share information and that has traveled. I do feel like we don't have solid sources of data for other jobs that have been popular.
We have tons of remote jobs. We list for project managers, for designers, and customers success for instance, So we'd love to compliment that effort. Yes.
Tevi: [00:25:42] Rodolphe, it was very nice to meet you. Thank you for your time. It's been a pleasure having the conversation.
Rodolphe: [00:25:47] Thank you so much Tevi & Scott.
Scott: [00:25:49] Thank you so much again for joining us. We'll put all the links in the show notes to the salary guide and the Remotive site, and how people can get more information about joining the Slack community and leadership group. Thank you so much everybody for the conversation and until next time.