How Stripe, Zillow, and Other Top Companies Pay for Remote Work
For HR leaders today, navigating through the new landscape of remote work is a balancing act of seemingly competing priorities.
On one hand, the rise of remote work has led to increased speed, innovation, and employee satisfaction and to CEOs who boldly declare that "remote resets broken ways of living".
On the other hand, remote employees report higher rates of burnout and isolation. They worry about being looped out of important conversations. And many employees - including parents, new grads, extroverts, and people who live in shared housing - would strongly prefer to go into an office.
We hear about new takes on flexible, hybrid, and remote work policies every week. And with that comes new and nuanced perspectives on how to pay employees for their work.
So let’s take a look at how top companies are adjusting compensation, and using the hard-won insights of the past few years to maximize their people strategy and business strategy.
Atlassian, the Australian company behind collaboration software Jira, Confluence, and Trello, is going all-in on work from home. Under their new "Team Anywhere" policy, employees can work in any country where Atlassian has a corporate footprint.
The company will keep its office headquarters in Sydney but expects that it will only see 50% occupancy. Employees will not be required to come in, except for scheduled team-building events about 4 times a year.
Atlassian's compensation strategy will follow one of the most popular best practices: location-based pay tied to the cost of labor in each market.
Their strategy is also influenced by the global race for tech talent.
According to the Sydney Morning Herald, "before COVID-19 more than 100,000 skilled migrants landed in Australia each year, with a majority of them headed for the tech sector. However, that intake has slowed to a trickle".
This temporary crunch exacerbates a talent shortage that exists around the world and which is predicted to worsen in 2022.
Having made 1,500 new hires in this difficult market, Atlassian co-founder Mike Cannon-Brooke identifies flexible work locations as "one of the ways we can differentiate ourselves and attract employees to Atlassian."
Automattic, the parent company of Wordpress and Tumblr, has 1,200 employees across 75 countries. They have been fully distributed since 2017.
They have often shared tips from their remote work playbook, including how to build trust and autonomy into your company culture and how to create more communication and "watercooler" moments.
Automattic aims to pay competitive market rates for roles in any given area, but it is not as simple as it sounds. In an interview with TechCrunch, CEO Matt Mullenweg elaborates on the challenges of normalizing salary ranges for remote workers - a process that took them several years and still continues to be refined.
One of the biggest challenges he sees is changes in local currency, which "can have wide swings, which creates imbalances".
Still, Mullenweg thinks it is extremely worthwhile: “You get a lot of richness, access to a global talent pool, and, I think, a positive impact on the world by spreading economic opportunity more widely than it has been in the past.”
With a company culture that emphasizes passion and adventure, it's no wonder that action camera maker GoPro wants to empower its employees to pursue happy and active lifestyles.
Going forward, GoPro will offer hybrid and remote work options for all employees. They will not cut pay for employees who choose to relocate and they will not benchmark their salaries to the local market or cost-of-living.
In an announcement on their website, GoPro explains its pay philosophy: "We have decided that compensation for all U.S.-based roles will be aligned with our California-based offices, with a similar regionally-based philosophy extended to our global offices. Full stop, we believe employees' compensations should be determined by their contributions to the organization".
Anchoring pay to a head office location is a traditional approach to compensation and continues to be extremely popular among employers and employees alike.
Stripe, the payment processing behemoth, has always advocated for flexible work. In 2019, they opened a "remote" engineering hub, a virtual office coequal with physical hubs in San Francisco, Seattle, Dublin, and Singapore.
In September 2020, Stripe introduced an interesting twist on work-from-anywhere compensation. Employees were offered the choice to move out of high cost-of-living cities like New York and San Francisco and get a $20,000 one-time bonus. In return, they had to agree to a 10% cut to their base pay.
A year later, to the surprise of many, this policy has been embraced by their employees.
“We saw pretty major uptake,” said John Collison, Stripe’s co-founder, in Bloomberg. “There were a lot of people where they took advantage of all the remote working that was going on last year to be able to move to be closer to their families, to somewhere they wanted to move previously”.
With a thoughtful approach to remote work and an innovative compensation strategy to match, Stripe is blazing its own trail. In March 2021, with a valuation of $95B, Stripe became the most valuable startup in the U.S.
Online real estate marketplace Zillow provides a great example of how quickly companies are pivoting their approach to compensating remote employees.
In August 2020, Zillow CPO Dan Spaulding told CNN Business that the company was undergoing a culture shift from discouraging work-from-home to allowing it permanently.
When asked if this would mean any changes to employees' compensation, Spaulding said: "Yes. There is no way that there won't be. [...] We are actively working through what is the coherent strategy around managing that in a fair and equitable way for where employees live".
However, one year later, Spaulding published a LinkedIn post that outlines a new compensation strategy with a totally different approach.
Instead of location-based pay, Zillow is "de-emphasizing location as a component of compensation" and is instead implementing "nationally competitive compensation packages" that are "primarily tied to an employee’s role, responsibilities and performance, with less emphasis on geography".
With this new location-agnostic approach to pay, Zillow now has employees in 49 U.S. states.
Flexibility is the future
When it comes to remote and hybrid work, there is no one-size-fits-all solution.
Atlassian, Automattic, and Stripe join the ranks of giants like Google, Facebook, and Microsoft in offering flexible working arrangements with location-based pay.
Meanwhile, GoPro and Zillow are moving towards being more distributed with one location-agnostic compensation structure.
There may only be few overarching approaches to compensating for remote work, but there are an infinite number of variations to these approaches to support different company cultures and business priorities. We are still in the earliest stages of these shifts in organizational and compensation strategies and we will continue to keep an eye out for the latest innovations from leading organizations around the world.