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How will the pandemic affect
geo-based salary policies?

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How will the pandemic affect geo-based salary policies?

Pandemic brings challenges to the way of working, but the other side of the coin is that it boosted the adaptation to remote1. Unlike before, companies do not seem that resistant to remote anymore as they experienced the increased efficiency2. Although some companies complain about working remotely, this is due to the legacy processes which are not remote-friendly. 

Before the pandemic, remote advocates and supporters were a minority. I would like to refer to Conversion Theory3 , which refers to the impact of a consistent minority on the majority. Conversion theory accepts the disagreement within the group which results in conflict. In such a case, conflict is reduced either by changing their own opinions or attempting to get others to change. Pandemic increased the adaptation to remote and now one can hardly see someone complaining about how remote work is inefficient.

As we have solved the resistance to remote work with the help of pandemic, the next challenge is to create a more homogenous world.

Is our world heterogenous? Yes! Highly! There are huge differences in the living expenses between countries and even cities. This also causes the companies to apply different salary regimes for their employees living in SF and in non-SF, for example… What if the salaries are the same across everywhere regardless of where you are living? In mid-term/long-term, will this help our world to converge to a more homogenous environment? .

If one would check the main difference in living expenses between the cities, #1 will always be the rental/home prices. This huge difference happens because of supply and demand basically. The central city locations or districts which are close to business offices always had high demand which causes the prices to go up. Consider that, together with the remote work, the demand for those areas will decrease, which will result in decreasing rental/home prices. This may affect the prices to be normalized across the country in mid-term and across the globe in the long-term.

Some non-remote companies apply different income regime based on where you live:

  • Google
  • AWS

Some remote companies apply different income regime based on where you live:

  • GitLab
  • GitHub

Dilemma: Wages based on the country you live or not?

Have you heard about Chiang Mai where thousands of digital nomads live temporarily? A nomad is expected to change their location by time. So consider I am a part of a remote-friendly company, let’s say Gitlab, and I am changing my location every 1-3 months. Wouldn’t it be a headache to tune the salary based on where I am living? What if Gitlab will apply the same income across their employees regardless of the location? 

Pandemic was a simulation of what will happen if the salaries were kept the same. My personal observation was that the majority who could escape to their holiday homes, to more calm or interesting locations such as coasts or somewhere in the middle of nowhere, just did so without hesitating.

In Kloia, we apply a non-Geo-based income policy which also includes a revenue-sharing model, where Kloians are free to live where they want to without worrying about us changing their remuneration. 

There is an increasing reality of “digital nomads”, who prefer remote locations like Chiang Mai4. It wouldn’t be easy for you to roam around if you worked in a company where there is a geo-based salary policy. Wouldn’t it be an option to consider your next adventure in a company with a non-Geo-based-salary policy? We will see whether the minority will affect the majority in this conflict in time.

P.S. :

The other effects of the pandemic:

  • How will pandemic affect business offices? (Comment pls if you wish we consider writing that article)

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1."Telecommuting will likely continue long after the pandemic." 6 Apr. 2020, https://www.brookings.edu/blog/up-front/2020/04/06/telecommuting-will-likely-continue-long-after-the-pandemicAccessed 7 Aug. 2020.

2. "Remote Workers Are More Productive - Business News Daily." 31 Mar. 2020, https://www.businessnewsdaily.com/15259-working-from-home-more-productive.html . Accessed 7 Aug. 2020.

3."Conversion theory of minority influence - Wikipedia." https://en.wikipedia.org/wiki/Conversion_theory_of_minority_influence. Accessed 7 Aug. 2020.

4. https://www.twowanderingsoles.com/blog/best-cities-for-digital-nomads

 

Derya (Dorian) Sezen

Derya, a.k.a. Dorian, ex-CTO of an amazon.com subsidiary, is currently working as Cloud and DevOps Consultant at kloia. He has migrated 10+ companies to AWS and has been involved in Containerisation and DevOps Automation projects in a range of industries. As a AWS DevOps Professional Certified expert, Derya is mentoring the hands-on trainings.