answer posted in article comments: ====

Hi Paul, thanks for taking the time to read this and for the comment. I faced similar reactions while setting this up, so I may be somewhat equipped to respond.

I’m not hoping to convince you here but I'll still try to provide a more complete picture.

From a team perspective, let's take a first example. Two senior engineers, Alice and Bob, work for company X. They have similar experience and roles. Alice lives in Central London, and Bob lives in Sofia, Bulgaria. In both cases that's because their respective families live there.

Say we chose to pay both the same exact amount: 75k£ gross per year, a fair senior wage in London.

In real terms, adjusting for difference in cost of living (for which hard data exists), Bob makes the equivalent of 150k£ per year; twice more than Alice, and also over twice what others in Sofia make for a similar job.

Such effective compensation discrepancies in a team can rapidly create extremely nasty jealousies.

In a word, balance in a team is important.

The principle we’ve tried to live by here is “fairness”. To the point I asked for my salary to be cut by 20% when I went remote myself. Perhaps this proves my “good faith”.

We did try to provide identical standards of living, be we’re of course not imposing lifestyles—the point of remote, as you point out, is in part that you can choose where and how you live.

For a practical example: living in the countryside in France, I have to spend money on a car but my rent is lower; I go to the restaurant less often but I spend more on food. In other words, I balance my lifestyle and budget differently but my “living standards” are similar.

To be coldly statistical about it, I was in the Xth percentile in terms in revenue or taxes in the UK, and I’m probably in the same percentile in France.

Let’s consider your examples. I’ll ignore the dependent person example, as that’s not relevant to the discussion (not being locale dependent).

Regarding the example of the person living in the London suburbs, you’re correct. We probably couldn’t pay them less for a similar job in absolute terms. But the example makes my point: for various reasons that person balances their lifestyle differently: e.g. spend more money and time on transport, less on rent. In my experience, they probably still have the same “living standards” (again, not a very precise term).

Finally, regarding having a “right” to decide what compensation is fair… well, that’s an employer’s prerogative.

It is, indeed, the employee’s decision whether their salary+costs+locale benefits is suitable, but as an employer it’s also possible to use factual data to keep balance.

Note that given our math involved tax systems in various countries, which can be hairy, we’d openly discuss this with candidates and make sure we’d reach an understanding.

Perhaps you’re correct and this kept us from hiring some of the talent out there. We still did hire several brilliant folks I enjoyed working with (and vice versa, from what they tell me), so it’s still an improvement over the previous status quo.

We don’t expect to have the ultimate answer to remote comp this or anything else — please remember, all I’m doing here is laying out what we attempted, how we reasoned on it, and what worked. I’m hoping others with similar experiences will come forward to complete the picture. Perhaps theirs will prove me completely wrong!