Had it occurred during any other socioeconomic moment in U.S. history, Facebook’s announcement that it is planning for up to half of its workforce to permanently work remotely might have shocked some in the business world.
While discussions about the eventual shift of professionals out of the office to work from home have circulated for years, many businesses large and small retained the traditional workplace model.
Yet with stay-at-home mandates continuing, and businesses of all types developing innovative ways to maintain productivity while talent works remote, Facebook’s move to adopt this model for the long-haul was less of a surprise.
Indeed, digitization has made it easier than ever for professionals to work remotely, and the global pandemic has only accelerated technological innovation to continue lowering barriers for a workforce unable to meet in person or step into the office. What Facebook’s announcement has done, however, is introduce a new debate: If the future of the workforce is remote, how will that impact compensation?
In a recent conversation with PYMNTS, Oyster Co-founder Jack Mardack discussed some of the potential implications of Facebook’s compensation strategy at a time when a growing remote workforce is introducing new opportunities for talent around the globe.
A Compensation Debate
According to Mardack, Facebook’s announcement last month was remarkable in that it reflects an emerging shift in the payroll and human resources (HR) landscape.
“Ultimately, we’re headed for a new kind of talent market that has not really existed before,” he said. “Suddenly, now, if you’re head of HR, you all of a sudden need a remote working compensation policy and make that a way to attract candidates and prospects. That’s the world we’re living in.”
The big debate that is boiling to the surface — particularly following Facebook’s announcement — is how to compensate remote workers. Mardack explained there are generally two schools of thought in this respect.
The first is for employers to base employee pay the same way they would if they were working within an office. The second, and the strategy that Facebook has decided to deploy, is to adjust compensation taking into account where the location of the employee is. Two professionals with the same job title, responsibilities and seniority won’t be paid the same if one lives in San Francisco and the other lives in Denver, for example, because cost of living in each city is not equal.
Unlocking Doors For Talent
As more organizations consider the opportunities in allowing professionals to continue working from home after social distancing mandates lift, establishing a remote working policy that includes clear guidelines on compensation is necessary. The global pandemic has validated the remote working model, said Mardack; now it’s time for organizations to choose the best path forward.
He likened this paradigm shift to the cloud migration more than a decade ago. While technology has undeniably changed the way businesses operate, not all companies were immediately on board with the tool. Today, talent attraction and retention are no longer about pinball machines and expensive coffee makers in the office, and according to Mardack, the organizations that recognize this first will be ahead of the game.
This migration isn’t only about domestic shifts in the workforce, either.
Mardack highlighted the opportunity for organizations from Facebook all the way down to corner stores and mom-and-pop shops to hire talent overseas. With cross-border payments infrastructure in place (Oyster integrates global payments FinTech Transferwise, whose co-founder and CEO Taavet Hinrikus is also an investor in the company, within its own global payroll solution), Mardack said that cross-border payroll isn’t necessarily challenged by the logistics of moving money across borders. Rather, it’s about compliant and correct withholdings as tax and labor laws change from one jurisdiction to the next.
This expansion of hiring across borders could also further ignite a debate about the most appropriate compensation strategy, opening up the floor for organizations to decide whether a professional in Dubai should be paid the same as a professional in Los Angeles. If not, employers must explore how to benchmark salary, which market rate to use, and — according to Mardack — understand that the concept of market rate may change dramatically.
“What happens when market rate is influenced by remote workers? In 10 years, what will market rates mean around the world? If the world is significantly distributed, it will be irrelevant,” he said.
There’s no guarantee that corporates will follow Facebook’s path and no certainty that the future workforce will be mostly, if not entirely, remote. But it’s likely that the current workforce climate will usher in significant changes to hiring, working and paying employees. And despite the challenges ahead — from facilitating seamless global payments to promoting compliance — global hiring capabilities have the potential to positively impact the world workforce.
“Growing companies today, now more than ever, are interested in expanding their talent pool and going all remote,” said Mardack. “This is an amazing cultural moment for us now to think differently about what will be the future relationship, if any, between where people live and where they work.”