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Remote First at Brex

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Re: Remote First at Brex

#81

Post by valuearb »

121789 wrote: post #77
ryanSrich wrote: post #23

Earlier quoted context omitted.

It's a relic, and a bad one. I run a remote-first, remote-only company and we pay everyone based on experience and merit. Not location. If you want to stretch $150k in San Francisco go for it. Good luck having to live with 3 other roommates. However, if you want to take that same $150k and live like a king in the middle of Kansas that's an option as well. Adjusting someones pay simply because they're logging onto the…

It's not a relic, it's a way to price labor effectively. You're not paying for work, you're paying for the candidate to choose you over a competitor. If you're competing against local Bay Area or high CoL companies that are local, you will have a lower offer and will likely lose out on talent. That's OK as a strategy, but you may just be selecting out of low-CoL areas and limiting your pool of labor. The alternative,…

If you have to pay $200k to get talented engineers in the Bay Area, and find out you can get equally talented people in the Midwest to work remotely for you for $130K, obviously it makes sense to set waters geographically.

But what happens when your competitors realize this as well? Now you can no longer get the same level of talent in Iowa for $130K, soon it’s $150k, then it goes up again. You aren’t paying for work, you are competing for talent.

I think the market ends up being bifurcated, where working locally in-office gets a premium when it’s worth a premium, but remote pays the same no matter where you are outside of time zone issues.

Re: Remote First at Brex

#82

Post by tallgiraffe »

There are some good pro's and con's to this strategy, but given market forces I can imagine the future where everyone "works" from the same address in the Bay Area, while being based elsewhere. Maybe I am hoping to see this as a hack :)

Re: Remote First at Brex

#83

Post by rorykoehler »

ryanSrich wrote: post #23
kag0 wrote: post #20

Earlier quoted context omitted.

Can someone explain the rationale behind geographically based pay in remote-first companies? I don't necessarily disagree with it, but I don't know what aspects of the issue companies are actually looking at to decide that geo-based pay is the way to go.

It's a relic, and a bad one. I run a remote-first, remote-only company and we pay everyone based on experience and merit. Not location. If you want to stretch $150k in San Francisco go for it. Good luck having to live with 3 other roommates. However, if you want to take that same $150k and live like a king in the middle of Kansas that's an option as well. Adjusting someones pay simply because they're logging onto the…

It's basically signalling that the company doesn't value employee output.

Re: Remote First at Brex

#84

Post by mepiethree »

ryanSrich wrote: post #40
crashedsnow wrote: post #32

Earlier quoted context omitted.

I don't see it as a relic, or a bad one. Some people can't just up and move to a cheaper location for a job they don't know they'll have in a year's time. How do you decide what to pay? Paying based on "experience and merit" needs to be anchored on something, so you just end up either massively over-paying someone in a location that's cheap, or massively under-paying someone in an expensive area. If you want to pay e…

> Any company with shareholders is accountable first to them (for good or bad) and I'm not sure your board or CFO would agree that paying peak makes sense Good thing I have neither a board or a CFO. But to respond directly, I think you're down playing how much of an advantage over paying (as you've put it) can be for acquiring great talent. Great companies are built by great people. Paying them well for the work they…

I generally agree with you, but I do struggle with the amount of risk taken by paying the top end salaries. Great companies are made by great people, yes, but great salaries are made by all kinds of people.

Re: Remote First at Brex

#85

Post by kyawzazaw »

ryanSrich wrote: post #40
crashedsnow wrote: post #32

Earlier quoted context omitted.

I don't see it as a relic, or a bad one. Some people can't just up and move to a cheaper location for a job they don't know they'll have in a year's time. How do you decide what to pay? Paying based on "experience and merit" needs to be anchored on something, so you just end up either massively over-paying someone in a location that's cheap, or massively under-paying someone in an expensive area. If you want to pay e…

> Any company with shareholders is accountable first to them (for good or bad) and I'm not sure your board or CFO would agree that paying peak makes sense Good thing I have neither a board or a CFO. But to respond directly, I think you're down playing how much of an advantage over paying (as you've put it) can be for acquiring great talent. Great companies are built by great people. Paying them well for the work they…

Then do you have to pay US salaries at all?

Re: Remote First at Brex

#86

Post by kyawzazaw »

alexeys wrote: post #78
nrmitchi wrote: post #35

Earlier quoted context omitted.

You're discussing "markets" across countries, which had much more reason for adjustments to be made. Social services, taxes, and healthcare are all different. There is not necessarily free movement between countries, and large goods that most people purchase in their lives (cars, education, healthcare) have very different costs. In my opinion that is different that companies doing large-scale adjustments within a cou…

Taxes and cost of goods vary widely across markets within the US. Not to mention that progressive scale shifts more tax burden to people living in high cost of living (COL) locations. Think $120k in Washington or Florida with no state income tax and lower COL. you’d pay maybe 25% tax. In San Francisco, $200k comp to adjust for higher COL will push you into higher federal tax bracket plus 10-12% state income tax. Now…

Taxes are calculated on the bracket though. So not the whole amount.

Re: Remote First at Brex

#87

Post by momokoko »

tallgiraffe wrote: post #82

There are some good pro's and con's to this strategy, but given market forces I can imagine the future where everyone "works" from the same address in the Bay Area, while being based elsewhere. Maybe I am hoping to see this as a hack :)

You laugh but that already happens where “former” Bay Area employees relocate to a cheaper region but maintain a Bay Area address for their cost of living adjustment.

Re: Remote First at Brex

#88

Post by JackPoach »

nrmitchi wrote: post #11

> What happens to my compensation if I move? Brex pays by geographic market, so we will ultimately adjust an employee’s Total Compensation Value (TCV) if they relocate to where pay rates are different. However, for current Brex employees who relocate before Sep 1, 2021, Brex will not make any compensation adjustments until Sep 1, 2024 to help each of us manage through the unusual circumstances associated with COVID-1…

My guess is this. Many companies are thinking about geo-readjustment. The true primary reason is that they want to lower their costs, given that a significant portion of their employees reside in high cost of living location (Bay Area, Seattle, or any European capital). However, my bet is that this is going to pan out poorly in the next couple of years and the scheme will need to be abandoned or thought over. First, there are plenty of people who will want to live in San Francisco, New York or London even when they are no longer required to do so for work. This means that their high cost of living stays with them. This means they can only accept job offers that support it. Another thing may turn out to be true. When employees are informed that their salary will be lowered when they move to another location, this may not sit well with them. So they may not move or they will have a strong sense of resentment. Basically in 1-2 years, we'll realize that what works in theory creates too many unnecessary problems and is not the way to go forward.

Re: Remote First at Brex

#89

Post by [deleted] »

ryanSrich wrote: post #23
kag0 wrote: post #20

Earlier quoted context omitted.

Can someone explain the rationale behind geographically based pay in remote-first companies? I don't necessarily disagree with it, but I don't know what aspects of the issue companies are actually looking at to decide that geo-based pay is the way to go.

It's a relic, and a bad one. I run a remote-first, remote-only company and we pay everyone based on experience and merit. Not location. If you want to stretch $150k in San Francisco go for it. Good luck having to live with 3 other roommates. However, if you want to take that same $150k and live like a king in the middle of Kansas that's an option as well. Adjusting someones pay simply because they're logging onto the…

[deleted]

Re: Remote First at Brex

#90

Post by onion2k »

kag0 wrote: post #20
nrmitchi wrote: post #11

> What happens to my compensation if I move? Brex pays by geographic market, so we will ultimately adjust an employee’s Total Compensation Value (TCV) if they relocate to where pay rates are different. However, for current Brex employees who relocate before Sep 1, 2021, Brex will not make any compensation adjustments until Sep 1, 2024 to help each of us manage through the unusual circumstances associated with COVID-1…

Can someone explain the rationale behind geographically based pay in remote-first companies? I don't necessarily disagree with it, but I don't know what aspects of the issue companies are actually looking at to decide that geo-based pay is the way to go.

Can someone explain the rationale behind geographically based pay in remote-first companies?

Profit.

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