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How to Pay Remote Workers

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Re: How to Pay Remote Workers

#31

Post by tdfx »

oAlbe wrote: post #21
cyborgx7 wrote: post #16

Earlier quoted context omitted.

>Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate. Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.

That's not the point though. Having an honest relationship with your employees and treating everybody fairly doesn't prevent you from profiting. It think this point is explained really well in the article: why should someone who lives in a city with a high cost of living be paid more than someone who lives in a low cost of living one? Effectively, what you are doing is giving the person in, say, SF, more money to be…

Workers should not be expected to be paid "fairly" or according to some broader social expectation. The company is not your friend and you are not the company's friend. They are paying you for sacrificing your time for their benefit. You are worth exactly the minimum that you're willing to accept in payment based on your individual circumstances.

Re: How to Pay Remote Workers

#32

Post by tom_mellior »

romanovcode wrote: post #7

> Why on earth would it matter where your desk is? It matters to product managers. Managing remote team is more difficult therefore PMs will always push against this.

Even if this were true, the only reason to pay remote workers less would be if they directly paid the difference to the PM as compensation.

Re: How to Pay Remote Workers

#33

Post by malux85 »

spurdoman77 wrote: post #27
gjulianm wrote: post #4

Salaries based on cost of living are always a mistery to me. If the company wants to have an honest relationship with the worker, the salary should be based on the value the employee is bringing, and that does not depend on where they live. Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

So, how do you calculate value for developer?

There isn't a deterministic formula that you can code, but the market generally does this.

A good backend python developer working for a London company here can get 80-100k GBP, if company X wont pay this, then company Y will. The developer goes to company Y.

If the job can be done remotely, and everyone is happy, then who the hell cares that this developer lives in an area with low cost of living? He's fulfilling the contract (quality work in exchange for money) and where they are physically located is irrelevant in determining their compensation.

Re: How to Pay Remote Workers

#34

Post by spurdoman77 »

cyborgx7 wrote: post #25
dustinmoris wrote: post #23

Earlier quoted context omitted.

No value comes from many different reasons and one of those is a new value generated from the combination of efforts of many individual contributors. The individual value which someone brings doesn't equal the end value which is being delivered to a customer. The essence of a business is generating new value to end consumers which an individual couldn't do on their own.

The extra value generated from the combination of efforts is still generated by the workers who combined their effort to generate it. Why are the owners more deserving of that "extra value" than the workers?

The owners started the business, took the risk, etc. If an employee isnt happy with the salary, he can always ask for more, change employer, or start his own business. It is a fair game IMO.

Re: How to Pay Remote Workers

#35

Post by oAlbe »

ta980345 wrote: post #20
oAlbe wrote: post #12

Earlier quoted context omitted.

Why is it more difficult? Do you have some data or anecdotes to back up your claim? I'm really interested. I've been working remotely for years now, and my relationships with the various PMs I've had has always been: talk about what needs to be done, and then be left alone to actually do it, check back when I have progress or if I have outstanding questions that arose from better understanding the problem domain. Plu…

I've been working for a company where people optionally do remote work from home; the difference in communication and team cohesiveness is stark to me. When people are colocated in an office (and I guess this is a generalization), there are more incidental chats, knowledge-sharing, status-updates, stress/challenge-sharing etc. I do better work and get more done at home though, and from an environmental perspective it…

There's a lot that can be written about the differences between remove vs on site work. Sure, remote does tend to feel more lonely. Sure, you are missing the whole water cooler effect (as I've seen it called) of running into a coworker at the office and just having a chat, and so forth. But I don't really see how that makes the job of a product manager any harder or how it makes managing remote workers harder.

Companies with offices still use work methodologies. They still use SCRUM, kanban boards, retrospectives, meetings, wikis/documentation, and above all tickets/issues/stories or whatever is the term your company prefers. And I'm sure they aren't writing their stories on pieces of paper, or their documentation in binders. Everything is done through a tool that saves everything online to make it available to everyone.

Your PM running into you at the office while you are taking a break and asking how the work is proceeding doesn't really add any value to neither the work you are doing nor the information they already have about it. Scheduling a weekly catch up meeting to discuss progress (depending on the size of the story of course and yadda yadda, just making an example here) makes more sense. And you can easily do that with a video call.

Re: How to Pay Remote Workers

#36

Post by onion2k »

cyborgx7 wrote: post #16
gjulianm wrote: post #4

Salaries based on cost of living are always a mistery to me. If the company wants to have an honest relationship with the worker, the salary should be based on the value the employee is bringing, and that does not depend on where they live. Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

>Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate. Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.

Where do you think profits come from? Profit is the difference between what you pay your workers and the value of their work.

I don't think the OP is refuting that. Paying someone 50% of the value they generate is fine. That's how businesses work. Paying someone 2% of the value they generate because they live in is much less easy to justify.

Re: How to Pay Remote Workers

#37

Post by idiocratic »

spurdoman77 wrote: post #28
oAlbe wrote: post #21

Earlier quoted context omitted.

That's not the point though. Having an honest relationship with your employees and treating everybody fairly doesn't prevent you from profiting. It think this point is explained really well in the article: why should someone who lives in a city with a high cost of living be paid more than someone who lives in a low cost of living one? Effectively, what you are doing is giving the person in, say, SF, more money to be…

But as an employer, why I should strive for honestness? Does it bring me more profit? To me it sounds like paying too much. I pay market rates which doesnt consider cost of living or value produced, but the the average salary for the skillset/experience.

It brings value in the long run and makes retention easier. If I work for a company who pays differently based on location, I'll soon be searching for a company that pays the same based on level of seniority or other internal criteria.

Re: How to Pay Remote Workers

#38

Post by stakhanov »

I think that one of the greatest structural deficiencies of our economy is that high salaries are tied to onsite jobs in a few cities and that, therefore, real estate owners in those cities get to participate in that wealth creation that they are not actually a part of. So they reap where they didn't sow, and that's just unfair.

By working remotely, companies and workers are working together in cutting those landlords out of the equation, and that leaves a huge pile of money on the table that landlords are now not taking away from companies or workers (depending on how you look at it).

The question is: Should it be the worker or the company getting that pile of money?

My feeling is: It should be shared as companies and workers have to work together to make it happen.

If the whole pile of money goes to the workers, then companies are not incentivized to do anything to drive forward the remote work revolution.

If the whole pile of money goes to the companies, then workers will have an incentive to continue to play the old game whereby, if they want to earn more, they have to move to the valley and take an onsite job.

If the pile of money is shared somehow, then both sides have the right incentives to drive forward a real change for the better, and it's a win-win situation for everybody involved (except the landlords).

I'm not saying the split has to be 50/50. Realistically, the split will be determined by market forces like supply and demand around the particular job role. We're already seeing this play out: For job roles that have low barriers of entry and for highly commoditized types of work, a greater proportion will go to the company, like what we are seeing on Upwork where everybody gets paid what an Indonesian freelancer gets paid. For jobs where it really matters to get the best people and where these people are hard to get, a greater proportion will go to the worker and you will see everybody around the world doing that kind of work earning as much as they would earn if they were doing that job onsite in the valley.

Re: How to Pay Remote Workers

#39

Post by spurdoman77 »

malux85 wrote: post #33
spurdoman77 wrote: post #27

Earlier quoted context omitted.

So, how do you calculate value for developer?

There isn't a deterministic formula that you can code, but the market generally does this. A good backend python developer working for a London company here can get 80-100k GBP, if company X wont pay this, then company Y will. The developer goes to company Y. If the job can be done remotely, and everyone is happy, then who the hell cares that this developer lives in an area with low cost of living? He's fulfilling th…

You are talking about ongoing market rate, not the value output. Sometimes even skilled developer can produce negative value because of accident or smth.

Why would I pay remote worker the same as for local developer, if I can find remote developers willing to work for much less?

Re: How to Pay Remote Workers

#40

Post by ehnto »

biblytens wrote: post #24
gjulianm wrote: post #4

Salaries based on cost of living are always a mistery to me. If the company wants to have an honest relationship with the worker, the salary should be based on the value the employee is bringing, and that does not depend on where they live. Tying the salary to the cost of living looks like a way to cheat a worker out of the value they generate.

Salaries are based on supply and demand. Think this one through with that in mind and it'll make more sense.

It still doesn't make sense, because the remote worker pool is global. If that were supposed to make sense then we would all be getting paid third world rates and cost of living would still have nothing to do with it.
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