Forget Location, Reward Skill: The Case for Location-Agnostic Pay

Imagine you're the CEO of a rapidly growing tech startup. You're committed to building a global team and offer remote-first positions to hire the best talent across the world. After a rigorous hiring process, you extend offers to two outstanding candidates: one from San Francisco and the other from Nairobi, Kenya. Both have impressive portfolios and similar experience.

Given your familiarity with the US market, you offer the San Francisco candidate $180,000 with generous stock options. After researching salary trends in Kenya, you propose $70,000 to the Nairobi candidate. While you feel you've offered fairly based on market research, you're also aware of the significant cost savings. Both candidates accept.

Over the next year, the Nairobi-based employee consistently exceeds expectations. Their innovative ideas and dedication drive significant project successes. Meanwhile, the San Francisco employee, despite being competent, struggles to adapt to the fast-paced startup environment and frequently misses deadlines.

Frustrated with the pay disparity and feeling undervalued, the Nairobi employee starts looking for new opportunities. A competitor recognizes their exceptional talent and offers a salary comparable to the San Francisco candidate's, embracing the concept of location-agnostic pay.

Skill, Not Location, Defines Value

The scenario, though fictional, illustrates a common misconception in the tech industry: that location is a primary determinant of employee value. However, as remote work becomes the norm, this outdated concept is quickly disappearing.

The days of "offshoring" for cheap labor are over. In today's competitive market, top tech talent can command high salaries regardless of where they reside. What truly matters is an individual's skills, experience, and ability to contribute to a company's success. The CEO's initial approach, while well-intentioned, failed to recognize this fundamental shift in the labor landscape.

 As Help Scout CEO Nick Francis stated:

“If an employee working from Argentina, Ukraine, or South Africa is making a killing relative to the person delivering the exact same business value from New York City, it’s not the business’ concern — just as what they spend on an apartment is not our concern”

Location-Agnostic Pay

Location-agnostic pay, also known as geography-agnostic pay or location-independent pay, is a compensation model where employees are paid based on their individual skills and experience, rather than their location. This means that employees in high-cost-of-living areas will not necessarily earn more than those in low-cost-of-living areas.

A number of companies have adopted location-agnostic pay in recent years, in response to the growing trend of remote work and the increasing globalization of the workforce. This model can be beneficial for both employees and employers. Employees may enjoy greater flexibility and work-life balance, while employers may be able to access a wider pool of talent and reduce costs.

Here is an updated list of companies that have adopted location-agnostic pay:

• 37signals: A software company (best known for making Basecamp, Hey and Once) that has been location-agnostic since its founding in 2004. 

• Buffer: A social media management platform that has been location-agnostic since 2013.

• Automattic: The company behind WordPress.com, which has been location-agnostic since its founding in 2005.

• GitLab: A DevOps platform that has been location-agnostic since its founding in 2011.

• Zapier: An automation platform that has been location-agnostic since its founding in 2011.

• Sticker Mule: A company specializing in custom sticker printing, offering high-quality, on-demand printing for businesses and individuals.  

• Ashby: The company behind Ashby, an all-in-one recruiting software platform designed to be easy to use and to scale with a company's growth.

• Help Scout: A customer service software company that offers tools for businesses to provide excellent customer support.

• Getro: Getro is a Venture Capital-Backed company founded in 2016 that offers a platform to create personalized job boards and a private talent network for its users.

• Doist: The company behind Todoist and Twist, which has been location-agnostic since its founding in 2007.

• Postscript: A marketing automation company specializing in SMS messaging solutions for businesses.

• RevenueCat: A subscription management company that provides tools for businesses to manage in-app purchases and subscriptions.

• Float: A company working on a resource management software to help businesses plan projects, allocate resources, and track time.

• Tinybird: A cloud-based data infrastructure company that provides tools for businesses to collect, manage, and analyze data.

• Boundless: A global employment solution that helps companies compliantly hire and employ anyone, anywhere in the world.

• Lightdash: A business intelligence company that offers software for data visualization and analysis.

• PostHog: A product analytics company that provides tools for businesses to track user behavior and understand their customers.

• Harvest: The company behind Getharvest.com They offer time tracking software with invoicing capabilities.

• DuckDuckGo: DuckDuckGo is the company behind the search engine that values user privacy. They offer the same salary for all job positions of the same level (no matter if it is a software engineering job or not).

• Fingerprint: They provide a platform that can identify every visitor to a website or app, even if they are anonymous

• Circle: Circle.so is a company offering an all-in-one community platform designed to empower creators and brands to build, engage, monetize, and scale their online communities

• Trust Machines: TrustMachines is a company focused on making Bitcoin more accessible. They make software products to simplify Bitcoin use.

• Hiro Systems: Hiro focuses on developer tools specifically designed for building applications on the Bitcoin blockchain.

• Sourcegraph: A code intelligence company that provides tools for developers to search, understand, and navigate code.

• Remote: They provide a platform designed to simplify the management of global teams

The Future of Talent Acquisition is Location-Blind

The traditional model of location-based pay is becoming increasingly outdated in the face of a globalized and remote workforce. By embracing location-agnostic pay, companies can build diverse, high-performing teams based on talent, not geography. This offers a win-win situation: employees enjoy greater fairness, flexibility, and work-life balance, while employers access a wider talent pool, reduce costs, and foster a culture of meritocracy.

The growing list of successful companies utilizing location-agnostic pay is a testament to its effectiveness. As remote work continues to become the norm, companies that cling to the outdated model risk falling behind in the competition for top talent. By prioritizing skills and contributions over zip codes, businesses can unlock a world of possibilities and build truly global teams that thrive in the new era of work.