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You have successfully hired a remote employee. Now what? Not in vain, one of the first things is to decide how much you will pay this new team member. It is not enough and retention will be an issue; too much and you’ll spend more than you should.
So what’s the right paycheck? From my more than a decade of experience dealing with a remote computer based outside the U.S., I’ve found that there’s no specific answer to this question, but there are things you can do that will help you determine the correct figure.
1. Cost of living and industry standards
The cost of living in the remote area of your employee is an important component in determining the rate of pay. The right amount will be fair, equitable and unique for each region, role and person. That’s why it’s also important to consider industry standards (look for average salaries online), position requirements, and just what you can afford.
2. Fit Experience, Competence and Company Culture
The more hash of experience and capacity an employee has, the more value it will bring to a company and the more you should pay them, but the right pay is not the end of the necessary considerations. The selection process also involves finding the right balance between the needs of the company and the employees, including ensuring that the culture is one in which a contracted potential can fit in and be both productive and happy. You want remote employees to feel like they’re part of something bigger, not just one more number on a spreadsheet or an extra pair of hands on an assembly line.
And while it may seem unfair to pay an employee less than you would get in a traditional office environment, you need to consider what you receive in return. The flexibility offered by remote work is often worthwhile for employees because they can choose where and when to devote their hours.
Related: 3 reasons why you don’t get the most out of your computer
3. Role Responsibilities and Requirements
When you consider the sweet spot of your salary, the most important thing to think about is what this person will do on a day to day basis. What skills are required and how much training will they need? Does the job require specific equipment? You will also want to consider whether the role has any special requirements regarding working hours (nights, weekends, etc.).
4. Size and structure of the company
These factors play an important role in determining salary. If you have a small team, you can often offer lower salaries, but if the company is large, you will have to pay more to attract the best talent.
5. Budget and Benefits
Of course, budgeting is key to determining salaries. While you can negotiate, there is also a limit to how much you can pay without exceeding your budget and causing problems with other employees working in the office.
And while pay is certainly one of the main factors in attracting and retaining employees, it’s not the only one: benefits such as health care and retirement programs are often just as important to a remote worker. If you want to attract and retain the best talent, be sure to offer a competitive package.
6. Wear rate and voluntary rotation
Wear refers to employees who have left the company on their own, while voluntary rotation refers to leaving due to dissatisfaction with the company or its function. Both types can be expensive and are also more common in remote work arrangements, more reasons to select carefully.
Related: 5 Ways to Turn Employee Rotation Into Opportunity
While it is a challenge, setting a fair wage for remote employees does not have to be arduous: there is usually a winning balance between frugality and generosity.