COLA adjusts the salary of an employee to compensate for the cost of living in the city where they live – an important consideration when teammates aren’t all in the same geographical location.
We were inspired by a recent SafetyWing webinar where we heard Lona Alia from SafetyWing, Amanda Day from Remote.com, Chase Warrington from Doist, and David Thompson from Carta delve into this topic and provide some insight on how Getro is seeing the future of work trends as they relate to COLA.
An Overview Of COLA
COLA has been an element of employee compensation packages for many years. Historically, it was a given that an office worker in San Francisco, California would make more than in Scranton, Pennsylvania, even if both teammates were working for The Office. However, the increased access to a global workforce and mobility of teammates post-COVID is decreasing the importance of COLA in the future of remote working as a fair & equitable system for global team members.
Why Organizations Adjust for COLA
Getro has been a fully remote company since our inception. As such, it’s important for us to be up to date on remote working trends for global teams and we believe COLA plays an important role in compensation systems. Why?
🙅♀️ Combat Systematic Inequality
Different cultures (and seniority levels) are more likely to negotiate vs. others - yet, living in San Francisco still costs much more than living in Scranton. With appropriate COLA implementation, teammates net comparable wages after their cost of living expenses. We want all of our team members to thrive. COLA is one way we can do our part in leveling the playing field.
💸 Remain Competitive In Every Locale
Areas with a higher cost of living also have a pool of positions with higher salaries to compete against. Employee benefits, including salary, have to be attractive if you want the best talent on your team. Getro believes in investing in valuable teammates by taking their cost of living into consideration.
How To Adjust For COLA
In order to carry out an effective COLA policy, it's important organizations create and follow a fair and logical process based on the current cost of living. While surely imperfect, we wanted to share how COLA is incorporated in Getro’s compensation structure for transparency:
- We compare the current cost of living index for cities around the world and create tiers of cities based on the Cost of Living Index. For example, Getro’s top Tier is for cities with 85+ on Numbeo.
- We create a multiplier for each Tier. At Getro we have 4 Tiers: A, B, C, and D, with Tier A denoting those cities with the highest cost of living and Tier D having the lowest cost of living.
- Next, we set a geography-neutral base salary for each function & level; this salary applies to Tier D and gets adjusted using the multiplier in point 2 for each additional Tier.
- We post salary ranges in all of our job descriptions.
- At Getro, on the first interview calls, candidates are given the Tier-adjusted salary figure for their specific geography to provide transparency within the range posted.
The future of remote working requires business leaders to view employee benefit packages from a global perspective, which includes salary COLA. Getro was an early mover offering full remote, but we’re always looking to improve. We love to hear about how other organizations are implementing COLA and other global benefits as the future of remote working continues to unfold.
The Decreasing Protagonism of COLA
As remote working becomes more common, there are companies moving to remove COLA. Why? The counterargument is that removing COLA places more emphasis on the value of work being done, rather than where someone lives.
Companies are no longer competing for talent in solitary locations. Organizations want to bring in the best candidates possible, not just the best candidates in their local region. Competition is now more global than ever; this is especially true at the most senior levels.
We are seeing a trend towards a decreased importance on COLA adjustments, and are revisiting our own policies in the face of this on an ongoing basis.
🌎 Managing Global Employee Benefits
In addition to COLA, the future of remote working requires us to examine other areas of compensation with a new lens. Getro, for example, is based in the United States. We can offer US citizens health insurance with a co-pay system, but what about teammates in other parts of the world?
Finding ways to offer equitable benefit packages for all members of the Getro team is central to our mission. At this time, systematic restraints are an obstacle to offering global healthcare and benefit packages. However, new options are becoming available as remote work continues to evolve.
Here are a few options on our radar in relation to healthcare and other benefits options:
- Offering a stipend for health insurance to both domestic and global teammates for additional financial equality and flexibility options (what Getro does today)
- Partnering with organizations like SafetyWing or Insured Nomads
- Look ahead to new startups doing international 401k and pension programs
- Partnering in local geographies with benefits providers
Employee Stock Ownership Plans, or ESOP, are commonly offered to employees by startups in the USA. In other countries, we’ve seen that ESOP is less common and less valued. Why?
- Education: understanding what ESOP is, how it works, and the potential upside
- Culture: values surrounding the concept of security vs. risk with greater upside
- Fiscality: ESOP tax treatment varies from country to country
Even if teammates’ native work culture isn’t one that commonly offers ESOP, options may still be made available. Getro offers ESOP to all teammates based on functionality, level, and when teammates joined. The goal is to provide information and clarity around how ESOP can benefit members of the team and help them make the best decisions based on that knowledge.
“Paid time off” means different things to different people. Depending on culture, religion, and/or geography, thoughtful consideration is required when deciding on a remote-oriented PTO policy.
- PTO expectations vary widely based on geographic location and type of PTO (vacation, sick leave, etc.)
- Holidays differ regionally and for individual teammates’ personal observation.
By way of policy, Getro offers unlimited PTO to provide flexibility, accommodating teammates’ needs and encompassing all local labor schemas. We expect teammates to take the time they need to enjoy life, engage in their cultural and religious days of importance & stay healthy.
When it comes to culture, we share and celebrate our time off, and support each other’s commitment to our lives outside of work.
The future of remote working is shaped by the decisions organizations make now. Getro views this moment as an opportunity to combat systemic inequality, create infrastructures that support teammates around the world, and build leading global networks primed for growth and innovation.