In a recent discussion with ortho leaders, a compelling dilemma emerged that has sparked a profound debate within the orthopedic device industry in the United States.
A manager, overseeing a fully remote team based in various US cities, presented a challenging scenario. The company followed a localized pay scheme for its remote workforce. This meant that employees in New York were compensated on a New York scale, while those in Memphis received Memphis-scale pay, and so forth.
The predicament arose when a team member reported that another colleague, originally based in an expensive city, had relocated to a more affordable city while still receiving the higher pay associated with their previous location.
This raised the question: Should the manager discipline the employee, despite their stellar performance? Or should she turn a blind eye, potentially upsetting the reporting team member and violating company protocol?
From the perspective of a top recruiter in the orthopedic device industry in the United States, it is evident that highly localized pay schemes are fraught with challenges from the outset. The manager found herself in an untenable situation, with no ideal solution in sight.
Before delving into the broader implications, it is essential to recognize that jobs that require physical presence should continue to adhere to local pay rates within the US. For instance, hiring a shift manager in New York necessitates New York wages, and the same principle applies to Memphis. However, when it comes to fully remote employees who can live and work anywhere within the United States, a more flexible approach is warranted.
First and foremost, it alleviates the burden on managers to enforce HR pay policies. Managers should not be tasked with scrutinizing their employees’ residential locations, especially when managing large teams is already a complex endeavor.
Second, it enables employees to change their location within the United States without the added concern of altering their pay. One of the greatest appeals of fully remote work is the freedom it offers. Employees may need to relocate for personal reasons, such as family, health, or a spouse’s career advancement. Penalizing remote workers with reduced pay for such transitions would be counterproductive and demoralizing.
Third, adopting a more flexible pay structure streamlines HR processes within the US. Managing hybrid and remote employees presents unique challenges, particularly in performance evaluation. Instead of focusing on input monitoring, where physical presence matters less, managers should assess employees based on outcome-oriented objectives like sales targets, customer acquisition, or product delivery. This shift requires rigorous performance evaluation, and localized pay schedules would only add unnecessary bureaucratic complexities during a time when HR and management should be collaborating on more critical matters.
Lastly, optimizing profitability in any US firm involves sourcing the most qualified talent at the best value. For fully remote positions within the United States, this means considering candidates from various locations while maintaining competitive wages. If a candidate in a lower-cost city can perform coding or marketing tasks as effectively as someone in a higher-cost city, it’s advantageous for the company to make that hire. Profitable US firms seek the highest-quality talent per dollar spent.
Of course, challenges persist, including legal and regulatory hurdles within the US that may require time to overcome. Additionally, the legacy of post-pandemic pay structures can pose obstacles. Many US companies hastily transitioned to remote work without adjusting their pay rates, resulting in remote employees being tethered to the pay scales of their former offices. However, as time progresses, these legacy issues are gradually receding within the US.
The recent changes in work dynamics have underscored the importance of a US-focused perspective on pay structures in the orthopedic device industry. Within the United States, compensation should reflect what employees achieve, not just their physical location.