How Automattic pays its remote employees across different geographies

A growing number of tech companies is telling their employees they can work from anywhere, even after this pandemic has passed. A looming question, however, is how.

Last week, Facebook CEO Mark Zuckerberg told employees that Facebook will adjust the pay of those who choose to move out of the Bay Area and work in different, presumably less expensive, geographies. But others figuring out their own remote-work strategies might also look to Automattic, the now 15-year-old, heavily venture-backed company that is parent to the publishing platform WordPress; the platform for discovering long-form writing content, Longreads; the comment-filtering service Akismet; and, as of last year, the former social media giant Tumblr; among other businesses.

Automattic, which now employs more than 1,000 employees, has been nearly fully distributed from its founding days, and became entirely so in 2017, when the company shut its San Francisco office and told employees they could work from wherever they choose. At the time, founder and CEO Matt Mullenweg told Quartz that most employees were already opting not to come into the co-working space it was providing, so it reasoned its money could be better spent elsewhere.

Because Automattic has always proudly shared its remote-work playbook - including giving employees a stipend to set up their home offices and paying for travel - we couldn't help but wonder how it pays those employees and whether there might be lessons for companies now moving toward a more dispersed future, too. Here's what we learned from Mullenweg, who answered our related questions via email over the weekend.

The biggest question, of course, is whether Automattic pays employees based on their geography and its related cost of living. In answering, Mullenweg didn't give a blanket yes" or no," explaining that at Automattic, [W]e aim to pay the same rates for the same roles, regardless of geography. Automattic currently has folks in over 75 countries. Sometimes this puts us above or below what may be the market rate for a role in a given area."

He said it's not so easy in practice. Among the biggest obstacles to keeping pay in sync is paying employees' compensation in their local currency, which can have wide swings, which creates imbalances," said Mullenweg. Automattic also generally only adjusts salaries up, so a positive currency swing may bring someone above a global norm for a year or two."

He thinks that as more companies move in the direction of encouraging - or, at least, allowing - employees to work from anywhere, it may be difficult for them to immediately switch to normalize salaries." He says when Automattic started down its path, it took several years to narrow the ranges people were in," and that, even today, it's never perfectly even - more a direction you're always heading in."

We were also interested in Mullenweg's thoughts about those companies that do adopt localized compensation. Specifically - based on what he has learned over time about employment regulations around the world - we wondered if tech companies that pay people different amounts for the same work might face consequences, legal or otherwise.

Long term," said Mullenweg, I think market forces and the mobility of talent will force employers to stop discriminating on the basis of geography for geographically agnostic roles." He also said that while he isn't aware of location or geography currently being a protected class for pay discrimination suits - at least in the U.S. - he thinks that for moral and competitive reasons, companies will move toward globally fair compensation over time with roles that can be done from anywhere."

Indeed, Mullenweg suggested that companies that have been paying based on local market norms in the past probably can't get away with that much longer, even while it's difficult to fix that immediately," and may be something that needs to be adjusted over several years, using more frequent or higher raises for the employees that are below your global market norm." (Conversely, he added, If you have people significantly above what the norm is across your company, I don't think it's fair to ask them to take a salary reduction because it's a mistake the company made, but it may be unsustainable to bring everyone to that higher level.")

In fact, the broader takeaway for companies that are moving toward this new future is largely to recognize that it takes time, along with an understanding of a whole lot of factors that don't come into play with geographically homogeneous groups of employees. Think currency controls, geo-political instability, protectionism, security concerns, and even the impact of someone making 5 to 10 times what their friends and family may make in salary," said Mullenweg.

It's all worth it, suggested Mullenweg. Like Zuckerberg - who last week emphasized to employees that a dispersed workforce could potentially spread more economic opportunity around the country more and potentially around the world more," and, in turn, hopefully a more sustainable social and political climate if opportunity can be shared more broadly" - Mullenweg seems to view more remote work as a kind of equalizing force.

As he told us over the weekend, You get a lot of richness, access to a global talent pool, and I think a positive impact on the world by spreading economic opportunity more widely than it has been in the past."