2020 Kleiner Perkins People Report

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2020 Kleiner Perkins People Report

Post-COVID Workplace
Post-COVID Workplace

Compensation

Adjusting Compensation

Whether or not to adjust compensation depends on your company’s compensation philosophy and how your company has decided to localize compensation (i.e. tiered, by state etc.).

🏙 Moving to a higher tiered city

🏞 Moving to a lower tiered city

🏡 Home base for digital nomads

When: Upon employee’s transfer to the new office (typically HQ) and aligned to the next pay period.

Alternative: move employee’s salary up over time. With tiered city model, they may not be too far off from the higher city rate.

For companies that don’t adjust compensation in this scenario, they attribute it to the following:

If it’s a voluntary move from the employee

The role was remote to begin with

For employees moving to a lower tiered city, we recommend localizing comp / adjusting salaries. One of the main reasons is equality. For hard to fill roles, you may want to consider a smaller discount when localizing. When: 1) During the upcoming review cycle or a future review cycle, 2) Set date in the future (i.e. Jan 2021) Some companies are considering keeping the employee’s salary the same but freezing raises until the employee is in line with market rate for that city/region.

Most companies don’t have digital nomads, but for those that do, there are a few ways to determine the home base:

Where they pay taxes

Their permanent residency

By “hire location”

There are no rows in this table

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Localizing Cash

60% of our companies are currently localizing compensation. The rest are in the process of developing their post-COVID workplace strategy.

Here are a few ways they are doing it:

Regional model (i.e. 3 regions in the US and then within metros in other countries)

Tiered city model (i.e. SF/Bay Area = 100%, other cities = discount to the SF/Bay Area)

💡 Insight: The timing on comp adjustments due to relocation range anywhere from immediate (the next pay cycle) to the start of the new year (Jan 2021) and as late as Q4 2021. Some companies do not plan to adjust compensation for recently relocated employees who meet certain qualifications, but will hold on raises until the salary catches up to the employee’s local compensation.

Localizing Equity

The companies that currently do not localize cash comp, also do not localize equity. There are a few that localize cash comp only. Below is the breakdown of how companies localize on the equity front:

% of companies that currently localize

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% of who gets equity

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Compensation Transparency

More than half of our companies have chosen to provide some level of transparency around compensation. The most common ways are:

Sharing market data with employees and their managers

Sharing job leveling

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There are some who do not believe in any transparency when it comes to compensation. In this competitive environment, especially as you scale, your employees may demand some level of transparency.

💡 Tip: If you are developing a comp philosophy for the first time, keep it the “What” and “How”. Employees want to understand the rules of the game -- when is comp reviewed, what are they being evaluated against, factors taken into consideration in the comp increase decision.

Re-Opening the Workplace

Timing

Majority of companies in the portfolio plan to remain 100% remote / WFH through the end of this year. The “Other” category consists of companies that have already made the transition back to the office, are essential businesses, or have not yet finalized the timing to return to the office.

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Setting Up Physical Offices

Most companies surveyed have between 1-3 physical offices. SF is the most popular location followed by NYC. A few of our early stage companies (Series A) are fully remote / do not have any offices at this time. One mid-stage company had 3 offices but did not renew any of their leases and are transitioning to being fully remote.

Key drivers to adding physical offices include:

Main Driver: Access to top talent (including immigration)

Proximity to potential customers

Similar time zones to HQ

High concentration of employees in a metro location*

Improve culture/morale, and collaboration/communication

Support employees who want to go to the office (parents, employees living in small spaces)

Economic incentives

*Exception: Companies that have physical warehouses are looking for space outside of metropolitan areas.

💡Tip: When searching for office space, be sure consider safety and accessibility to parking, public transportation, and highways. On average, ~150 sq ft per person (taking into account requirements for safety and restrooms).

Culture

Future of Work

The 100% remote environment forced by the current pandemic has resulted in a shift in workplace culture. Over 80% of our companies plan to offer flexible work options. Variations include: in office with WFH flexibility, hybrid work model and fully distributed.

After COVID (across all stages)

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💡 Insight: Some examples of companies that have recently made changes to their workplace models:

Figma

“How work is changing at Figma“⁠

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Dropbox

“Dropbox will let all employees work from home permanently”⁠

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Twitter

“Twitter tells employees they can work from home forever”⁠

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Quora

“Remote First at Quora”⁠

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WFH Tips:

OpenRaven

“Working from home”⁠

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Coda

“Shishir’s guide to distributed teams”⁠

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Hubspot

“Productivity tips for working from home"⁠

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HBR

“Is your organization ready for permanent WFH?”⁠

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WFH Flexibility

Many of our companies are in the process of setting up their WFH policies as they design their return to office strategy.

Who decides rules around WFH flexibility?

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Communication

During COVID, the most common cadence for bringing employee together (virtually) is weekly during the company All-Hands. Some companies are having more frequent companywide meetings, while others are hosting All-Hands on a monthly or quarterly cadence. The majority of our companies have gatherings that are a mix of social and work. Half of our companies do not plan to change this cadence post-COVID.

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