8

Transforming Compensation and Benefits for Talent Mobility

“I’d like to update our holiday benefits to be in line with our global culture,” Jacky Cohen, Topia VP of People, told me in 2018. We had just finished launching equal parental leave for men and woman—something both Jacky and I felt was deeply important to continuing to build a company rooted in diversity and fairness. Now Jacky had her eye on a similarly innovative approach for our holiday benefits, or paid time off (PTO).

Spotify, she explained, was well known for offering floating holidays, a set number of annual holiday days for all global employees that could be used anytime, replacing the divergent public holidays in each country and state. Employees could use them as they wished—if they wanted to take them on public holidays, they could; if they didn’t, they could; if their religion dictated time off that was not a recognized local public holiday, they could take time off and celebrate. This approach smoothed public and company holiday variances across global locations and supported a global culture of working everywhere. I immediately loved it.

At Topia, we had already taken our holiday benefits a step further than most companies. I had founded the company in London in 2010, where the European Union mandates a minimum of 20 holiday days per year, but the local market often dictates 25 days per year, which we adopted at Topia. As we expanded to the United States (and other countries), I felt strongly that we should embrace our founding identity and keep this entitlement for all global employees. After all, why should an employee in the United States work more than an employee in the United Kingdom, and perhaps be perceived as more committed when the annual talent review comes along? Similarly, why should an employee in the United Kingdom have the opportunity for more health and wellness time, and perhaps be able to be more present while at work? None of it seemed fair. Everyone at Topia got 25 holiday days per year as part of being a Topia employee, regardless of where they lived.

But due to great variances in public holidays across states and countries, our employee time off still varied greatly, causing regular discussions internally. Jacky’s floating holiday proposal would fix all of this—and also recognize that individuals may want to celebrate holidays at different times. So, we started looking into it.

Like many forward-thinking companies, however, we encountered administrative and compliance bottlenecks to rolling out what we wanted to do. We didn’t have the resources to manage the intricacies of managing this in the many countries where we operated and ensure we maintained compliance with local laws. So, we made a compromise. We gave everyone the same number of days off—PTO and local public holidays—but we did it with a set calendar, selecting which days would be the public holidays. Like many companies, we phased our transformation, ensuring we could balance an innovative approach for the talent mobility era with the reality of operating a growing business.

One of the most difficult things about managing a company with significant movement between geographies, locations, and jobs is the different local expectations for compensation, benefits, and employment protections, balanced with the local laws and norms, which can vary widely across states and countries. As employees increasingly work across different cities, states, countries, and their own homes—working everywhere—traditional compensation, benefits, and employment protection models may no longer be fit for purpose.

F3 Companies rethink their compensation and benefit structures to enable talent mobility. This includes salary and bonuses, holiday and leave entitlements, and healthcare and retirement, all of which we’ll cover in this chapter.

As the talent mobility era takes hold and people increasingly work across companies, geographies, and employment types (as employees and freelancers), America’s long-held social contract between employer and employee must also evolve. For decades, companies provided benefits like healthcare, retirement plans, and leave to employees. However, with the growth of talent mobility and the freelance economy, we must fundamentally rethink the structure of work—including social support, benefits, and protections—for our new era. We must ensure all workers, regardless of employment type, have a living wage, antidiscrimination protections, health and safety standards, the right to collectively represent themselves, and support to balance families and careers. While there are many benefits of employment mobility, its growth brings challenges in ensuring that all workers enjoy both new work opportunities and a healthy, safe, and fair environment for work.

Companies and business leaders that want to succeed in the talent mobility era must rethink their compensation and benefits models, creating a new worker value proposition. Those that do this will attract and retain top talent and skills; those that don’t will lose out to their more forward-thinking competitors. This chapter looks at how to transform the structure of work, including compensation, benefits, and worker protections, for the talent mobility era.

Rethinking Compensation Models

How Employees Were Traditionally Paid

As we’ve discussed in prior chapters, traditional companies hired employees to fixed roles in fixed teams with defined compensation for that role and seniority. Compensation increases were tied to two things: tenure and promotions within the team (see Chapter 6 for more information on linear career paths). Traditional compensation was generally a base salary and a small annual bonus. In most cases, the annual bonus was expected, the result of working for the year. Compensation levels were either based on a minimum wage with some additional amounts dictated by seniority and tenure, or set in line with the role and local market norms, generally dictated by a cost of living index in a particular market.

When employees moved—generally a relocation or traditional expatriate assignment (see Chapters 1 and 7 for further details on how these worked), compensation was adjusted to ensure that employees were not “worse off.” In nearly all instances, they were much better off—companies enticed them to accept expatriate assignments by increasing their salaries through a series of cost of living, relocation, hardship, housing, car, school, and foreign service allowances (also called premiums) and tax equalizations, which almost always meant higher compensation. Base compensation was converted to the local currency and then adjusted by a cost of living multiplier (rarely did these go down) with the allowances added on top. If an employee went on to another expatriate assignment (as was common in certain industries like oil and gas), the same process happened. Colloquially, this is known as “the expat package.” The process was both cumbersome and expensive for companies. But since it happened rarely (and even more rarely repeatedly for the same employee), it worked.

In the traditional model of employee movement, it was rare for employees to move between departments or functions when mobile. Rather, these expatriate assignments were used to fill specific geographic needs. Company org designs and departments still remained vertical and siloed—different from the complex matrix of movement across geographies and jobs we see today.

At Topia, we always have naturally attracted employees who had experiences living around the world as children—often with parents working as expatriates or in the army. Our first sales hire had this profile. His father worked for Schlumberger, one of the world’s largest oil services companies, and was a “serial expat.” He is Dutch, but he and his parents had spent time in Holland, Qatar, Azerbaijan, and France. While he worked for us, his parents went off on another assignment to Angola. His family moved on a traditional expatriate package, supported with corporate housing and other living benefits. In each community, they socialized with other expatriates who followed a similar path, creating a type of global community.

“The traditional expatriate assignment was long the compensation model adopted for any type of geographic movement,” says Peggy Smith, CEO of Worldwide ERC, whom we met in Chapter 1. “Expatriates were maybe, max, 5 percent of a company’s workforce, so it was fine for companies to invest a lot of money for them and take significant time managing them. Traditionally, they were also almost always experienced, senior-level employees. Let’s say with a back of the envelope calculation, we generally knew that it cost three times an employee’s base salary when considering all of the benefits and equalization.”

“However, over the last 10 years or so, we’ve seen a significant shift in this approach,” continues Smith. “Traditional expatriate assignments still exist, but companies are shifting to a much more fluid concept of global mobility, where many more employees move . . . but in many more structures. You see one-way moves, hiring moves, rotations, commuting structures, frequent travel, and short-term assignments for projects. Underlying this is a shift to much more dynamic project-based work across all parts of companies and much more remote and distributed work. With all of this, there’s a very different cost, compensation, and management model for companies. I haven’t seen many of them—at least the larger companies—fully make the transformation to this yet.”

How to Set Compensation Amid Talent Mobility

With increasing geographic, job, location, and employment movement, setting compensation can be challenging. Should you adjust an employee’s salary with a cost of living adjustment if she works in another location for three months? What should you do when an employee elects to move to lower-cost geography? Or, does projects in multiple places? Or, works remotely while traveling the world? Or, works four days per week balancing childcare needs alongside work, but contributes significant hours over the weekend? And how do you compensate a remote freelancer doing the same work on the same project team as a full-time employee in the office? These are just some of the scenarios amid the Talent Mobility Revolution. And all of them introduce compensation complexity.

Continuous movement is a growing part of today’s workforce. For geographic movement, companies should consider two compensation structures: local benchmark or global benchmark.

•   Local benchmark. This compensation model is based on the traditional model. In a local benchmark model, compensation is set based on a local market norm based on a cost of living index. The goal is to be competitive in the local market with local employees. If an employee moves from a lower to higher cost of living market, compensation is adjusted upward; similarly, if an employee moves the other way, compensation is adjusted downward. (Note that this can be a challenging conversation, and expectations should be set early for this operating norm with all employees). For traditional business-driven expatriate policies, it remains common to offer tax equalization benefits, but the numerous allowances of prior years are less common, except in hardship locations, like moves to certain African countries. For permanent one-way relocations or hiring relocations, tax equalization is generally not used. Companies should adopt policies that dictate that compensation is only adjusted to the local market when an employee is there for more than six months consecutively, such as for a long-term assignment or relocation. Otherwise, living adjustments should be covered in the benefits for the given policy, with things like corporate housing or per diem allowances (see Chapter 7 for further details on policies).

•   Global benchmark. This compensation model is increasingly looked to as a way to support the continuous movement of employees in the talent mobility era. In a global benchmark model, compensation is tied to a fixed global norm, and all employees have their pay set to this global norm (which replaces the local cost of living indices). Effectively, this decouples compensation from local markets and means that all global employees with similar competencies and skills are paid consistently, making it easy to work from everywhere. The HR team gets new efficiencies by not going through complex salary adjustments with each move—an unrealistic expectation when there are so many of them! Adjustments needed for cost of living considerations for moves to certain places or with certain personal circumstances are still considered, but they are dealt with on a case-by-case basis. To get started, companies may first apply this model to a specific subset of employees who they expect to be regularly mobile across geographies, locations, and jobs (for example, high potential employees). This mobile talent pool may also be employed by a global employment company (GEC; see Chapter 9) that administers a global benefits model and eases legal friction (see the rest of this section and Chapter 9 for more details on GECs).

The Talent Mobility Revolution not only brings compensation challenges with geographic and location mobility, but also questions on how to compensate external freelance workers, who are increasingly part of project teams. The standard compensation methodology for freelance workers is to agree to project compensation up front as an hourly, daily, or monthly fee. In certain instances, companies may also agree on a project fee up front, but it can often be difficult in this dynamic world of work to know how long projects will take.

Catherine Stewart is Chief Business Officer at Automattic, which as we discussed in prior chapters owns content management site WordPress.com and operates a fully distributed global team of more than 800 people. Despite Automattic’s successful model, Stewart acknowledges that setting fair and equitable compensation amid talent mobility is still one of the most difficult things to do. Automattic uses a combination of the local and global benchmark strategies today.

Schneider Electric has tried to solve this for certain employees with what Susanna Warner calls an “international compensation package.” She describes this as a compensation structure that is disassociated from a particular country with an expectation that employees will be regularly working across different countries as a part of their career, a type of global benchmark model. The company hasn’t yet widely rolled it out but sees it more as applicable for a certain population of high potential employees who would move regularly as a part of their leadership development.

Bonus Methodologies for Talent Mobility

As we discussed in Chapter 6, F3 Companies redesign their annual reviews and bonus processes to be agile, championing an objectives and key results (OKR) framework to set project goals and sharing continuous feedback with workers during projects. At the end of the year, they have a talent review, where project leaders and managers come together to review employee contributions (based on the OKR framework) and competencies. They then apply a talent indicator that corresponds to employee bonuses, compensation increases, and leveling. Levels are based on breadth and depth of competencies and skills and are consistent across the company, regardless of the functions or teams the employee has worked on.

F3 Companies structure their compensation to include a material portion of employee compensation as variable bonuses, rewarding achievement of both the company goals and individual goals (as dictated by the OKRs). The bonus amount (typically a percentage of base compensation) is dictated by employee level. A key tenet is that bonus payouts are dictated by output in dynamic projects (detailed in OKRs), not, as at traditional companies, an expected portion of compensation for time put in. The talent indicator drives the amount of bonus paid to an employee. Like all parts of the Talent Mobility Revolution, bonuses are agile and tied to performance.

Like many companies, we followed this model when we designed our talent management processes. We made variable compensation and an agile bonus process part of our talent strategy. Based on our employee levels, we set bonus percentages that were consistent across teams and offices. We used an OKR framework to set dynamic goals tied to projects (as discussed in Chapter 6) and held talent reviews to discuss employee contributions.

Rachael King, Topia’s first VP People, believes that over time, this model may shift to be even more agile. “In a similar way to how the annual review is disappearing, there is an argument to say that compensation and bonuses shouldn’t be structured that way either when work is contributed more in projects or ‘chunks,’ ” says King. “I think there will always be a core salary for an employee because that’s the nature of employing someone rather than hiring a freelancer, but the bonus part could become much more agile over time and tied to what is being delivered across dynamic projects. I think this will change in coming years as the Talent Mobility Revolution accelerates to reflect how we are actually managing and retaining people.”

Reinventing Employee Benefits

Innovating in Vacation and Time-Off Benefits

F3 Companies dispense with the idea that vacation days are fixed and tied to norms in each location. Instead, they know that when employees are constantly mobile, they will be working across many different geographies and locations. Therefore, they move from a fixed vacation model to either a floating or unlimited vacation model. I explain each of these below.

•   Fixed vacation model. This is the historical standard and remains in place at many companies today. In this model, employee vacation days are provided based on country and market norms. Employees of each country get the national public holidays in that country off, plus a set number of PTO days that is in line with the market norms. Like Topia, some companies adopt a “fixed plus” vacation model, enhancing the traditional model by equalizing the number of public holidays and PTO days globally.

•   Floating vacation model. This is an innovative approach that companies like Spotify take. In this model, all employees get a set number of public holidays (e.g., 25 days) that they can use whenever they want to during the year, in addition to their normal PTO entitlement. Employees can elect to use these days to cover some public holidays that they would normally take, or they can use them when they wish. This approach brings consistency and recognizes that employees have different religious and personal needs, allowing them to celebrate and worship as they wish.

•   Unlimited vacation model. In this model, employees are able to take unlimited amounts of vacation throughout the year. There is no tracking of days off or maximum amount allowed. Instead, employees are expected to handle their time off responsibly. In reality, many also work remotely during portions of their vacations and stay connected to their projects and teams. This approach eliminates any inconsistencies globally and gives employees full autonomy to manage their work and life needs. This approach is popular with technology companies like Automattic and Netflix, and has also been adopted by Virgin, among others.

“Time away works differently at Netflix,” writes the company on its jobs website. “We don’t have a prescribed 9-to-5 workday, so we don’t have prescribed time off policies for salaried employees, either. We don’t set a holiday and vacation schedule, so you can observe what’s important to you—including when your mind and body need a break. We believe in working smarter, not harder.”

Managing Retirement Benefits

In the talent mobility era, managing retirement benefits can be another area of friction. Geographies across the world have different approaches to statutory retirement support (e.g., Social Security in the United States), as well as local norms for companies in given markets (e.g., 401(k) in the United States). When employees are geographically mobile, they may forgo some of these retirement benefits.

When employees are moving between geographies, it can be difficult to smooth gaps associated with country-led retirement schemes. In most instances, there is no way to transfer a government-provided retirement account between locations, and it would be impractical in a world of constant movement. Certain companies include retirement or social security equalization in their policies for geographic mobility (see Chapter 7) to ameliorate some of this. Many however, look to smooth this exposure through company-provided plans or other benefits that employees get through talent mobility.

Companies can pursue two models for retirement benefits that they provide: a local retirement model or a global retirement model. As the Talent Mobility Revolution continues to grow, companies will increasingly look to innovative retirement savings approaches to ease friction from talent mobility. We outline both the local and global retirement model below.

•   Local retirement model. This is the traditional retirement savings structure that companies have followed, and most still do today. In this model, employees receive a company-sponsored retirement plan that is in line with the norms in the local market where the company operates and the employee is employed. For example, in the United States this is generally a 401(k) plan; in the United Kingdom, it is typically a private pension. Employees are typically able to contribute to these plans tax-free to save for their future retirement. Depending on the company, there may also be a company contribution component, such as company matching in 401(k) plans. This varies by company—and is generally a benefit provided by larger companies. At the same time, employees working in a given market generally have a portion of their salary deducted to pay into a national retirement plan, like Social Security in the United States. In the talent mobility era, this local retirement model can create friction as retirement accounts (public or company-provided) remain in different locations while an employee works around the world. In this model, when employees move to a new location, the company ties the employees’ retirement schemes to a home market and equalizes them for contributions, similar to how other tax equalization is handled (certain countries also have social security treaties for long term assignments, but this can be increasingly complex with shorter durations).

•   Global retirement model. Companies may increasingly look to a global retirement model in the talent mobility era. Similar to a global compensation benchmark, employees become a part of a single global retirement scheme that is often headquartered and administered offshore in a place like Jersey, United Kingdom. Employees and companies can pay retirement contributions into a global plan regardless of where they are physically working. Typically, these plans are denominated in US dollars or British pounds (GBP), and as contributions are made, they are converted from the local contribution currency to US dollars. When they retire—regardless of where they live—employees can withdraw these savings for their retirement. Nationally run retirement savings plans operate in the same way as above through equalization or treaties.

When I worked abroad, I had a local retirement model. In Hong Kong and Singapore, I was able to withdraw the funds I had contributed to the public schemes when I left the country. In the United Kingdom, the money I contributed to the national plan stays in the plan even though I now live back in the United States.

Public and private retirement plans are complex to administer and manage amid continuous talent mobility. Like compensation and holidays, today’s companies increasingly look to a private global retirement model to smooth differences across markets and make up for challenges with national plans amid talent mobility. Companies may adopt this for all employees or for a segment that they expect to be mobile. To make this—along with the global compensation and holiday models—work, companies may set up a global employment company (GEC) to employ a subset of employees that are expected to move frequently (see Chapter 9 for further detail on managing entities and GECs).

Enhancing Family Leave

Like the challenges in normalizing compensation and retirement, talent mobility brings with it similar challenges for family leave. Family leave is critical to supporting diversity in the workforce and giving employees both vibrant work and personal lives. Yet family leave policies vary greatly by geography, even by state in the United States. And the United States sadly does not yet offer any paid parental leave—one of the only advanced countries that does not.

In 1993, the US Congress passed the Family and Medical Leave Act (FMLA), which mandates a minimum of 12 weeks of job-protected, unpaid leave for mothers. Certain states support adjusted maternity leave, including four states that fund a portion of a mother’s salary for a part of it, or include leave for fathers in it. However, in most cases, fathers must use vacation days for the birth of a child. Other countries, such as the United Kingdom, provide up to a year of maternity leave, with employers required to pay a statutory amount for up to 39 weeks and 2 weeks of paternity leave. There are also great variances in expectations for other types of parental leave, for example to care for an aging or sick parent, or to mourn the loss of a loved one, as I did with my father while working at Lehman Brothers. More often than not, caring for a parent also requires traveling to a different place and working remotely from there.

These great variances, across countries and states, make it difficult to normalize employee benefits in the talent mobility era and to appropriately support working families in an era where both men and women regularly work. But companies now recognize that work-life integration is in high demand from today’s employees. With increasing talent mobility and the absence of sufficient and consistent statutory parental leave policies, companies should adopt consistent family leave policies to support families. They should also champion location movement, one of the building blocks of talent mobility, to allow for flexible work while away from the office or to care for families.

The best practice for family leave is to offer a minimum amount of paid parental leave for mothers and fathers, taking into consideration all configurations of a modern family. Companies should also include a minimum amount of paid family leave to care for a sick parent or mourn a death in the family. This, coupled with work-from-home models and flexible work arrangements, balances variances across locations and helps employees balance work and family. Although this can be expensive for small and growing companies, the benefits in attracting, retaining, and engaging today’s top talent far outweigh the costs. Small companies should start their transformation with what they can support, and evolve from there, just as Topia did in evolving our vacation days. The principle—and starting the journey to greater support and consistency—is the most important first step.

In 2018, Topia rolled out equal paid parental leave for men and woman. We followed a similar staged model as we did with holiday days. We introduced paid parental leave for both men and women who welcomed new children. Although we wanted to offer more paid leave than we did, we started this journey with what we could realistically support for all men and women at our company. Just as we’d done with our holiday policies, we were balancing the benefits we wanted to offer with business realities. When we announced our new policy in a company all-hands meeting, people were very grateful—and we even received hugs from some of the male employees!

Delivering Employee Healthcare

One of the core tenants of the structure of American work has been that companies provided healthcare to their employees. Unlike Canada and most European and Asian countries, healthcare in America has historically been provided by employers. In the talent mobility era, with increasing job movement, freelance work, and entrepreneurs, this structure must change so that the government provides a minimum level of healthcare to all workers regardless of where and when they are working.

Amid the Talent Mobility Revolution, employees increasingly work from everywhere all the time—at home, at the office, on the road, and many other places all around the world. This continuous movement brings with it challenges in delivering employee healthcare. If an employee is working between 10 different countries over a couple of months period, how does his or her healthcare coverage work? How do you ensure employees are covered for a one- or two-month assignment in another location? What should you do for freelancers who work similar hours to employees on the same project team but don’t get healthcare provided by the company or country?

Similar to the global compensation and retirement models we’ve discussed, companies increasingly look to global healthcare plans to support employees who continuously move between geographies. Similar to retirement models, often companies offer a local healthcare plan tied to an employee’s home location (e.g., the United States), plus a global healthcare plan administered offshore, often through a global employment company (GEC) (see Chapter 9 for further details). Like compensation and retirement, the global healthcare model often starts with a particular segment of employees who are presumed to be continuously mobile, while others remain on traditional local plans in given countries. Certain companies also provide emergency healthcare plans (often delivered through companies like International SOS) to cover employees who travel regularly.

As freelancers become a larger part of their workforces, certain companies are innovating in their traditional benefits model to provide freelancers healthcare options. Certain companies offer a healthcare plan that freelancers can buy into. As freelancers become a larger part of our workforce, we should update the US federal employment law to account for the changing the structure of work. This should classify freelancers and gig economy workers as a new type of worker and provide a mechanism for collective bargaining, benefits, and protections within the flexible on-demand structures of the freelance model, something we discuss further in the subsequent section and in Chapter 10. Until we get to national healthcare and an update to federal labor laws, however, companies should provide their freelancers with healthcare plans that they can buy into and benefit from the bargaining power of the company.

Supporting Employee Wellness

With work from everywhere comes constant connectivity to e-mail, videoconferencing, and messaging systems (see Chapter 9). In this virtual work world, the concept of location and time zone goes away; gone are the days where you worked 9-to-5 and then relaxed in the evening with family without any thoughts of work. This brings with it challenges in employee wellness.

Companies today must develop employee health and wellness programs to ensure employees have strong mental and physical health amid the Talent Mobility Revolution. Often these programs include mindfulness initiatives, such as meditation offerings in person or via applications, coaching programs, and employee wellness platforms where employees can allocate a set of points to classes, like yoga or Pilates, that they may want to take outside of work. Employee health and wellness is a growing part of the Talent Mobility Revolution, so that companies can ensure the benefits of continuous connectivity and talent mobility without negative effects.

Evolving Employee Protections Amid Talent Mobility

Traditional Employee Protections

As we’ve discussed in prior chapters, one of the key elements of the Talent Mobility Revolution is the growth of on-demand freelancers as a part of project teams, a trend that is set to accelerate in coming years. In a 2018 survey by Upwork, 57 percent of HR managers said they plan to increase their utilization of freelancers in the next 10 years,^* which is driven by demand from both companies and workers.

The growth of the freelance economy has positives for companies and workers. Many companies—often located in urban coastal cities in America—report challenges finding skilled workers for open jobs. These urban employment markets often have very low micro-unemployment rates and high costs of living that can make it prohibitive for people to move for work opportunities. Moreover, many people in America—across all demographics—value living in their local community near family and friends; however, often they can’t find good paying jobs there. There is an ongoing discussion about incentivizing companies to move to or set up in new locations—often outside of popular urban coastal cities. However, another way to look at this is to incentivize companies to hire a greater number of remote freelance knowledge workers spread throughout the country, whether in rural areas like Truckee, California, or midwestern cities like Indianapolis. Freelancers can work from anywhere, loaning their skills out to companies based in urban coastal cities, and remain living in their communities.

The structure of employment in America, however, must shift to support freelance workers with some of the traditional employment protections and benefits. Until this happens at the government level, companies that leverage freelance workers as a part of their teams should extend their traditional employment protections to all workers.

Throughout the twentieth century the US government, in partnership with our unions, passed legislation mandating protection for employees working at companies. Some key legislation included setting a minimum wage for work, ensuring antidiscrimination in the workplace, and setting health and safety standards for work environments. Freelancers do not enjoy any of these employment protections under the law or any collective bargaining rights. While many workers today value the flexibility, diversity, and work-life integration of working in the freelance economy, significant questions abound about how to ensure these workers are protected.

The best practice is for companies to extend basic employment protections to all workers and make this a part of their culture and operating norms. These should include protections for antidiscrimination, sexual harassment, and health and safety at a minimum. Upwork sets a strong example for its customers and follows this policy to protect all of its workers under similar company policies.

Innovating in Benefits for Freelance Workers

In the absence of nationally led healthcare and other benefits, companies that use freelancers should think about how to extend their benefit models and employment protections to their whole workforce. Companies should include healthcare and retirement buy-in options to freelancers. These can be structured as plans where the freelancer can elect to participate, continuing to provide flexibility and ensuring freelancers are not classified as employees. With the company’s buying power, these plans could provide lower cost healthcare options to freelancers than if they purchased healthcare on their own. The best practice is to set this up via a portal for freelancers and make it entirely optional—healthcare for those who want it; retirement savings for those who want it. To further support workers, companies should include web-based trainings on health and financial literacy (including savings for retirement). In the shift to the freelance economy with more variable pay and less company-led savings, there is increasing responsibility on workers to understand how to plan and save. Companies have an obligation to support their workers with this knowledge in an easy and accessible way.

Given that the nature of freelance work is “on demand”—that is, work happens when a worker wants to take a job (and often in addition to other work)—holiday and family leave policies are not relevant. In fact, one of the things that workers value in the freelance economy is the opportunity to balance work and life obligations through flexibility—working when and where it’s convenient for them.

As I built Topia, I worked with many companies as they worked through their compensation and benefits models amid growing amounts of talent mobility. As the freelance economy grew and companies started to increasingly leverage nonemployee workers for project teams, I participated in discussions with companies and government leaders about how to evolve traditional worker protections and benefits for the growing freelance economy. The structure of employment needs to be updated in America, as the Talent Mobility Revolution and freelance economy increasingly take hold. For the near term, however, companies that want to harness talent mobility for success should evolve their benefits to both enable more frictionless employee movement and ensure all classifications of workers are supported and protected.

Transforming compensation and benefits is the eighth step of talent mobility transformation. Companies and business leaders that innovate in their compensation and benefits models will win the war on talent, continually attracting the people they need to fuel their business. Those that don’t will lose out in the Talent Mobility Revolution.

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^* Upwork, “Future Workforce HR Report,” 2018.