Q. "When determining a new hire's salary, should we look at cost of living in the city where our organization is or where the employee lives?"
Answer:
While the generally accepted practice is to just research the city in which the employee lives, there's valuable nuance to consider:
For remote employees, using their actual city of residence is essential for a truly competitive pay analysis, since cost of living can vary significantly.
For non-remote (on-site or hybrid) employees, your ministry's physical location might actually be your starting point, but remember many employees commute from surrounding municipalities where expenses like housing might differ significantly. For example, a church located very close to a city line might have staff living across multiple towns with vastly different costs of living. Considering each of these diverse living areas helps ensure your compensation remains fair and competitive, reflecting your entire team's economic environments.
Ultimately, the goal is to accurately capture the relevant local labor market your employees are part of, ensuring your compensation strategy is fair, competitive and actually takes care of your people.