How Spotify Successfully Approached the Future of Work

In a globally competitive and rapidly changing environment, organizations are determined to create a seamless employee journey during the digital HR transformation. Spotify’s VP of HR Freemium and GUs, Anna Lundström, takes us through their approach towards the future of work during our online insights session.  

As one of the architects behind Spotify’s work-from-anywhere approach, or what they like to call the ‘distributed first work experience’, Anna mentions three key factors to how they developed this formula.

 

Offering Full Flexibility

 

Though it is already a flexible employer, engagement feedback showed that Spotify employees wanted even more flexibility. This led to the company starting work on this work-from-anywhere program back in 2019. Of course, the pandemic in 2020 accelerated their efforts which led to the initiative being officially launched in February 2021.  

Anna noted that everything was based on their philosophy to “become a distributed-first company, enabling our talent to create value for Spotify independently of where they work and remove constraints from scaling the platform”. 

Here, Anna emphasized that every organization would differ in its goals and philosophies.  

 “My advice is not to copy just another program and call it a day, but really take a step back and think about what your culture is, what will work for you, and define it with one belief.”

– Anna Lundström 

At Spotify, the belief is that work is not something that people come to the office for, it is something they do. This led the organization to put together a whitepaper and a handbook for this new approach of work-from-anywhere. 

Ultimately, they came up with different work modes they could offer their over 10,000 employees around the world. First is a Home Mix where employees spend most of their time working from home with the option of a couple of days in the office per week. The reverse of that is the Office Mix. In regions where there isn’t an office, a Co-working Mix is offered.  

Full flexibility also means that Spotify offers employees the option to work from another state or country where the company has a legal entity. To make this easier, employees are also grouped into different regions – the US, EU, and Asia.  

To ensure that the program runs as smoothly as possible, Anna and her team spent plenty of time before launch to consider every possible question and constraint that might come up. They spoke to management and stakeholders to understand the different jobs and roles within the company and what they can offer in terms of flexibility. For example, some jobs may be tied to specific regions and wouldn’t be able to get full flexibility. However, the majority of roles do have that option.  

For tax purposes, Spotify also instated a 12-month commitment for employees who want to move. Meaning they have to commit to their new address for at least 12 months. Anna noted that this gives the organizations more security in not only knowing where their employees are but allowing them to stay compliant with local regulations and tax requirements.  

 

Adopting a National Compensation Benchmark 

 

With the idea of allowing employees to move anywhere within a specific region came the question of compensation. Do they keep the same salary? The short answer is yes. Spotify opted for simplicity because a complex compensation structure would be difficult to scale, according to Anna. The team worked closely with HR, legal, and finance to consider every angle of approach including compensation policies and travel philosophies. 

For example, a Spotify employee in New York who wants to move to Minnesota would keep the same salary instead of having it adjusted to the regional market rate. This is because Spotify has moved into what they call a national salary band. They wanted to solve any potential issues that might crop up if they lowered salaries when employees move. 

However, if an employee moved to another country – for example from England to Spain – they would get to keep the same take-home salary in the new currency. Anna stressed that everyone is taken care of when this is done as they are able to make the same level of pay that fits the new market conditions that they are in.  

For now, Spotify is in over 40 different countries – giving employees a lot of choice and flexibility in terms of where they want to work from. If they do decide to move, Spotify will also handle the cost and processes of the visas and employment-related paperwork. The organization is also continually assessing where it would like to establish an entity. Most recently, they established an entity in Ireland.  

Anna mentioned that Spotify has seen incredible results from this level of flexibility and preservation of compensation including reduced attrition and increased applications by top talents. The company also reduced the time taken to fill a position from 48 to 42 days. 

Remarkably, Anna also noted that her team was able to answer every single question that was raised by employees when the program was first launched thanks to how thoroughly they had thought about everything in the playbook beforehand.  

“That was the key to success… There were not a lot of things in our program or policy that we had to update or change because we thought it through early on.”

– Anna Lundström 

 

Creating A Dynamic Workplace 

 

Another aspect of the work-from-anywhere program in Spotify is their introduction of a new way to design or think about workspaces more dynamically. Anna talked about how the organization’s workplace services team spent time with stakeholders across the business to understand what drives them and how they do work in order to come up with the best set-up for everyone. For example, engineers get plenty of screens while creatives get more space for whiteboarding. Other examples include focused spaces, spacious cafeterias, and social spaces.  

Anna stressed that the goal is to create an environment that fits all employees regardless of their roles because there are employees that work on a range of different things within the company. This kind of thoughtful design enhances collaboration and innovation, she added.  

One of the challenges with such high levels of flexibility and remote working is maintaining company culture. It’s something Spotify takes very seriously. When asked about how this is done, Anna explained that every new employee gets to visit Spotify’s headquarters in Stockholm to spend a few days being introduced to the company culture and leadership, and to familiarize themselves with the organization’s strategies and goals. They also conduct several different virtual sessions throughout the year, including with top management, to nurture and cultivate the company culture.  

Anna pointed out that it is also important to allow culture to evolve while ensuring you remain steadfast to your organization’s values. Trying to stick to the same company culture that was developed at the beginning while you are scaling up – i.e still using that start-up mentality – will present many challenges. Evolution is key. 

 

Practicing Trust and Transparency 

 

When asked about how Spotify balances the interests of employers and employees when offering flexibility, Anna mentioned trust. Being a values-driven organization, Spotify has a performance development philosophy in which employees drive their own development with the support of the organization.  

“We support their growth and we put a lot of trust in our employees to drive it. We emphasize self-leadership.”

– Anna Lundström 

Beyond that, Anna mentioned transparency as being another key to empowering employees. This can look like being open with employees about the state of the company, goals, targets, long term vision, and OKRs. This must happen at every level from the executive team right down to line managers and team members. 

Consequently, Anna notes that advocacy comes into play as well. While employees are given the freedom and power to shape their growth, some may require or prefer a bit more structure otherwise they risk burning out.  

This is where mental health and wellbeing is prioritized. The team at Spotify is focused on destigmatizing discussions around mental health and creating a safe space for people to talk about their struggles and ask for support when they need it. Some questions that Anna notes are important for leaders to ask include: Do they have the right technology, processes, and support? Is there enough investment in important tools to prevent burnout? 

Work-life balance and mental health care have to be modeled by leadership, according to Anna. For example, if a manager chooses to work late at night, they shouldn’t expect their teams to be pulling the same hours. Anna stressed that empowering employees is about being clear on what the priorities are and offering support, as flexibility alone isn’t the answer. 

 

Final Takeaway: Experiment and Adapt 

 

In the end, Anna’s advice for leaders who are trying to prepare for the future of work is to “think as a futurist, build scenarios of the future, and make bold choices” to fit what is best for your organization. Instead of copying a program, make it your own.  

She also stressed that leaders should not try to do everything at once as they will surely fail. Instead, take it as a journey of learning where mistakes will be made. It is more important to experiment and adapt as that is the only way to create the best possible future for everyone.