Why benefits matter more in high-cost cities

I used to think compensation was a clean negotiation. Pick a number, anchor hard, close fast. In Kuala Lumpur that sometimes worked, because rent and transport gave you wiggle room. In Singapore, Hong Kong, Dubai, Riyadh, and New York, I learned the slower way. Every time we tried to win on salary alone, the hire landed tired, distracted, or gone within a year. The problem was not motivation. The problem was the gap between headline pay and usable life. In high-cost hubs, people do not live on numbers. They live on what is left after rent, childcare, commute, visas, and a brain that still has energy by dinner.

Founders talk about culture and mission, which is good. The market talks about total compensation, which is reality. When rent absorbs a third of take home and childcare eats another chunk, the marginal dollar of base pay stops changing how someone sleeps. Benefits change the week. Benefits lower friction, reduce silent costs, and build predictability. That predictability becomes focus. Focus becomes output. Output keeps the company alive.

There is a reason candidates in high-cost cities ask about health coverage before equity. They have lived the difference between a polished vision deck and a bill at the clinic. In Singapore and Hong Kong, private medical plans that include mental health visits and dependents coverage do not feel like luxury. They feel like an employer that knows how life actually works. In Riyadh and Dubai, visa sponsorship and family status decide whether a senior hire can move at all. In New York or San Francisco, commuter support and even a simple pretax transit benefit remove a monthly hassle that erodes energy. A good benefits stack turns chaos into routine. Routine is underrated.

When we ignored this, we hired people who spent their best hours solving personal logistics. One product manager had a choice every afternoon. Leave early to make childcare pickup or pay penalty hours that swallowed half her net raise. She never said it in a one-on-one as a complaint. The numbers said it for her in missed windows and patient frustration. We increased her base salary after six months, and nothing changed. When we finally added a childcare stipend and flexible core hours, delivery moved again within the same headcount. We had asked for craftsmanship without respecting the load people carry to get to the starting line.

The same lesson showed up with housing. We lost a strong engineering candidate in Hong Kong over a five-figure gap we thought we could not stretch to. He accepted a role with a smaller base but a guaranteed housing allowance that stabilized his year. The other company did not outspend us. They out-designed the whole package. They understood that the most expensive part of living there is not the office. It is the front door key.

Founders worry that benefits will inflate burn without moving retention. That is fair if the benefits are performative. In high-cost hubs, performative perks are easy to spot. Free snacks are nice. Predictable healthcare access is a reason to stay. A branded gym membership looks generous. A schedule that protects two real deep work blocks per week without late-night pings saves a career. In these markets, the valuable benefit is the one that removes a known life penalty or builds time back into the day. The test is simple. Does this benefit reduce an unavoidable cost. Does it turn a recurring hassle into a solved problem. If it does, you will see it in velocity and in the way people answer messages. They reply from calm, not from a moving train while juggling school pickup.

If you are building across Southeast Asia and the Gulf, there is another layer. Mobility. The city may be the hub, but your talent life is regional. Malaysians cross the Causeway for opportunity and return for family. Filipinos in Dubai support households in two countries. Saudis bring parents into care decisions. Benefits that travel matter more than benefits that impress. Regional health coverage that follows a person across borders is not cheap, yet the signal is loud. It says you value the person and the family system that allows them to show up. In Saudi Arabia and the UAE, clear spousal sponsorship, school fee support where appropriate, and relocation that covers real settling-in costs eliminate the silent tax of moving. When you remove that tax, the city becomes possible. Then the work becomes possible.

Let us talk about equity, because founders assume it balances everything. In high-cost hubs, equity inspires ambition during bull cycles and becomes abstract during rent season. I still grant equity with conviction, and I still believe in shared upside. I pair it with a vesting education that is honest about liquidity and timelines, then I protect the present with benefits that make the wait livable. If your equity story depends on people absorbing crushing present costs, you do not have a compensation philosophy. You have a hope strategy sitting on someone else’s stress.

There is a quieter reason benefits win in these cities. Fairness is visible. People compare subway rides, school applications, clinic waiting rooms, and landlord deposits. When your benefits align with the city’s real pain points, employees tell each other without being asked. This is how you build recruiting gravity. Not by louder campaigns, but by delivering a package that actually holds a life together in a difficult environment. Candidates then accept slightly lower base numbers because the full picture makes more sense. That is how benefits become a cost control tool instead of an indulgence. You pay for certainty. You receive stability.

I have seen founders try to split the difference with allowances that look good on a slide but are brittle in practice. The intention is right. The implementation is sloppy. A monthly wellness allowance that excludes mental health care misses where the pressure actually sits. A learning budget that requires three layers of approval removes the point. A relocation grant that covers flights but not temporary housing means your new hire starts work from a hotel room with poor Wi-Fi, which is how resentment begins. The fix is not more money. It is better design, faster reimbursements, and policy written in plain language. When people have to decode their benefits, they assume you did not plan to keep your promise.

If you are early stage and cash sensitive, you can still compete in a high-cost city without pretending to be a unicorn. The path is focus. Choose three benefits that remove the heaviest friction for your specific talent pool, and go deep rather than wide. For a Singapore engineering team with young families, that could be comprehensive medical including mental health, a childcare or dependent care stipend with simple rules, and a remote or hybrid rhythm that protects mornings for builder work. For a Dubai sales team with regional travel, it could be housing stability, family visa support, and a travel policy that does not force 2 a.m. connections to save a tiny cost. For a Riyadh product hub, it might be school fee support tied to tenure, dependable domestic help allowances within policy, and targeted transport support that recognizes commute reality. None of this requires a glossy wellness brand. It requires paying attention to how your people actually live.

There is also the matter of time. Benefits are not only financial. In high-cost hubs, time is the most constrained resource after housing. Look at your meeting culture and your message discipline. If your team cannot find a two-hour silent block without defensive calendar Tetris, then no stipend will save your roadmap. The most valuable signal you can send is that you treat time like a budget. Protect core hours. Publish norms that make after-hours messages the exception, not the show of loyalty. Make on-call schedules explicit. Replace heroics with process. When you do that, your other benefits work. When you do not, everything you pay for leaks through a calendar that never rests.

Some founders fear that generous benefits will attract people who are here for comfort, not challenge. In my experience, the opposite happens in high-cost cities. The people who are serious about their craft choose employers who remove noise. Benefits are not a hammock. They are earplugs at a construction site. They protect the work. They also protect the team from manager mood swings and late-stage scramble that turns into early exit. Good benefits are a promise to treat adults like adults. Adults then behave like owners because the environment lets them.

What do you do if you already rolled out a benefits stack that no one uses. Do not blame the team. Listen first. Run short interviews that ask what costs feel unfair or what chores steal their mornings. Look for patterns. You will hear the same three issues on repeat. Redesign for those. Sunset what no one touches. If your team in Hong Kong is not using your gym partnership because it is two train lines away from home, stop paying that invoice with pride. Use the funds for something that ends a real pain point. If your Saudi team keeps asking for clarity on spousal sponsorship, do not send another policy PDF. Hold a session with HR and immigration counsel and make the path clean. The trust you build in those moments is not soft. It is retention.

I am not arguing that salary does not matter. I am saying the function of salary changes as the cost of living climbs. In mid-cost markets, salary can still move lifestyle. In the top-tier cities, salary mostly holds back erosion. Benefits change the slope. That is why benefits in high-cost cities matter more. They are not decorations on the package. They are the structure. They turn a demanding city into a livable one, a livable week into a focused day, and a focused day into a product that ships. That is not a perk. That is a competitive advantage you can feel in the hallway.

If I were building the stack from zero tomorrow, I would begin with coverage that reduces fear, time rules that protect attention, and one or two targeted supports that match the city’s heaviest load. I would put it in writing in plain language and I would make using the benefits annoyingly easy. I would measure success in accepted offers, in first-year stability, and in how little we talk about burnout in one-on-ones. When someone asks why we did not push for headline salaries we cannot sustain, I would tell them the truth. We pay for what makes the work possible. We let the market chase noise. We keep people who want to do the best work of their career in a city that tries every day to make that harder.