While more companies are allowing for remote workers as part of their post-pandemic “new normal,” reports suggest that few companies have considered how compensation may look different for those that no longer work in the office. While companies began to assess their return-to-work plans, many workers — in fact, a whopping 65%, according to one survey suggested that they would take a pay cut to continue working from their couches. Further, 71% said that they would be willing to “take a salary below the market average” in exchange for remote work options and 77% said they would do the same for flexible working hours.
With this data in hand, companies who are willing to move forward with a hybrid work model — or to let their employees stay completely virtual — may want to revisit their salary scale or otherwise consider how their compensation and benefits may be adjusted in this new market. However, a report by PayScale, a compensation data and software firm, found that 81% of employers do not have a compensation strategy that encompasses remote workers even though 43% of companies expected their work-from-home options to increase post-pandemic. Payscale chief HR officer, Shelly Holt, notes that “there are many appropriate ways to structure compensation strategies to accommodate remote work and increased workplace flexibility. What really matters, though, is that compensation programs are competitive, consistent, and fair.”
Trailblazers in the tech world have already taken steps to adjust their pay scale to meet the needs of their new remote workforce. Google, for example, announced this summer that it would be lowering wages for workers who opt to work from home from a location with lower labor costs; for employees staying in or within one hour of the same city in which they were hired, wages will stay the same. In response to the announcement, a Google representative noted that “our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from.” That said, in the Payscale report, 69% of respondents do not intend to lower wages for workers who elect to stay home, and 62% indicated that they do they anticipate offering a reduced salary for any remote workers they hire moving forward.
In a report for clients, advisory firm Newport Retirement Services describes three approaches to establishing a pay scale for workers who are remote, particularly if they live in diverse local labor markets. Under the first strategy, the group recommends setting pay rates for remote workers based on the rates paid in the main office or closest regional office to the remote worker. A second strategy, meanwhile, would pay workers based on the employees’ home or remote-work location, with pay aligning with local pay expectations. Finally, the group also proposed setting employee pay to a US national rate, with location pay added for employees who live in markets with a higher cost of living expenses, but no penalty conferred for those who live in significantly less expensive parts of the country.
While each of these three options has its merits, the folks over at Newport note that they could all easily draw the ire of employees who may feel slighted by the new policy. As such, they suggest that companies “develop a clear remote-pay policy, communicate it to their hiring managers and build it into the employee handbook to ensure consistent pay practices.” Further, the pay strategy needs to be implemented across the board and consistently among employees to avoid litigation.
