Scottsdale, Arizona – Organizations appear to be simplifying pay philosophy and policies surrounding geographic pay, according to a new study published by WorldatWork. The survey, “Geographic Pay Policies,” reveals that organizations are increasingly considering single pay structures, as well as consolidating or eliminating pay differentials.
"Geographic pay policies have existed for many years but in the past were more about an organization's multiple physical work locations rather than where the work was being performed, including employees' homes like with remote work," said Alicia Scott-Wears, WorldatWork Director Total Rewards Content. "With the increase in remote work over the past two years, these philosophies and policies have required more attention and communication."
Flexibility to work remotely, at least on a hybrid or part-time basis, is of importance to employees. Survey respondents indicated they would seek new employment opportunities if working in-person full-time were to be required again.
28% of organizations plan to modify their policies through consolidation of pay differentials, while 13% are considering eliminating differentials by geographic area. There was a six-percentage point increase from 2021 for organizations using a single pay structure where pay is not differentiated by geographic areas.
Only 7% of organizations report geographic pay policies as ineffective for reducing turnover.
A continued increase in remote work options is likely driving employees to initiate relocation.
Remote work flexibility is valuable enough for 38% of employees to consider looking for new work if discontinued. This has increased 17-percentage points since the COVID-19 Employer Plans and Employee Perceptions Study conducted in 2021.
About the Study
WorldatWork invited its broader membership and customer base to participate in an electronic survey on U.S. geographic pay policies. A total of 858 responses were received, representing U.S. organizations of different sizes and across multiple industries. WorldatWork also obtained responses from 312 full-time business professionals via the Schlesinger Group panel online. The sample was sourced primarily based on gender, geography and age. Email invitations were sent directly to participants on 03/14/2022 and results were collected over a 14-day period. Sample sizes vary by question. Geographic pay differentials are pay differences established for the same job based on variations in costs of labor or costs of living among two or more geographic areas.
WorldatWork is the leading global nonprofit organization for professionals engaged in the critically important practice of total rewards. We serve those who are responsible for cultivating inspired, engaged, productive, and committed workers in effective and rewarding workplaces. We guide them in the design and delivery of total rewards programs with our education and certification; idea exchange; thought leadership; knowledge creation; information sharing; research; advocacy; and networking.