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While there were many topics that piqued the interest of attendees at WorldatWork’s “2021 Total Rewards Conference and Exhibition,” a session focused on how to compensate remote workers was among the most captivating.
The COVID-19 pandemic forced most businesses into some form of remote work beginning in March 2020. And that model, which proved to be viable, has led many organizations to opt for remaining either fully remote or in a hybrid model going forward. With that, however, has come a host of complicated questions and decisions for organizations on how to go about compensating these remote workers.
Chad Atwell, senior manager, Deloitte Consulting and Karen Ekren, compensation design lead at Stantec, a global professional services company in the design and consulting industry, tackled the topic in their session on Tuesday, Oct. 5, in front of an engaged audience of compensation professionals seeking guidance and perspective regarding remote worker pay.
Atwell brought forth three key concepts for organizations to consider to inform the discussion:
- Identify long-term opportunities for virtual work
- Maximize productivity, sustain culture
- Imagine the workforce of the future.
Atwell noted that many companies initially went into cost-cutting mode and shrunk their facilities’ footprint once remote work appeared to be a functional and effective strategy. As it related to employees, there was a misinterpretation between work from home and work from anywhere, which led to some business risk and exposure for companies.
“There were quite a few people who decided to move away from those central locations where their company was headquartered and there wasn’t a policy in place to say they couldn’t do that,” Atwell explained.
Most organizations spent the past year identifying roles that will be work-from-home, hybrid and on-site. Now, they are still grappling will how to approach the intra-country or cross-border movement. Some organizations responded to this by limiting where employees could move, prioritizing where they already had a physical footprint or a tax/legal presence.
Eskren said Stantec hasn’t restricted any employee movement, as long as it doesn’t interrupt work with a client and they have put together guidance limiting the amount of days that people can work outside of their home base, although there are challenges to both accommodate and implement this.
Additionally, Deloitte’s research did find that most companies aren’t restricting where a remote individual can work.
“Some companies are taking advantage by opening up offices in new locations or hiring in new locations to expand the talent pool in this new remote environment,” Atwell said.
Geographic Pay Differences
Once companies have put a policy in place regarding the ability to work in various locations, the question of compensation then comes into play.
The most common conundrum is how to approach pay for employees who have chosen to move or are looking to move. A recurring example is that of an employee moving from a high cost-of-labor area such as Silicon Valley to a low cost-of-labor area such as Des Moines, Iowa. Are companies adjusting pay downward to reflect market value for that role in that city? The answers have been a mixed bag thus far.
Deloitte’s research from 2021 found that 70% of companies use geographic differentials to adjust salaries based on the individual’s location. This number rose to 85% for tech companies.
Ekren said Stantec has not adjusted base pay downward based on an individual’s move to another market. However, she noted the adjustment could be factored in at end-of-year salary increases. Eskren noted that Stantec is uniquely positioned, because they have offices in all 50 states and offices across the globe, which makes it more practical for employees to move to different locations.
The question was also raised as to whether organizations should implement a required minimum timeframe of staying in a new location to dissuade employees from trying to game the system. For instance, an employee might move from Utah to San Francisco and receive a pay adjustment upward to account for the cost-of-labor difference and then decide to relocate back in Utah two years later with the knowledge that the company would not adjust their pay downward.
Eskren said that’s not something Stantec has discussed implementing. Atwell said he had not heard of organizations requiring location time limits but that this would be an example of why organizations would have a policy in place to adjust pay based on location.
“Organizations are being careful about staying consistent to their approach today,” Atwell said. “They’re trying to apply the same policy but evaluate it every step of the way to make sure it isn’t creating future problems.”
Atwell left attendees with a reminder about the importance of keeping pay equity in mind when implementing any of these remote pay measures.
“It’s never been a better time to focus on pay equity as an organization,” he said. “As you’re tapping into new markets around the country, make sure you’re not doing things inconsistently in a way that is discriminatory or inequitable.”
Relevant WorldatWork Resources:
- WorldatWork 2021-2022 Salary Budget Survey. This year’s survey includes base salary increases and merit budgets for 19 countries including in-depth insights into salary budget planning in the United States (U.S.), Canada, India and the United Kingdom. Plus, with the included Online Reporting Tool you can drill down and build customized reports according to industry and geographic area (U.S. and Canada).
- WorldatWork’s 2021 Geographic Pay Policies Study
- On-Demand Webinar: Best Approaches for Paying Talent When They are Remote or Move Across Borders
About the Author
Brett Christie is the managing editor of Workspan Daily.