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Select a Pay Strategy for Remote Workers

Nearly half of workers expect remote-work options to increase after the pandemic

September 22, 2021 | Stephen Miller, CEBS

A woman talking on the phone while sitting at a table with a laptop.

Office workers are expecting increased workplace flexibility, in the form of fully remote or hybrid onsite/offsite work arrangements, to be an option when the pandemic ends, according to new research.

Employers that don't provide increased remote-work opportunities may find their employees leaving for jobs that provide greater flexibility. If employers do adopt remote or hybrid work practices, they'll have to decide on a pay strategy for offsite workers.

Remote-Work Expectations

Eighty percent of U.S. workers expect their employers to allow them to work remotely multiple days a week and 82 percent expect flexibility in their hours, according to a July survey of 1,000 employees by beqom, a cloud-based compensation software provider, which noted the findings in its September Employee Expectations in Hiring report.

Nearly two-thirds (65 percent) of respondents were willing to take a pay cut to work remotely. In addition, majorities said they might be willing to take a salary below the market average in exchange for benefits such as:

Flexible working hours (cited by 77 percent of respondents).
Remote-work options (71 percent).
More paid-time-off days (70 percent).

"The last 18 months have greatly changed the way we work, the way we value work as a part of our lives and what employees need from a future employer," said Tanya Jansen, beqom's co-founder. "As employers navigate through this shift," she advised, "utilize data and employee input to implement a flexible rewards policy that ensures relevant benefits" for the workforce.

In other research, PayScale, a compensation data and software firm, analyzed 538,438 salary profiles collected from July 2019 to July 2021 and surveyed 682 employers from June through August 2021. The firm's 2021 State of Remote Work Report indicates that:

Pay strategies lacking. While 43 percent of workers overall expect remote-work options to increase after the pandemic, 81 percent of employers do not have a compensation strategy that encompasses remote workers.

Employee preferences overlooked. In occupations like technology and marketing, the expectation for remote-work options rises to over 70 percent. Half (50 percent) of organizations say they will have a flexible or hybrid office after the pandemic, but less than half of organizations (47 percent) have surveyed their employees on their preferences.

While most employers are not planning to lower pay for employees who work remotely, that could change as location-based compensation strategies become more popular, especially for large, global organizations and technology companies, such as Google and Facebook, PayScale reported.

"There are many appropriate ways to structure compensation strategies to accommodate remote work and increased workplace flexibility," said Shelly Holt, chief HR officer at PayScale. "What really matters, though, is that compensation programs are competitive, consistent and fair."

Different Approaches to Location-Based Pay

The two companies below, among the minority of organizations that have a pay strategy for remote workers, are taking different approaches.

Online real estate site Zillow is shifting away from tying pay to local labor rates, according to a Sept. 15 LinkedIn post by Dan Spaulding, the firm's chief people office.

"As we evaluated our compensation philosophy to align with our new flexible work policy over the past year, we knew it needed to reflect our values and account for competitive realities," he wrote.

Going forward, he explained, "When you work for Zillow, your long-term earning potential is determined by how you perform, and will not be limited by where you live," with nationally competitive compensation packages primarily tied to an employee's role, responsibilities and performance.

Vistaprint, a marketing and design firm for small businesses, decided to consider location when setting pay.

"After surveying team members on their preferences, we opted to transition to a remote-first workforce," said Stacey Sutela, Vistaprint's director of global compensation and HR operations. The firm has developed "a globally-centered approach to compensation with geographic differentials that would be fair and equitable for team members," she noted.

Choosing a Strategy

Advisory firm Newport Retirement Services, based in Walnut Creek, Calif., described three approaches for setting pay for workers in different local labor markets:

Set pay rates by the main office location or regional offices. Employees can be assigned to specific pay structures based on the office closest to their remote-work location.

Set pay based on the employee's home or remote-work location. If an employee or job candidate lives in an above-average rate-of-pay labor market, the employer may need to account for the employee's salary expectations based on local pay expectations.

Set employee pay to the U.S. national level and adjust it upward if necessary. While the national rate may be suitable for employers in areas with moderate labor costs, location pay could be adjusted up to account for higher living expenses for employees located in significantly more expensive areas. Conversely, if employees are living in areas with significantly lower costs of living, a location adjustment would not be applied.

"Organizations should develop a clear remote-pay policy, communicate it to their hiring managers and build it into the employee handbook to ensure consistent pay practices," Newport advised. "It is important for employers to consider the approach that works best to support their business strategy and to follow that approach consistently."

Related SHRM Articles:

Two Experts Debate: Should Remote Workers Who Relocate Be Paid Less? HR Magazine, August 2021

Google's Salary Cuts for Remote Workers Renew Location-Based Pay Debate, SHRM Online, August 2021

Remote Workers Expect Pay to Reflect Their Locations, SHRM Online, April 2021

Employees Working Out of State Often Fail to Let HR Know, SHRM Online, February 2021