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Remote Work & Compensation: The Path Forward

Written by David Cross

July 11, 2021

Remote Work & Compensation: The Path Forward Hero

The COVID-19 pandemic forced US organizations into accommodations to keep their businesses running.  Where possible, remote ‘work-from-home’ alternatives were developed to maintain operations.  While there were some studder-steps early in the process, many business processes remained effective, and results were generally positive.  The remote work alternative was seen as a viable working arrangement for both the organization and its employees.

As organizations emerge from the pandemic, many are considering return to “normal” working arrangements and are faced with trading off between “normal” and a possible shift, as many employees now prefer remote work for a variety of reasons.

The results of our Remote Work & Compensation Pulse Survey highlight some important findings that organizations should consider as they chart a new path forward.

Market for Talent

Assuming remote work can be a reality for many US organizations, companies will need to reconsider how it defines its market for talent.  Remote work translates to a more fluid and potentially volatile market for how employees can move from company to company.  This double-edged sword not only means that there is a broader selection of talent from which to hire, but that there is also an increased retention risk to the current workforce.

However, this risk is not only in the availability of talent, but in many cases, it is the availability of specific skills.  If there is a more permanent shift towards remote work, organizations need to recognize that the specific skills required will be more specialized, compounding retention risk.  Employers recognize that rewards need to not only reflect and attract these skills into the business but retain those skills in their existing employees.

Organizations recognize that simply reflecting the external market will increase pressure on internal equity within their companies.  Attracting talent without focusing on how to compensate employees runs the very real risk of causing internal pressure.

Having a Formal Plan

Our survey found that over 90% of respondents do not have a policy in place for addressing how or if rewards should reflect this new reality.  While organizations see remote work as an important consideration, there are consequences and significant implications if they fail to clearly define their objectives and strategy. Before making any decision related to adjusting workplace arrangements, leadership needs to consider the many possibilities through the lens of a much larger set of issues that all circle back to the specific rationale for taking such actions.

Remote Work and Pay Adjustments

A clear finding of our survey is that organizations adopting remote work on a permanent basis are not considering a change in employee compensation.  Our survey found that almost 95% would not consider lowering compensation for employees who work from home.  This recognizes that some organizations would consider changes to compensation because remote work could be seen as an element of their reward systems.  The perspective being that employees may prefer to work from home as an element of their rewards.  While these considerations are understandable, there are potential consequences to such changes.  Our survey found that employees would be much more willing to move from one organization to another if there were changes to current pay arrangements.

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about the author
David Cross is a Senior Compensation Consultant at Salary.com. He has more than 30 years of compensation consulting experience which includes all aspects of compensation strategy and design for executives, employees, and sales compensation. He has worked with senior management and Boards of Directors for a wide array of public and private companies.
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