Are you experiencing remote work challenges regarding compensation planning and implementation? Having the flexibility to allow employees to work from home (or any location) is beneficial, especially for retention and recruitment. However, from a compensation standpoint, the shift to remote work leaves many employers unsure of how to handle salary and benefits. To ensure you are ready for this new era of work, start by reviewing and updating your compensation strategy.
Key factors to consider in your remote work compensation strategy
The days of having all employees in the office are gone (at least for now), and remote work is here to stay. A recent Gallup poll shows that “54% of employees who work at least some of the time remotely say they would ideally like to split their time between working at home and in the office — a hybrid arrangement. A little over a third (37%) would like to work from home exclusively, while 9% want to return to the office full time.”
This means that your compensation strategies may no longer fit your work model, and it’s time to make some updates. To help you update your compensation plan for remote and hybrid workers, we have highlighted some new challenges employers face and how to work through them:
Fair compensation for remote workers: As the number of remote workers increases, employers struggle to determine what is considered fair compensation. Do you make pay decisions based on the home office, employees’ location, or some other factor? Cost of labor is factored into compensation based on where an office is located. However, with the flexibility to work from practically any location, some employees are moving to lower cost of living areas. Should employers reduce salaries for those employees who have changed locations?
Many employers are not going to reduce salaries in this ultra-competitive job market. However, salary increases could be based on location for employers looking to cut costs in the long run. Your Total Rewards Program can also play a part in determining a fair compensation package that incorporates medical, dental, and additional benefits for workers, in addition, to pay.
Designating remote work positions: Not all positions can be done remotely, and not all employees want to work remotely 100% of the time. Start by reviewing all the positions in your organization and designating those that must be done in an office and those that can be done remotely. You may find that some managers want team members in the office, but those positions can be done effectively and efficiently from home. To keep it fair in those cases, the USI 2022 Benefits Market Outlook suggests employers “take an unbiased look at which positions can and can’t be performed remotely.”
Once you have determined which positions can be remote and those that cannot, draw up a plan for how your organization will handle remote workers, hybrid workers (for those that want a few days in the office), and those that will be completely on-premises.
Managing business expense: Remote work may create some additional business expenses for your employees. Determine what your organization is willing to provide (equipment, internet or phone stipend, etc.), what is a reimbursable expense, and what is not covered. Outline these details clearly in your remote work policy.
Another consideration is whether there are any tax implications for reimbursements, not to mention the different reimbursement requirements by state. When in doubt, consult a professional to help you create accurate policies.
Don’t be afraid to bring in a specialist
For many organizations, we are on uncharted territory. If you are struggling with creating remote work compensation philosophies or policies, reach out to a compensation specialist for help. For example, here at Compensation Works, we use a 9 step process to review and create the best possible plan for your organization.
Whether you need help creating a brand-new remote work compensation strategy or you have a policy that could use some updating, the Compensation Works team is here to help. We can provide a comprehensive assessment and recommendations by evaluating current practices and plans that support your strategic goals. Reach out today for a consultation.