Remote Work & Compensation

Mary Crogan 00:46

I've been surprised how much I actually like it now not having to deal with a commuting time. And we made significant gains and efficiency. I am surprised at

Kevin Plunkett 00:56

how well we've developed the community because most of my team is remote, you can be very efficient, you can connect to anyone in the company. We're all used to it now. Why go back to the office? What's the phrase there when the toothpaste is out the tube, it's hard to get it back in. But working from home doesn't work for everyone. I like the office environment. It's better than what my workspace will be at home. How do you please everyone? I mean, some are happy to go. But others don't want to. What is the right strategy? How do you compensate them? Are you confused? While you're not alone? we'll tackle the issue of remote work and how it impacts comp. Right now. From the Salary.com studio in Waltham, Massachusetts. This is Get Pay Right. The podcast that dives deep into the current compensation topics that matter to you most, so you can get it right, every time. I'm Kevin Plunkett,

Mary Crogan 02:01

and I'm Mary Crogan. Welcome to Get Pay Right. On today's show, we want to dive into the topic of remote work

Kevin Plunkett 02:09

as more and more the country gets vaccinated. Mary, there's an expectation that everyone will return to the workplace business as usual.

Mary Crogan 02:17

I'm not so sure about that, Kevin, a recent survey about remote work and compensation that we conducted here at Salary.com points to some pretty big gaps in terms of expectations between employers and their employees.

Kevin Plunkett 02:30

And in this episode, we'll dig into the survey results and discuss some of the issues. Mary, can you share some of the key findings of the survey?

Mary Crogan 02:39

Well, to start, like I said, there's a big disconnect when it comes to returning to the workplace full time. So 88% of the employers that we talked to are planning to bring their employees back by the end of q3. 19% of them are requiring that employees come back full time. But only 8% of employees are willing to do it as a mandate. Okay, there's a problem. Yes, it's a big problem. Even more so. And you look at the rest of the data. Turns out 48% of employees want to continue to work remote permanently. While the remaining 44% they only want to come back to the office part time.

Kevin Plunkett 03:18

Wow. Okay, so you've got 20% of the employers out there saying it's going to be full time back at business as usual. And a full 93% of the population is gonna be like, yeah, you're not having it. 50% don't ever want to come back.

Mary Crogan 03:38

Exactly. Wow, I got a big disconnect there. Another interesting point 83% of employees said that they would leave their current position if compensation was reduced because they wanted to work remote. Well, I don't blame them. I don't either. The good news for those employees is that employers are not planning to cut wages, after all, 95% said that they would not lower an employee's compensation if they chose to continue to work remotely. So that's really good news.

Kevin Plunkett 04:05

That is good news. Okay. So Mary, what about the trend we're hearing of employees moving out of large cities, to more remote areas where they could stress their dollar. Did that come up in the survey at all?

Mary Crogan 04:19

Yeah, it's interesting. They spent a lot of chatter about that. But the reality is, according to the survey, only 9% of employees moved to a different geography during the pandemic. Alright, so maybe not that big a deal. not that big of an issue. not that big of an issue. What is a big concern though, is while you have a significant number of organizations that have moved to a remote work model, turns out only 8% have a formal practice in place for determining pay for remote employees.

Kevin Plunkett 04:45

Ah, there's the biggie. big night. I agree. I agree. So everybody kind of flew by the seat of their pants and there's dill flying by the seat of their pants looks that way. It's only eight percent of companies have a formal solution while it's time organizations step up. But you know, finding a solution isn't going to be so simple. So we checked in with someone who knows how to tackle these challenges. David, introduce yourself.

David Cross 05:14

Yes. Hi, Kevin. My name is David Cross. I'm a senior compensation consultant here at Salary.com. My works primarily in the area of working with clients on all aspects of compensation, structure and design.

Kevin Plunkett 05:27

Great. And so you wrote an article recently about the impact of remote work and what you know what it might mean for organizations who move to this, this this type of work model long term? What are some of the key challenges there for an organization?

David Cross 05:43

If we start to think about working from home? it? What do we do about from a labor market standpoint? What if we have people working all over the country? Should they be paid differently from people in another location should be the same? What does that look like? If you're an organization that has a really strong interpersonal culture, a lot of exchange in the workplace between people, if you start working from home, what's going to happen with that culture, things change, and doing working remotely isn't really going to isn't necessarily going to maintain that culture.

Kevin Plunkett 06:18

There are some significant issues to grapple with. I understand. Dropbox was thinking through this very issue. And they decided to adopt a virtual first philosophy, giving employees the choice to come in or not. But the organization runs as if every employee is working remotely. Now, not every organization can make that kind of commitment right away. Right.

David Cross 06:41

But I think we're still under a situation in many cases where companies are choosing to be more cautious and not mandating people to come in. Some employees may in fact, choose to come in others may not. Does that create a different work dynamic, when we have such situation, especially if it's mandated, but you should have sort of two classes I have and have not in terms of who's working from home and who's working remotely? And that's like back to a cultural question. Again, that's an underpinning of all this is that culture does have an is impacted by work from home, maybe we want that maybe we don't care.

Mary Crogan 07:18

I think there's an interesting dimension to this too. When you talk about culture and haves and have nots, they're certainly the challenges of having as a manager, half of your team working remote and half in the office, and maybe you yourself working hybrid two, there's also the question around compensation itself. But if we hire someone remote, let's say you're in Boston, you hire someone in San Francisco, you're going to adjust the compensation for that individual. And I think that has the potential to create some challenges.

David Cross 07:48

Yeah, there is some interesting work that's been done so far, that says, basically, we as a company are going to pay a national number at a basic amount. But unlike sort of normal geographic differentials, we're going to look at PE going forward by adding a premium for different locations. When I move from one geography to another, I do have a geographic differential, but it's its own piece of pay. It's its own line item of pay. And if I move to a more rural area, I lose that one element of pay because I've moved to a lower cost area.

Mary Crogan 08:28

And that's really interesting, too, because that allows you to maintain your existing salary structures, correct?

David Cross 08:34

That's correct. And that's really one of the points of this. So it's an interesting way to start to think about pay, without compounding issues with more and more salary structures.

Mary Crogan 08:42

Are there consequences for moving to a national pay strategy?

David Cross 08:45

A couple things could happen from that, that we don't intend to happen. For example, there could be an impact on culture, what happens to the way we interact? And that whole cultural aspect of of the way employees work is a big part of that. Another way to think about it is that if we think about a national labor market, what happens it in terms of pay in terms of holding people? So you may say, Well, we've got a national labor market, and we want to attract people here. And that's great. We bring people in, but we also run a risk that others that have a similar strategy could pull people away from us. How did we didn't intend on that. But that's something that if that either those situations happen, may not be what we planned, but it's a problem we have to deal with.

Mary Crogan 09:31

Now, if you move to a national pay strategy with people that live in areas that pay above the national average, be taking a pay cut under that scenario.

David Cross 09:41

Yeah, I mean, the worst outcome here would be for a company to say that we are going to look at remote pay at a lower cost, but because there have been admittedly still gaps, but there have been gains in terms of pay equity. If you compound that with a lower pay for people Per working remotely, you have made a situation that was not great to potentially very bad.

Mary Crogan 10:07

Okay, there is a lot to think about when designing a strategy for remote pay. Next, we will look at some of the measures to determine if you're successful.

David Cross 10:17

So, productivity ultimately, needs to be the question we have is whether our comp strategy that reflects work at home is the right thing for us.

Mary Crogan 10:27

So, you're not left guessing if the strategy even worked. A broken clock is right twice a day. So yeah, okay, but doing nothing at all? Well, that may be the worst plan of all.

David Cross 10:37

If we approach this, just shooting from the hip, it could be very seismic, and that's coming up right after this.

Kevin Plunkett 10:47

Imagine the CEO has determined it's time to bring people back to the office, and he tells you to adopt a national pay strategy. What do you do? I mean, you don't have any national average data, you don't even know where to find it. Well, salary.com has it salary.com can provide data for over 15,000 jobs nationally, and has advanced reporting and analytics to help you implement a national pay strategy. In fact, their comp analyst platform can tackle the simplest to the most complex pay strategies. Maybe you're still unclear what your strategy should be. Salary has a team of compensation experts that are easy to work with, and are committed to providing you the right solution. If you'd like to speak to David Cross, or other members from the salary.com team, visit www.salary.com backslash business. let's shift gears a bit. The Gallup poll suggests the 2.3 million women left the workforce versus 1.8 of men during the pandemic. What happens to the pay gap if more women choose to stay home?

Mary Crogan 12:06

Well, I think it depends though, if employers start to make adjustments to pay for remote work, or make adjustments to compensation for remote work, maybe not straight base salary, but other elements of it, then yeah, that I think that is going to start to create an reintroduce pay gaps in inequity that maybe hadn't been there before, just by virtue of the fact that more women are choosing to continue the remote work option than their male counterparts.

David Cross 12:34

Yeah, you know, what it comes down to one idea that I think is important here, which is measuring the level of pay inequity. I mean, understanding where we stand in terms of pac money across organization. That's an important just measuring that alone and testing that on a regular basis is or is important, because otherwise, how do we know if we have a problem or not?

Mary Crogan 12:59

Right, and it's important, it's something hopefully, organizations are already doing. But remote work makes it even more of an imperative.

David Cross 13:07

It does. But without the data, understanding how that pay differences are on a job by job basis. You don't know if the problems getting is bad, getting worse, getting better. And so like anything else, if you measure things, you there's a better chance we're going to take the right action.

Kevin Plunkett 13:24

There was a study that was done a bit ago, certainly pre pandemic for the Quarterly Journal of Economics, that suggested that employees who worked remotely had a 50% reduction in the rate of promotions due to you know, any number of factors but, you know, perceived lack of productivity because they weren't in the office, people couldn't see what they were doing. How do you combat that? If your culture has been primarily in office, and you choose to go this remote or hybrid? How do you combat that issue? From a productivity and visibility standpoint?

David Cross 14:02

That all seems to come down to a question of defining what we mean by productivity. So productivity ultimately, needs to be the question we have is whether our comp strategy that reflects work at home is the right thing for us.

Kevin Plunkett 14:17

Pre pandemic, the perception of those that work from home was that they were less productive. But data from the last year is showing just the opposite. People are more productive at home. So has our perception of productivity changed?

David Cross 14:35

I don't know Kevin, I think some measures of performance like the amount of times in the office or whether you attend meetings or so on those are admittedly objective, quantifiable measures of performance. But companies that are looking at a work from home type of policy, ultimately need to ask the question of are we what are we getting for this is business. Yeah, I understand the growing pains individually. But ultimately, we're doing this for a reason. That is sort of increased performance as a business itself.

Mary Crogan 15:11

And I think what we're finding is that going into this people thought, to your point, Kevin, that people are just going to be slacking off and doing whatever during the course of the day, and people aren't going to get as much done. But the reality is, we're getting more done, because as employees, we're being given some flexibility to create a structure that works for us in our day. And quite frankly, I know from personal experience, that when you're given that sort of empowerment, you're grateful for that. So you're going to work twice as hard for that employee or that company. And I think we're starting to see that.

Kevin Plunkett 15:44

Mary, have you've been, you know watching me at home, because that's exactly what I'm doing. I'm like working, I'll take a break, go run some errands, come back. And you know

Mary Crogan 15:52

Well, ask Megan, I'm in the car, go pet the dog up at doggy daycare. We're doing this while I'm in the car. So,

Kevin Plunkett 15:59

but it does. But to your point it you know, on a personal level, it does reduce stress to some degree. Like you're not sitting here stressing about Okay, I got to get home by such and such before the x closes. So I can pick up dry cleaning or whatever, right dinner

Mary Crogan 16:13

or practice or Exactly, exactly. I think we're given that freedom,

Kevin Plunkett 16:18

you're given that freedom as an employee, and I think the trade off is well, I'll put more time in when I can outside of normal hours. Because let's all there's plenty of time. And there's plenty of work to be done. Right?

Mary Crogan 16:28

Absolutely. And I think it's incumbent on your HR professionals in particular, to work with managers to make sure we're putting the mechanisms in place. And I would hope that over the course of the last 18 months, we figured some of this out, right, but putting the mechanisms in place to you know, have an understanding of how well someone is adapting to a remote model and how productive they are that there are ways to do that, in collaboration with employees, quite frankly. So everybody feels like they're part of this, this equation and the solution to making this work for everybody.

David Cross 17:05

So one question, though, we think about that flexibility. and the value that employees attached to that is that should that aspect of, of work now be a factor in your total rewards programs themselves? So yeah, we may pay you x. But any subsequent increase, maybe that's offset by the fact that you get to work from home, and you have that flexibility. And so companies, we're back to strategy, when we think about what that pay strategy is, it's not just about who we compete for, for talent and where we position ourselves to market, but how work from home and the flexibility associated with that needs to get factored into our discussion.

Mary Crogan 17:49

So for an HR or comp professional out there that's tackling this right now. What's the one thing they should do? As soon as they're done listening to this podcast?

David Cross 17:59

are we changing our work from home policies? Because we want a broader later labor market? We want to think about labor nationally? Are we thinking instead, are we thinking about there's cost saving some basic standpoint of bricks and mortar? If I don't need the same office construction? Is that what I'm trying to achieve? So it really all fundamentally comes back to why are we doing what we're doing? And I don't think that that's always been the forefront up till now.

Kevin Plunkett 18:27

Those are some really high level organizational decisions. And should that be the responsibility of a compensation professional?

David Cross 18:35

Yeah, that's a really important question. Because, yeah, it's true that comp professionals may not have the accountability to make the decision around what we do. But it is comp professional, the expectation amongst comp professionals to set up the dialogue around what it is we should be doing from a strategy standpoint. And so typically, what a comp professional would do is to frame that question, any way that senior management can look at that and really evaluate is this for us? Is it not for us? What are the implications? What are the potential unintended consequences we need to think about? So it really is, it does come back to a strategy around how we set up our PE. And that's basically what a comp professional, it's sort of the core of what they're going to do. Because once they have that idea in mind, then it becomes executing on the strategy itself.

Mary Crogan 19:30

I think the other thing that's important for an HR comp professional to kind of lead and drive is the transparency and the communication around that. Because when you leave folks sort of in the dark on big decisions like this, and they don't feel like they're part of it, that can have negative consequences, too.

David Cross 19:51

Yeah, that's right. I mean, if that transparency isn't there, I mean, you're gonna get the questions again, and again, from comp. professionals, I mean, imagine coming in the office one morning, and just dreading that phone gonna ring. When someone's gonna say to you, I really want to work from home, Mike and I get a pay decrease, or how does this affect my incentive plan? Or how do I manage my my work at home? If I take a leave of absence? What is there that? How does that differ in terms of salary? I mean, comp professionals are going to get those kinds of questions. It's, it's, it's and it's the type of thing that aren't necessarily strategic questions. And the more questions without the communication, the more kind of questions they get like that, the less they're less, frankly, time, they're going to have to frame the important questions of how should we dealing with this?

Kevin Plunkett 20:44

Your organization may not be ready to make a decision yet. But you don't want to leave people in the dark. So what do you communicate in the meantime?

David Cross 20:53

I think the best way to sort of handle the sort of short term question you're asking about is just be truthful. I mean, you have to tell people, look, we don't know, we don't know how it is, but but we're really aggressively working to understand that question. There are a lot of implications for it. I mean, that's really all you have, in the short term, you can just say we don't know yet, but it's on the front of our agenda. That said, we talked before about raising the questions of strategy with senior management and building an approach and building part of our reward strategy that considers work from home.

Kevin Plunkett 21:28

Last spring, employees had to adjust to a work from home strategy overnight, and they were accommodating now, they're expecting a thought out plan. So let's say your organization diligently designs a plan that addresses everyone's needs. How do you know if you got it? Right?

David Cross 21:47

That's a great question. You know, there's, I guess, I would think of it in two ways. One, you have to look at data, you have to look at the information you have in front of you compensation data, performance data, employee retention data, just employee data, in general, and start to build a case for whether this is the appropriate sort of thing or the optimal thing for us to do. Ultimately, though, this is business judgment. I mean, we look at this and we make informed decisions based on information that we have at our disposal, including all that data that we just I just mentioned, but there's no substitute for business judgment. And so do we know it will work? Well, we know it as well as our decision making process will lead us towards.

Kevin Plunkett 22:29

That all seems like a very large undertaking.

David Cross 22:33

If a company doesn't have a plan for how this works. They better do so soon, because it's not something that you can do on a dime. It takes a while to implement changes and work from home policy. What's the phrase, it's hard to turn the Queen Mary, it doesn't happen overnight. And I just don't want to lose. I think companies need to recognize that.

Kevin Plunkett 22:59

The get pay right podcast is produced by Kevin Plunkett, Mary Crogan and Megan Nadeau. If there are topics you'd like to hear about, let us know at get pay right at salary.com. A big thank you to our sound engineer Jay Sheehan of Garrett audio. Thank you all for listening and make the time to get it right.