By Anthony Kaylin, courtesy of SBAM Approved Partner ASE

Employees want this and they want that.  The most recent issue is arising from the remote work environment.  For those jobs that can be done anywhere, employees expect their compensation to be the same as where they were initially situated, unless they move to a more expensive location, then they want the bump.

According to new survey data from Salary.com, employees want to maintain the option to work remotely post-pandemic and will not tolerate being compensated less for remote work. The Remote Work & Compensation Pulse Survey of both employees and employers, was conducted online from May 14 – June 7, 2021.   A total of 743 organizations participated from across the U.S. representing a broad spectrum of industries and organizations. The results were anonymized and analyzed in aggregate.

The Survey found 48% of employees want to be fully remote and 44% want a hybrid work model. The hybrid work model has support among 51% of employers surveyed, though there is a big divide when it comes to fully remote work, with only 5% of employers saying that will be an option.

As the new work environment has hit employers suddenly, 92% of employers have no formal practice in place for determining pay for partially remote employees and 72% have no formal practice in place for determining pay for fully remote employees.

The survey also found that employees would be much more willing to move from one organization to another if there were changes to current pay arrangements. 83% of employees said they would leave their job if compensated less for working remotely.  Given the talent war, an overwhelming majority (95%) of employers said they would not lower compensation for employees who continue, or transition to, working remotely.

For those working part-time remote the same view is taken.  97% of employers indicated that they will not lower an employee’s compensation if they continue, or transition to, working partially remote. For those that would adjust compensation, 21% would adjust salary with employee contribution, geographic location, and concerns about culture as contributing factors.  

Interestingly enough, new hires would likely be treated differently than new hires.  When employers were asked if they would hire a fully remote employee in a different geographic market at the same rate as an on-site employee, 34% percent of employers said “No.”  For their pay decisions, these employers would take into account:

• Geographic differentials (58%);
• External competitiveness (67%); and
• Cost of living (43%).

This approach for a two-tiered system could lead to pay disparities that lead to systemic discriminatory practices.  If two employees, one male and one female, doing the same job are working in two different geographic regions and one employee was one who transitioned to remote work, the other a new hire, either employee depending on the pay structure could claim pay discrimination that would be hard to defend, not just on a federal level, but likely in many of the activist states as well.

A vast majority of employees (94%) believe they should be compensated based on their skill set, not their location.   With what people are calling the “Great Resignation” era coming upon us, what should employers do?   We recommend the following checklist to start.