{"id":17073,"date":"2022-10-12T04:20:18","date_gmt":"2022-10-12T04:20:18","guid":{"rendered":"https:\/\/www.shrm.org\/resourcesandtools\/hr-topics\/compensation\/pages\/rethinking-your-pay-model-in-a-new-era-of-remote-and-hybrid-work.aspx"},"modified":"2022-10-12T04:20:18","modified_gmt":"2022-10-12T04:20:18","slug":"rethinking-your-pay-model-in-a-new-era-of-remote-and-hybrid-work","status":"publish","type":"post","link":"https:\/\/squarehr.com\/index.php\/2022\/10\/12\/rethinking-your-pay-model-in-a-new-era-of-remote-and-hybrid-work\/","title":{"rendered":"Rethinking Your Pay Model in a New Era of Remote and Hybrid Work"},"content":{"rendered":"

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The COVID-19 pandemic altered where our employees work, with many businesses shifting to full-time remote work or hybrid models that allow employees to split their time between home and the office. But this seismic shift raises a host of questions. Can you pay workers less if they are not commuting to an office? Can you ask an employee to take a location-based pay cut when they move from San Francisco to Cincinnati? <\/p>\n

Even if you can<\/em> do so\u2014should<\/em> you? What are the legal and practical considerations for your remote pay policies and how might your decisions impact company culture and employee morale? <\/p>\n

A new day may call for a new approach to compensation. Here are some key considerations you need to take into account as you navigate the new normal when it comes to paying your work from home (WFH) or remote workforce.<\/p>\n

Understand the Extent of the WFH Trend<\/p>\n

Work-from-home arrangements are nothing new, but they have undergone a dramatic\u2014and potentially permanent\u2014shift in the past two years.<\/p>\n

Full-Time Remote Workers<\/p>\n

According to recent Gallup research<\/a>, very few employees were full-time remote prior to the start of the COVID-19 pandemic, with only 8 percent of people in “remote-capable” roles working from home in 2019. That number spiked to 70 percent at the outset of the pandemic in May 2020, but the number of full-time remote workers settled to 29 percent in June 2022. Gallup researchers project that the number of full-time remote workers will decrease to about 22 percent in the near future\u2014which will still be three times higher than pre-pandemic levels.<\/p>\n

Hybrid Arrangements<\/p>\n

While the number of full-time remote workers may be leveling out, the opposite is true for hybrid workers \u2013 those who split their work time between the office and a home office. Gallup reports that 32 percent of the remote-capable workforce had a hybrid arrangement in 2019, and that number jumped to 49 percent by June 2022. Looking to the near future, Gallup predicts hybrid workers will make up 55 percent of the remote-capable workforce.<\/p>\n

Work from Home, Collectively<\/p>\n

Combined, that means about 77 percent of the estimated 60 million remote-capable jobs in the U.S. are expected to be performed remotely\u2014at least part of the time. And with the explosion of WFH options comes a commensurate explosion of interest from employers regarding the various compensation aspects of remote work. For one thing, can all employees work from home? If not, you may consider paying onsite employees more for commuting to the worksite. You may also want to consider the overhead costs associated with onsite versus remote work\u2014which will vary among employers.<\/p>\n

Some companies may save on office space and other expenses when employees work from home. However, remote arrangements aren’t always less expensive for employers, since you may have to cover additional costs for employees who work from a home office.<\/p>\n

For example, in California, employees must be reimbursed for reasonable business expenses, which may include cell phones and home internet. Reducing compensation may offset those additional costs. But before you pay employees more for working onsite or less for working remotely, you should consider the laws of your jurisdiction and the impact of your WFH pay policies on employee morale.<\/p>\n

While every business must consider its own unique circumstances, you’ll have to decide if adjusting your remote work or hybrid compensation policies will be an effective strategy for attracting and retaining the kind of talent you want. If so, you’ll need to develop a consistent, effective, and legally compliant pathway.<\/p>\n

Note that if you are a government contractor, you will need to review compensation guidelines from the Office of Federal Contract Compliance Programs (OFCCP).<\/p>\n

Consider Location-Based and Value-Based Compensation Strategies<\/p>\n

One of the more challenging aspects of creating a compensation strategy for remote workers will involve managing geography-based pay differences and expectations. Some of the questions you may want to ask yourself now that your organization has settled into a WFH routine, or will be finalizing a long-term remote work approach, include:<\/p>\n