By Ashley Thomalla and Andie Gordman
It’s taken the pandemic to make the remote workplace mainstream, enough so that 67% of companies (according to one survey) expect to make the practice permanent, or at least, long term.
Among the benefits are a broadened talent pool unlimited by geographic constraints. But on the flip side? Compensation. What’s the policy if employees move from a lower-cost region to a higher-cost one?
Employers must recalibrate their philosophies and procedures of their employee compensation plan to align with our evolving reality. That’s especially true with their compensation philosophy. Ill-conceived decisions can hobble the ability to attract, retain and motivate the best employees, today and in the future.
Some important considerations for compensation planning include:
- Revisit your compensation philosophy. This is the “why” behind employee pay, the framework that gives your policies consistency. It’s especially important to look at your pre-pandemic philosophy in light of the changed environment. Look at your program goals and how they should be adjusted. How are job goals determined today? Identify target pay and performance metrics that are relevant for the circumstances. How much weight is put on tenure? These types of issues drive the kind of data you gather to benchmark jobs and set base pay rates.
- Take a 360-degree pay plan review. It’s one thing to review your compensation philosophy and structure from the employer perspective. Are goals met? Is the intent accomplished? But what about employees? Do they understand it? Do they see the plan and underlying pay structures as competitive, fair and, above all, rewarding? External comparisons also are key, so look to benchmark your compensation plan against industry and other market standards.
- Special Considerations in Today’s Environment – Work from Anywhere. In recent months, many organizations have started to view long-term work from home more favorably. Some employees who have adjusted to working from home full-time are now starting to wonder if they can work from anywhere and move to another state. When organizations allow employee to move to a new location, consideration will need to be given to how compensation will be set. Will pay be based on the employee’s new location, the cost of labor or the cost of living there, the employee’s prior location, where the headquarters is located or some combination of these considerations?
- Communicate. This has been a tough year all around for everyone. If your pay plan is going to be different in 2021 than it was this year, you need to give employees as much notice as possible. Are salary structures changing? Are merit increases on or off? If variable forms of compensation are cut, when will they be re-implemented? The better prepared employees are for the possible downside, the less productivity and engagement will suffer and the more you’ll retain commitment and buy-in for the future.
HUB International’s team is available to work with you on a diverse range of HR needs, from risk management and regulatory compliance to benefits strategy, program design and workplace culture.