The pandemic has changed everything about how we do our jobs now.
Many people now work from home. These days, many people want to work in hybrid or flexible ways. In the Great Resignation, a lot of people are leaving their jobs. There is a shortage of workers, a gap in skills, and hiring from home. It keeps going.
So, how do we figure out how much to pay people? How do you figure out how much to ask for if you want a new job?
There is a lot of uncertainty about pay because of two different incentives. People who work from home like it so much that they’re willing to cut their pay to do it. They also need less money if they move to an area that isn’t as pricey.
On the other hand, a lack of skills, labour, and the Great Resignation movement are all pushing up salaries and bonuses. Companies are trying to reward their employees.
Many businesses are still in lockdown mode, so it’s not clear how many jobs currently done from home will stay that way. When prices go up, they go up more.
Tech companies like Alphabet, Amazon, Apple, Meta, and Microsoft said they cut to pay for workers who work from home and don’t live in Silicon Valley. The median home price in Palo Alto, in Silicon Valley, is about $3.5 million. Like the real estate website Zillow, other companies say that pay shouldn’t change based on how much it costs to live in a particular area.
There is a good chance that most companies will pay their employees based on how much it costs to live where they work, as it always has. People who work for companies will usually get paid what the labour market can bear. It’ll be easier to hire good employees at lower salaries in areas where living costs are lower, so companies will pay more.
One of the seismic shifts in employee expectations requires a new look at pay. Many people now say that flexible work or working from home is more important than bonuses and other money-related things, like raises and bonuses. Companies are trying out and planning to spend a lot of money on things like workcations, sabbaticals, teamwork trips, and other things.
That gives both the opportunity and the challenge of not having salary differences between office and remote workers but having different non-salary benefits and compensation.
The Complex Compensation Calculus
It’s essential to think about morale when making pay decisions, and part of that thinking needs to consider the morale of employees in the office and people who work from home. People who live in cheaper places might be angry if their colleagues in more expensive places get paid the same.
You want your employees to be happy and not be angry at other employees who have different jobs.
Workers in the IT department, especially those who need to be on-site to do things like provisioning and hardware support and do other important things, are more likely to have to work from home. Many people might be angry at IT workers who work from home if they get the same pay.
It’s also essential to ensure that no one in your company hides pays bias based on gender, race, or age in new policies about hybrid and remote work pay.
Make Sure That You Don’t Forget to Pay Attention to Pay and Policy.
I have talked about the need for a hybrid work policy in the past. There are many things to think about when you think about how different pay affects your status, such as whether you work full-time or part-time from home, where you work, and what other factors do affect pay. Make sure to show your employees how you came up with how much it costs to live where they are Pay Attention. Workers might wonder if they’re getting a bad deal if you say someone lives in a less-expensive area without giving them the numbers to back it up.
It will also help people understand how the company thinks about pay.
It doesn’t matter whether your company follows the official hybrid work policy or not. Even if there are rules about paying employees differently based on their role in the official policy (like HR, hiring managers, supervisors, team leaders, executives, or others), your company needs to make its policy on compensation for clarity and consistency.
Get the people who make the decisions together to figure out what you’re going to do about pay, write it down, and communicate it either to people who work with hiring and pay or to all employees. Above all, do not use ad hoc, uneven, or arbitrary methods to pay your employees.
Everything is different in the new world of work. So, pay attention.