Navigating Employee Compensation in a Remote Work Era: Key Considerations for Leaders

Now that remote working appears to be here to stay, what does this mean for employee compensation? Do the same salary and benefit formulas apply for people who work at a central office as they do for those who work from home—especially if those homes are in distant cities—or even states?

In this new reality, organizational leaders must:

Determine how to maximize productivity while maintaining and growing their company culture, promoting real connections between people even when those individuals may rarely, if ever, come into physical proximity.

Create a policy that clearly defines what roles can be performed remotely.

Determine what locations must pay geographic differentials. For example, if an employee chooses to move from a high-cost-of-living area to a lower-cost-of-living-area, I don’t recommend reducing their pay. However, when annual merit increases are awarded, the cost-of-living in the employee’s area can be considered.

When hiring in a new region, consider the cost of labor in the area where the new employee resides. Many organizations use differentials to adjust salaries, especially tech companies.

Note: I do not recommend considering geographic differentials when working with “hot talent” sets and jobs with salaries above $150,000. In these cases, we’re not talking about commoditized skills, but rather the education, experience, and availability of an individual candidate. Also, I recommend ensuring pay equity remain part of the mix when setting pay levels for remote workers. (Companies must be intentional about not creating discriminatory or inequitable pay practices in different locations where employees reside.)

If you require a compensation policy reflecting today’s remote-working economy, we can help. My team and I are compensation and corporate culture specialists. You can contact me at laura@conoverconsulting.com.