Insights

The democratization of remote work and its potential impacts on total compensation

Overview
Published on: September 28, 2020
Subjects:  Total compensation

Months have passed since the early days of lockdown, and the question remains: What will be the legacy of the massive shift to remote work caused by the pandemic? As of writing, the answer is still unclear, but it seems reasonable to posit that employees will want to maintain a certain degree of flexibility. Assuming that employers accommodate their employees’ wishes and maintain this flexibility, how might this impact total compensation?

Potential impact on direct compensation

For many employees, remote work is still a benefit, but not all staff members can enjoy it. How, then, do you make sure your employees are compensated fairly? Is it possible, or acceptable, to revise salaries based on whether employees can work from home?

In addition, the definition of “flexibility” varies from organization to organization. Assuming the salaries were equal, would a majority-remote position be more attractive than an in-office position? What will be the true value of remote work?

For certain sectors, this shift toward remote work may also change how recruitment work, as the absence of geographic restrictions allows them to draw from a much wider pool of candidates. When the pandemic subsides, will more people prefer to work from a region where the cost of living is lower? Will they be willing to accept lower-paying jobs that allow them to work from anywhere in the world?

Impact on employee benefits

The impact of mental health problems is a major employer concern, one that has only deepened since the emergence of the pandemic. Once the situation stabilizes, how can companies properly address the mental health of their remote employees? What programs will best meet their needs? Will mental health and work-life balance benefits take on greater importance, and will new services emerge?

Impact on other benefits

In response to the labour shortage of recent years, organizations have invested in more diversified benefits packages to attract and retain employees, foster a sense of belonging and cultivate a company culture. Often, these benefits take the form of on-site services, activities and infrastructure: social activities, subsidized cafeterias, on-site gyms, subsidized transit passes, etc. In a post-pandemic world, these benefits may lose some of their luster. What will employees value going forward? For example, organizations might consider setting aside a fund to cover a portion of office equipment or telecommunications costs for their remote workers. Employee needs will evolve, and organizations will need to be creative to stand out.

And what about recognition programs that normally require a physical presence, from welcoming new employees to celebrating milestones and important events? How do you maintain the same level of engagement and sense of belonging when your employees aren’t in the same room? Organizations will need to put in the effort to organize activities that will help maintain social cohesion in the company.

All of these are question that organizations must consider. The pandemic has certainly helped broaden access to remote work, but it has also exposed some of the shortcomings of this way of working. We can sense a certain level of enthusiasm, even among managers, for remote work, but we may be underestimating certain blind spots, such as the creative energy generated by a team physically working together for months.

Based on our observations, businesses are exercising a great deal of caution as they navigate this transition. Yet, the dilemma remains the same: how to stay relevant on the job market while avoiding setting precedents that may prove difficult to maintain down the line. Despite the upheaval organizations are experiencing, the basics of designing a compensation strategy have not changed. There is no one-size-fits-all solution, and the best compensation strategy is one that is aligned with the organization’s objectives. It must be fair, consistent, and most importantly, clearly communicated.

Is your organization undergoing a transformation?

Don’t wait to update your compensation programs. Contact our experts to discuss any issues or challenges you might face. They can help you develop creative communication and compensation management strategies for navigating through exceptional circumstances.

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