Hybrid & Remote Work Compensation Considerations

The Changing Landscape

Remote & Hybrid Work Arrangements

The past couple of years have presented unprecedented changes to the workplace. At the forefront are remote and hybrid work arrangements. Employers are now facing many questions regarding the impact of compensation and in most cases as a reaction to the current climate rather than a planned strategy.

Remote Work vs. Hybrid Work Environment

Remote work occurs when an employee’s workspace is outside of the office. This workspace could be in the employee’s home, a coworking workplace, or some other location. A hybrid work environment is a combination of assigned work time in the office (brick & mortar building) and remote work.

Compensation Considerations for Remote Work / Hybrid Work

Compensation for remote workers has created discussions, webinars, and forums with varying opinions. In most cases, the decision to adjust base pay for remote workers relies on the company’s overall compensation philosophy. Some questions to consider include the following:

• How many geographic work locations do we have?
• Do we want to differentiate pay based on work location?
• If so, how do we determine this differentiation?
• Is a pay adjustment warranted if the remote employee is performing the same work as in the office?
• Do we allow employees to relocate if they want to live in another city or state?
• What are the implications to the company if we allow employees to work in other locations?
• How does this affect our ability to attract and retain employees?

Scenarios and Possible Outcomes

• Reducing pay for employees who work remotely:
  • Consider internal equity when making these decisions
  • The competitive landscape has increased remote work locations and the potential for employees to look elsewhere for a remote workplace
  • Work-from-home employees may be more productive since there is far less “water cooler” talk, etc.
  • The potential morale hit, especially for current incumbents, could be huge
  • Reducing pay may result in turnover, which is costly to the organization
  • Although the employee may be saving in transportation costs and time, it may not be “convenient” to work from home, i.e., need to create designated office space, supplies, and office equipment
  • The company may have savings from reduced overhead expenses
• Pay based on location:
  • Will this apply to all positions?
  • Determine what valid survey sources will be used to determine an accurate geographic differential
  • Determine how often will you review and/or adjust pay differentials
  • Will geographic differential be set up per location, or in tiers, such as high market, national market, low market?
• Allow employees to relocate:
  • The company may have to establish an entity in the new state / local jurisdictions
  • Additional state / local tax implications and liability
  • HR laws will most likely differ between states / local jurisdictions
  • Minimum wages may vary by state / local jurisdictions

Taking the time to review and carefully evaluate options for remote or hybrid work options is critical in terms of recruiting and retaining talent.

To learn more about how Compease can help your credit union, reach out to CUSG at info@CUSG.com.