It’s 2021, Do You Know Where Your Employees Are? Modernizing Pay for the Remote and Hybrid Workforce.
Remote and hybrid work will never go away. How we deal with them will continue to evolve. Do you use a local geographic differential? Do you keep paying home office rates? Should you design a more modern approach that understands that expanding the talent pool across regions should also add to pay equity across those regions? Great questions, but let’s start with something more fundamental.
To properly pay people in this new “movable employee” environment we need to know where they are and how that may drive the total rewards package that works best for them. The unspoken issue is this: Once someone has become untethered from their required office location, it becomes possible for them to move more often and less predictably. Even if your employees never leave the US this movement can create challenges you may have never faced before.
Each state has its own income tax rules, workers' compensation rules, and some now have compensation reporting rules. Most states have some sort of “time in state” requirement for tracking income and tax obligations related to the work performed in that state. Your company may need to set up health insurance or other benefits programs that can operate beyond your traditional “borders”. Since remote and hybrid work is not going away, we all need to navigate very new waters.
More importantly, many individuals care more about their email address than their physical address. How will you know when Sally has spent 2 months at her sister’s house in North Carolina, instead of the Colorado address in your HRIS? How will you track Charlie’s time in California if you never even knew he was there? All of this explodes further if your staff can work from other countries.
Forbes reports that there are over 10 million “digital nomads in the US. Surveys show that their biggest concern is great WIFI. Is a super-speed WIFI connection a benefit you should be offering in lieu of additional pay? Should your company buy a long-term fuel contract and offer “gas cards” as a form of compensation to people living and working from vans and RVs? We do not yet know the answers, but I can guarantee your competitors for talent are already working on new solutions.
The simple act of knowing where people are in today’s working world is a challenge we gave never faced in such a volume. The old school manager looking across their team of cubicles for missing staff is no longer a reality for many companies. If we are ever going to evolve compensation and total rewards into the new world of work we are first going to have to figure out how to keep track of where our employees are. What is your plan?
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or follow him on Twitter at @DanFutureSense.