Payscale: Most employers lack a pay strategy for remote workers

Dive Brief:

Eighty-one percent of organizations told Payscale they don't have a pay strategy that encompasses or is specific to remote employees, according to a report released Sept. 14. Most organizations are split between basing pay on factors such as employer location, employee location or a mixed strategy, and 30% of employers are undecided. The report is based on a field survey of 682 respondents.
Employers in the survey tended to shy away from lowering pay for employees who work from home — 69% said they do not plan to lower pay for remote workers. Similarly, 62% said they won't lower pay for remote workers they hire in the future.
The details of remote pay strategies appeared to be influenced by industry. Tech sector employers leaned toward compensating based on employee location, for example, while consultancies reported plans to pay by employer location or national median. Global organizations more frequently based compensation on employee location, Payscale said. These organizations have many locations to factor in, but they usually have large compensation teams to help make their approach precise, the report said.

Dive Insight:

When employers first sent workers home in the early spring of 2020, there was one question on everyone's minds: Is remote work here to stay? As the pandemic stretched on and workers adapted to the new arrangement, the answer became clear.

Remote work is now an expectation of any job that makes the setup feasible. In fact, workers are saying they won't consider an opportunity that doesn't include flexible work options.

But as employees hunker down to work from home in the long term, employers are left with a couple questions, the most pressing of which concerns compensation. Facebook, which has said vast swaths of its workforce will work from home, will adjust workers' pay based on their location. The company will shrink someone's pay if they move from the San Francisco Bay Area to Kalamazoo, Michigan, for instance.

As Payscale's survey indicated, not all employers will take this path. "There are many appropriate ways to structure compensation strategies to accommodate remote work and increased workplace flexibility, but the right solution is going to be unique to differentiate the organization in the bid for talent," Payscale CHRO Shelly Holt said. "What really matters though is that compensation programs are competitive, consistent, and fair."