Dive Brief:

• Alternative work arrangements are prompting employers to rethink compensation and benefit strategies, according to the Nov. 19 results of a Willis Towers Watson (WTW) survey. Respondents included 344 companies in North America that employ 4.83 million workers.
• With significantly more employees working from home — and employers expecting those arrangements to last for some time — roughly half of survey respondents said these changes could eventually necessitate a hybrid reward model, which for some organizations may include paying employees based on where they are located.
• Sixty-one percent of respondents said that next year, they'll pay remote workers the same as in-office employees regardless of location; however, more than a quarter (26%) said pay will be based on the location of remote workers for all jobs, WTW said. Two in 10 respondents (18%) said they set pay levels by first determining the market value of an employee's skills and then applying a geographic differential.

Dive Insight:

As employers realized that many employees would be working from home for an extended period, some made permanent adjustments. Employers like Google and Facebook, for example, have indicated that some employees may never return to the office full-time.

But several employers in the tech sector are mulling pay localization. VMware, for example, offered employees the opportunity to telework permanently with a pay cut if they move from Silicon Valley to a less-expensive location, Bloomberg reported; Facebook and Twitter are reportedly considering similar moves.

While it remains to be seen just how common geographic differentials may become, employees have previously expressed a willingness to take a pay cut in exchange for the ability to work remotely. In a 2018 FlexJobs survey, nearly 30% of respondents said they would take a wage cut to telecommute. Similarly, in a 2019 Owl Labs survey, 34% of survey respondents said they would take a pay cut of up to 5% to work remotely; 24% said they'd take a 10% cut and 20% said they've give up even more.