Distributed Workforce: Compensation Challenges and Approaches
Mary Rizzuti and Diana Neelman of Compensation Resources joined us at our Weekly Webinar to discuss the ever-evolving topic of compensation. Specifically, they focused on the challenges around compensation as well as the different approaches organizations are considering around returning to the workplace.
Types of Workplace Models
- Remote Work: Work within a “reasonable” distance of a company’s location.
- Distributed Workforce: Work that is dispersed geographically over a wide area, whether domestically or internationally. Remote employees can access all company resources, applications, and data within the confines of an agreed upon location.
- Work From Home: Employee’s primary place of work is the company’s office; however, the secondary place of work occurs at a disclosed and agreed upon location. This location is mainly the employee’s home.
- Hybrid Model: This model is trending as we enter the post-COVID world. In this model, employees split time between an agreed upon remote location and onsite at a company location.
Rizzuti explains that the hybrid model brings up questions that need to be answered: How much flexibility should employers give? Should employers impose core hours?
Setting Policy for Remote Work: The Distributed Workforce
When setting policy, Rizzuti explains that employers must differentiate between positions that can be remote versus positions that must be onsite. To do this, employers first need to establish a clear methodology for determining which positions fall into which category. This includes clarity on business needs and delineating the difference in job descriptions and responsibilities. Employers may consider offering a one-time bonus for employees who must work onsite.
If employers are allowing work from home, they should clearly lay out core business hours and decide limitations as to how far away from company headquarters employees will be permitted to live. Employers also should think about what events require in person attendance. On the digital side, organizations should consider a policy regarding email response time, which addresses both the issue of responsiveness and, potentially, an issue of overtime, as nonexempt employees should not be writing and responding to emails beyond their normal work hours. For Zoom meetings, employers should decide and communicate with employees whether cameras on will be a requirement. And employers should decide whether they can and should attempt to track productivity in a virtual environment. These are all important considerations when creating policy around the hybrid work model.
Recruiting is challenging right now, and many employers have been casting a wider net for talent during the pandemic. However, there are challenges that come with a distributed workforce. For example, employers must comply with the labor and employment laws of the states in which their employees are working, and those laws can differ significantly from state to state. In terms of onboarding and training, Rizzuti explains that it is too soon to fully evaluate the impact of in-person training and onboarding on developing policy.
According to Rizzuti, the pandemic has impacted compensation in many ways. For one, worker compensation has been systemically low. Because of this, we are seeing a tight labor market and push to increase wages. However, in highly skilled industries, employers lack qualified workers, and some smaller businesses are struggling to absorb the higher wages that bigger companies can afford.
Rizzuti explains that employers should determine a payment model for hybrid work. To do this, employers need to ask: How will pay be dictated? On a base level? National baseline? Based on employee location?
General Trends in Compensation
Hybrid Model Trends:
- Employees working in the office starting September
- Establishment of core in-office days
- Implementation of the “hoteling” concept to reduce office space
- Requirement of employees to attend in-person meetings
- Recruitment of employees from other areas
- Pay at the headquarter’s location rate
- Establishment of pay zones or regions
- Implementation of market adjustments and merit increases
- Focus on internal equity
- Career-Pathing and levelling
- Approaches to variable pay
Variable Pay Trends:
- Commission plans converted to bonus pays
- Commission plans being consolidated and harmonized
- Succession planning
If you have questions about anything discussed above, please call or email the MEA hotline.