Employees want to maintain the option to work remotely post-pandemic and will not tolerate being compensated less for remote work, according to new survey data from Salary.com.
The Remote Work & Compensation Pulse Survey of employees and employers, conducted in May 2021, found 48 percent of employees want to work fully remote and 44 percent want a hybrid work model. The hybrid work model has support among 51 percent of employers surveyed, though there is a big divide when it comes to fully remote work, with only 5 percent of employers saying that will be an option.
Another red flag: 92 percent of employers have no formal practice in place for determining pay for partially remote employees; 72 percent have no formal practice in place for determining pay for fully remote employees.
When asked if they would hire a fully remote employee in a different geographic market at the same rate as an on-site employee, 34 percent of employers said “No.”
While generally there has been speculation that employers would decrease pay for fully remote employees going forward, the Salary.com data shows otherwise. An overwhelming majority (95 percent) of employers said they would not lower compensation for employees who continue, or transition to, working remotely. This is a critical point, given that 83 percent of employees said they would leave their job if compensated less for working remotely. A vast majority of employees (94 percent) believe they should be compensated based on their skill set, not their location.
The same strategy applies to partially remote employees, with 97 percent of employers indicating they will not lower an employee’s compensation if they continue, or transition to, working partially remote. For those that would adjust compensation, 21 percent would adjust salary with employee contribution, geographic location, and concerns about culture as contributing factors.
“Remote work translates into a more fluid, and potentially volatile, market for how employees move from company to company,” said David Cross, senior compensation consultant for Salary.com. “This double-edged sword not only means that there’s a broader selection of talent from which to hire, but that there is also an increased retention risk to the current workforce. Employers recognize that rewards need to not only reflect and attract these skills into the business, but to retain those skills of their existing employees.”
The compensation strategy appears to shift for new hires. When asked if they would hire a fully remote employee in a different geographic market at the same rate as an on-site employee, 34 percent of employers said No.
For their pay decisions they would take into account:
- Geographic differentials (58 percent)
- External competitiveness (67 percent)
- Cost of living (43 percent)
“One-quarter of employers indicated they will take different considerations into account when determining fully remote pay for new hires, which could create a subtle class divide between new hires and existing employees,” said Cross. “This move could have significant consequences on employee culture and retention.”