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HR

Report: How remote work is impacting compensation

Posted by Kanika Sinha

December 15, 2021    |     4-minute read (677 words)

Now that remote work has become a part of the modern experience, businesses need to structure their compensation strategies accordingly, as well as accommodate employees’ demands for more flexibility. Employers that don’t accommodate this new reality are likely to continue struggling to retain employees and to attract new talent, a recent Willis Towers Watson report says.

Delve deeper

The global advisory firm’s biannual Salary Budget Planning Survey, published in July, investigated the impact of remote work — which includes working from home, working from anywhere and hybrid setups — on pay, including the actions that employers have taken, are planning or are considering. 

Overall, the survey’s findings suggest that while policies for remote work are in place or under development in many organizations across the world, the pace of change is slower when it comes to compensation strategies. Below is a recap of the survey’s key findings.

Organizations are increasingly adopting remote work policies

Prior to the pandemic, most organizations around the world had no remote work policy, while 24% of U.S. organizations had one. But after March 2020, organizations in many countries where remote working had been uncommon began to introduce remote work policies. In Taiwan, for example, only 15% of businesses pre-pandemic had a remote work policy, but nearly 46% of organizations created one after March 2020, and another further 22% were considering it at the time of the survey.

Geographic pay policies exist mostly in larger markets

A formal policy for geographic pay differentials did not exist in the majority of global businesses before the pandemic. But about one-quarter of organizations in the world’s largest countries, including Canada, China, India, Russia and the UK, had geographic pay policies in place. In the U.S., 51% of organizations had a geographic pay policy. About 10% of the organizations in these countries were considering devising such a policy, the survey found.

Work-from-home expenses are the most common benefit

Among the small percentage of global organizations that have made changes to their benefits programs during the pandemic, most are covering work-from-home expenses such as supplemental computer equipment, internet access and ergonomic chairs or devices.

Transportation allowances decreased in some cases

Some businesses have reduced their allowances for meals and transportation, For instance, 42% of organizations in Brazil and Mexico decreased transportation allowances, followed by 40% in Poland and Russia.

Key considerations for employers

The challenge of attracting and retaining qualified employees is not expected to dissipate any time soon. This suggests that failing to address the impact of remote work on pay and benefits poses a significant risk to employers’ ability to compete for talent. Therefore, it behooves employers to factor in the considerations below.

Make remote work an intrinsic part of compensation strategy

Geographical differences are important to consider in designing remote work arrangements and compensation structures, but employers can also garner helpful input by meeting employees where they are. 

Tap into the employee experience to glean insights on how to most effectively redesign work to accommodate flexibility, which in turn can lead to a significant competitive advantage in the search for talent.

Consider cybersecurity and geographically disparate data rules

With scores of employees now working remotely, employers must rethink their cybersecurity protocols. Businesses now have to deal with a broader challenge — that of maintaining consistency in implementing data privacy, data protection policies and uniform cybersecurity policies on the work setups of employees working from different locations with varying data rules.

Ensure commitment to equity

Employers should weigh the cost, benefits and fairness of any change in pay or rewards due to remote-work arrangements. They should also consider how geographic differentials are applied to ensure equity in the design and delivery of pay programs.

Leverage market data and insights

The survey also found that while there is considerable consistency among global organizations’ remote work policies, there are also striking differences in how they are implemented at the regional and country level. Employers should use vetted, up-to-date market data and insights to devise a compensation strategy with a nod to local market distinctions.

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