The rise of remote work has created a paradigm shift for HR professionals and business owners. Not only has the way we recruit, train, and manage productivity and engagement changed, how we compensate our staff is now coming into question.

One of the questions being asked now – both by employees and management – is how will compensation be addressed if an employee lives outside of the organization’s home base? If you have remote workers, will you be setting wages based on their geographic location or the organization’s? For example, if your business is in Milwaukee and during the pandemic you agreed to have an employee move to San Diego and continue working for you, are you going to pay them Wisconsin market wages or California market wages? What if you’re a California employer and your employee moves to Missouri where wages are lower? Do you keep them at the same wage or lower it? Some employees are asking – and some businesses are implementing – increases to employee wages when they come into the office because of commuting costs (gas, wear and tear, public transportation expenses) or as motivation to return to the office.

As you consider your options, think about the risk/rewards of a location-based or internal value compensation philosophy. If you choose to base wages on where the employee is located, gather location market data, consumer price index information, and understand what the payroll and pay laws are in that location (state and local). If you choose to base wages on the value of the work being done, consider whether or not this will impact your recruiting and retention efforts.

No matter what you choose, it’s important that your communication strategy to candidates and staff is clear and transparent. Analyzing how this decision is impacting staffing in 12-18 months is another important aspect of any compensation decision.

Trying to do this on your own can be complicated and stress-inducing. Contact the HR experts at The Employer Group if you need help with your compensation planning.

 

 

This information does not constitute legal advice.