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Remote work is here to stay, but where is your compensation strategy?

Future of Work|Talent
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By Hatti Johansson and Mei Nishiwaki | November 15, 2021

In just two years, organizations’ thinking around remote work has changed dramatically. But if their reward strategies don’t keep pace, there will be a bigger price to pay.

Heading into 2022, organizations around the world are experiencing attraction and retention challenges. Compared to 2020, almost three times as many North American organizations are currently having difficulty attracting employees and four times that are having trouble retaining. This has resulted to organizations taking actions across the employee experience to increase workplace flexibility and allowing employees to work remotely.

Remote work (telecommuting, working from home, working from anywhere and hybrid setups) has become an important aspect of an evolved employee experience, and organizations need consider its impact on their rewards strategy.

According to our database of benchmarks on employee opinions, 71% of employees prefer working at home. In a parallel finding, 73% of employers are prioritizing flexible work plans to improve the employee experience (Figure 1). The pandemic has shown that remote work is an effective model that can bring a wide array of benefits to both an organization and its workforce.

71% of employees prefer working at home. 73% of organizations say flexible work is a priority for improving employee
experience in the next three years
Figure 1 – Employer and employee perspectives on remote work

Willis Towers Watson’s latest Salary Budget Planning Survey investigated the impact of remote work on pay, particularly actions that organizations have taken, are planning or considering. While remote work is global in nature, there are noteworthy differences in implementation at the regional and country levels. Therefore, it is critical for your reward strategy to have an appreciation for local market distinctions where necessary. Additional survey highlights:

  • Organizations are adopting remote work policies
    Most organizations around the globe did not have a policy on remote work prior to the pandemic. For example, about one-fifth of organizations in U.S. (24%) and Canada (22%) had a remote work policy. However, only about 15% of organizations in China and Taiwan had a policy before March 2020. After the pandemic hit, organizations in some countries where remote working was less common began to introduce new policies. For example, 46% of organizations in Taiwan created a policy after March 2020, and a further 22% are considering it. However, 30% of organizations in China are not planning or considering a remote work policy.
  • Eligibility to work remotely based mostly on job function
    Our Salary Budget Planning Survey consistently shows that the most common basis for eligibility to work remotely across countries is job function, edging out all employees having access, manager discretion and job level. For example, 40% of organizations in Singapore and Italy base eligibility to work remotely on job function, though almost 30% indicate that all employees would be eligible. This compares to the United States, where a higher percentage of organizations are basing eligibility on job function (45%), 20% for all employees, and 15% manager discretion.
  • Work-from-home expenses are most common benefits
    Although most organizations have or are planning to create a remote work policy, a smaller percentage have made or are planning to make changes to their total rewards program as a result. Among those organizations that have made changes to their rewards programs, most are covering work-from-home expenses, including supplemental computer equipment, home office equipment (e.g., ergonomic chairs, devices) and internet access. In those countries where organizations provided additional benefits, supplemental computer equipment is the most common (be it temporary or permanent).
Temporary supplemental computer equipment is provided by 62% of organizations in India, 50% in Brazil, 52% in Poland
, 46% in France and 37% in the U.S. Permanent supplemental computer equipment is provided by 31% of organizations in India, 43% in Brazil, 36% in Poland, 38% in France and 30% in the U.S.
Figure 2 – Supplemental computer equipment
  • Transportation allowances decreased in some cases
    In some markets, organizations are decreasing allowances for meals and transportation, including cars and car allowances. Our survey found that at 42% of organizations in Brazil and Mexico reduced transportation allowances, followed by Poland and Russia at 40%.
  • Geographic pay policies exist mostly in larger markets
    Prior to the pandemic, most organizations across the globe did not have a policy on geographic pay differentials. Only about a quarter of organizations in the largest countries (e.g., Canada, China, India, Russia, UK) have a policy on geographic pay differentials, with the highest number of organizations (51%) in the United States. Less than 10% of organizations in those countries either created or are considering creating a policy.

Considerations for addressing impact of remote work on pay and rewards

The findings from our Salary Budget Planning Survey suggest that while policies for remote work are in place or under development in many organizations across the globe, the pace of change is slower as it relates to organizations’ compensation strategy. Overlooking the impact of remote work on pay and rewards could pose a significant risk to talent attraction and retention, so it is important to consider these three critical points:

  • Make remote work part of compensation strategy
    Our Employee Experience Stress Test study found that, although remote work poses challenges for company culture and employee wellbeing, it boosts the employee experience. While there are regional or country differences that are important to consider in the new ways of working and rewarding, organizations can get helpful input from meeting employees where they are – involving employees in determining how to integrate flexibility in the where, when, how of their work can lead to a significant competitive advantage for attracting and retaining talent.
  • Ensure commitment to equity/fairness
    As more people work remotely than ever before, employees are empowered by its democratizing effect. Organizations need to consider the cost, benefits and fairness of any pay change related to remote working and how geographic differentials are applied.
  • Consider challenges in attraction and retention
    The increasing availability of remote talent across the globe has created a larger, more diverse talent pool, but this also has invited a larger set of competitors for the same talent. This has several implications on talent attraction and retention, including broader challenges and risks such as consistency in applying data privacy and data protection policies across geographies, and uniform cybersecurity policies on the work setups of remote talent.
  • Get it right by leveraging market data and insights
    Remote work is here to stay. Our Salary Budget Planning Survey shows that while there are globally prevalent approaches to remote work policies, there are noteworthy differences in implementation at the regional and country levels.

As the new normal calls for a new approach to designing work and total rewards, organizations need to get it right, or continue struggling to retain existing employees and attract new talent. Vetted, up-to-date market data and insights will keep employers anchored in organizational strategy and trends, and ensure your business is investing wisely and in line with the latest market practices.

Authors

Global Innovation and Product Development Leader

Director, Global Product Development

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