May 13, 2021
Working Remote: Most Companies Keep Comp “As Is” for Employees Moving to Lower-Cost Areas
– Lynn Jokela
As comp committees are often tasked with human capital management oversight, for some this oversight can include matters relating to remote work arrangements and return to office plans. Pearl Meyer recently released results from a “Work from Home Policies and Practices Survey” including data points on, among other things, who’s working from home by employee level (including executives), how companies that shifted to remote work view their success, and future plans for office space.
This excerpt from a press release about the survey, discusses how companies are planning to handle compensation of employees that opt to work remotely from lower-cost geographic areas:
Bill Dixon, managing director at Pearl Meyer notes how some questioned whether companies would change geographic-based salary structures as a result of the shift to remote work. He said even with ‘some worker migration from high cost-of-living states to lower-cost markets, it appears that the number of companies considering changes to an individual’s salary as a result is fairly small.’
One third of survey respondents currently apply “geographic differentials” to their salary structure and of those, 20% are considering modifications to their current approach. When asked outright about reducing an individual’s cash compensation if they move to a lower-cost geographic area and work from home, just 4.3% said they would do so, while 56.5% said they would not, and the balance were uncertain or would decide on a case-by-case basis. Dixon said, ‘at this juncture, when companies are allowing—or encouraging—remote work and it is going well, it appears there is some hesitancy to disrupt the talent pool.’