A couple of weeks ago, it was reported that Google had developed a location-based pay calculator which could show employees what kind of pay cuts they can expect for choosing to work from home. And Google’s not the only large employer to do so. Tech giant, Facebook, is currently trialling a similar employee pay structure, as is Twitter.
With this topic gaining attention in the news, we wanted to ask: in a world that’s moving towards hybrid working, is it reasonable to cut the pay of staff who choose to work from home?
The results of this poll question weren’t all that surprising. 11% of people who voted, answered ‘Yes’, whilst 98% chose ‘No’. It’s clear that our audience is keen to maintain employee salaries even as they work from home or choose more flexible work patterns.
What are the negatives?
Let’s have a look at why the majority of voters believe that it’s unreasonable to cut the pay of remote workers based on location.
1. Demoralizing and de-incentivising workers
Ultimately, moves like this de-incentivise working from home for employees. There is nothing more motivating than money and paying home-workers less seems like a punishment for doing so, no matter how it’s phrased. In doing this, employees may feel they have no other choice than to go back to the office to avoid the cut in pay. Although, Workplace Insight tells us that up to a third of workers would take a pay cut of up to 5% so they can spend more time at home.
In either case, employees may have to sacrifice something they might not have had to before the pandemic and the choice may weigh on them in the long-term. Flexible and remote working has been shown to boost employee satisfaction, as well as individual productivity. In fact, a survey by Flexjobs found that 80% of employees said they would be more loyal to their employer if they offered flexible working. Who wants to be paid less for doing the same job?
2. Negative effects on diversity
Cutting salaries based on location could be damaging to your diversity goals. In adopting flexible working into your workforce management strategy, you’re improving the diversity of your workforce by expanding your candidate pool. Not only do you have access to MORE talent, but you’re also gaining access to the BEST talent. We think it’s in a companies’ best interest to foster strategies that enhance the diversity of their workforce for many reasons, including increased profitability and productivity.
Disenfranchising home workers with lower pay serves to restrict your talent pool and restricts options for those who find working from home useful in their day-to-day life. This particularly affects women who have the main responsibility for childcare. Enforcing office working places mothers in a sticky situation, whereby they must now find childcare to cover their work hours. Some may decide not to and conclude that the best solution is to leave their job entirely, causing a widening of the gender pay gap which has already seen a significant increase.
3. Working from Home Costs
As pointed out by one of the members of LinkedIn, working from home brings its own financial burden to individuals. They still need to find a space to work, fast internet, electricity and heating… the list could continue. At the moment, remote workers are replacing the cost of commuting to work with these expenses. However, if that portion of income is removed, as is proposed by these new payment structures, workers will not only be earning less but paying more to work from home.
So, why has Google made this decision?
If there are negative side-effects of cutting the pay of remote workers, there must be a goal that companies like Google and Facebook are trying to achieve by implementing these kinds of employee pay structures.
1. Office Productivity and Operations
Chief Executive of Morgan Stanley, James Gorman, has been very clear about his intention to get employees back to the office. He expects them to return to the office, or, if they choose to work from home receive a pay cut. In fact, he recently explained this by saying, “We do our work inside Morgan Stanley offices, and that’s where we teach, that’s where our interns learn, that’s how we develop people.”
Although other brands haven’t been as vocal about the need for employees to return to work, it would suggest that organizations looking to implement pay cuts to remote workers places importance on employees being in the office for operational and productivity purposes.
2. Reluctance to Devote Resources to Remote Working
Nigel Davies, who writes for Forbes about the changing and future workplace, notes the reluctance of businesses to devote resources to kitting out their employees for remote working. He says, “Success boils down to their technology setup, culture and management structure. Some businesses are simply reluctant to devote resources to prepare for sweeping change.” This means that for some organizations there are particular roles that require specific resources which on a wide scale would prove difficult to provide for remote workers in one fell swoop.
3. Unskilled Management
Not to say that Google and Facebook managers specifically are unskilled, but there are plenty of managers who find managing remote workers difficult. Managing partner at Keystone Partners, Elaine Varelas, explains that, in an office, managers often assess contribution by monitoring when you arrive and leave work. With remote working this isn’t possible, and without understanding how to monitor a worker’s contribution without the need for lots of face time and reporting meetings, it is a difficult skill to master. As a result, these companies are less reluctant to offer flexible or remote working to their staff.
How might this effect their workforce?
Studies have revealed that there are many more benefits to remote working in comparison to full-time working in an office setting. Staff retention and recruitment will see the most benefits with remote workers being 13% more likely to be planning to stay in their role for the next five years. These studies also showed that 80% of employees and job seekers are more likely to choose job offers with flexible working than offers without flexible working. This means that larger organizations making these pay cuts to remote workers may find recruiting and retaining employees – in a world that is beginning to embrace hybrid working – very difficult.
With more and more workers looking to embrace flexible working, to balance home and work life, to remain in well paid positions, organizations, such as Google, who choose to cut pay of remote workers do so at their peril. The full-time office lifestyle may have worked before COVID-19, but the long-term lockdowns and working from home restrictions has enlightened workers to the benefits of remote working.
The tone-deafness of employers that fail to recognize the seed change in knowledge worker attitudes to work-life objectivity that our research is exposing may create a long-term stain on brand reputations.
That being said, remote working isn’t for everybody and there are those who welcome the return to the office with open arms. Additionally, employee mental health has suffered greatly, with workers ‘burning out’ and others struggling to ‘switch off’ after a day’s work.
What we know is that a large population of employees—as well as the voters in our recent poll—would prefer to have the choice to work from home, without having to suffer pay cuts to their salaries. It’s clear that some larger organizations would prefer their workers to come to the office and there are some clear business benefits that would make it easier on them. But would they benefit more from enforcing full-time work in the office or allowing employees to choose a work-life balance that suits them? It ultimately comes down to finding the right balance between workforce preferences and business needs.
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