Should geography change salary? And other questions for remote working post-pandemic

In 2019, just 30% of UK employees worked from home. But that was pre-pandemic, pre-lockdown, pre-remote working. Today, as we cautiously move towards opening up again, expectations in the workplace are very different.

COVID-19 launched the world into a mass homeworking experiment, triggering a change in lifestyles and employee expectations. The upshot is that now over four-fifths (88%) of people want to continue working from home on at least a part-time basis after the pandemic, 60% want to work remotely at least three days a week, and 17% don’t want to return to the office, ever.

With the pressure for flexible working on, more businesses are reviewing their stance on flexibility, with many making permanent changes to home working policies. But how will this shift affect talent acquisition?

Should companies pay less for remote workers?

Firstly, people should be paid for the skills, experience, and potential they bring to the role. But should there be a difference in pay for remote?

On the one hand, remote working is already a cost-saving measure. According to recent research, workers could save on average over £2,200 a year if companies adopted a Work Near Home model, meanwhile companies could save upwards of 23%. And for businesses that go totally remote, the savings are even more substantial. This means that for both employees and businesses, remote saves money – penalising remote workers by cutting pay packages might actually cost the business more as it becomes harder to attract and retain talent.

On the other hand, talent attraction for in-office roles is about to get harder. The talent pool that is happy to work five days a week in the office is likely to shrink post-pandemic and many organisations may need to find ways to incentivise workers that need to be in the office. This might result in pay disparity between remote and in-office working – but it will be the result of pay rises as opposed to pay cuts.

Would people trade in their salary for more flexibility?

Research by Owl Labs found that just under half (45%) of employees would be open to taking a pay cut to continue working remotely long-term – but a similar proportion (46%) said they would leave if their employer chose to slash their pay as a cost-cutting measure, and 41% would resign if forced to return to the office. 

This highlights the fragility and the complexity of the new working world. For employers that want to revert to old ways of working, or that want to take advantage of new ways of working, the route to talent acquisition is precarious. 

However, what the market does present is flexibility. Owl Labs also found that two-fifths (43%) of workers would consider relocating for remote work, while 37% would be willing to commute an extra 39 miles. Meanwhile, for a third of tech professionals (38%), the pandemic has increased their appetite to live further away from the office – with over a quarter (25.44%) willing to work ‘significantly’ further from their home in the future.  

In fact, the proportion of people that would be willing to compromise on pay, location or flexibility is similar to the proportion that wouldn’t. This suggests that rather than taking blanket policies, companies need to understand individual expectations, needs and opportunities.

Should location pay weighting change?

We are now at a crossroads where the majority of people can, and would prefer to, work from any location. This raises questions about location pay weighting, the prioritisation of location over skillsets and skills clusters. 

Take London as an example. London has been a magnet for technology talent for decades, drawing in businesses, driving up competition, and raising salaries. But would this inflation still exist if the same talent could be found elsewhere? 

That really depends on cost of living and availability of talent. The pandemic is expected to trigger a worker migration from the Capital. According to research, one in seven (14%) Londoners plan to leave the city as a result of COVID-19, causing the first decline in the London population in over 30 years. Talent has been steadily flowing into other tech hubs – such as Cambridge, Leeds, and Manchester – for a number of years now, and as more Londoners migrate outwards, London’s (expensive) position as the centre of tech talent may fade. 

If this happens, demand for London-based talent may drop. And so would pay weighting. However, it’s important to say that London is still a major international hub for technology. Pay should be linked to skill level and availability of talent – and for as long as London is a nexus for tech talent, the demand, and the higher salaries, will follow.

The presenteeism problem

Setting parameters is the easy part, but how do you ensure fairness at a distance? Some interesting statistics have surfaced recently suggesting who is most likely to revert back to the 9-5 post-lockdown. 

Research from Hassell suggests that men, managers and older employees are the most likely to return to the office. The gender divide in the return to work has also been called out by Gartner, as they flag the potential impact to the gender pay gap. Meanwhile, research from Oracle shows that the C-suite have had the hardest time adapting to remote working - with 85% reporting significant remote work challenges including collaborating with team at a distance (39%), managing more stress and anxiety (35%) and lack of workplace culture (34%). This might signal a return to the office for senior leaders and C-suite.

Even though flexible working has been embraced during the pandemic, the return to work could shift the balance when it comes to recognition at work, especially as 64% of managers believe office workers are stronger performers than remote workers and are consequently more likely to deserve a higher raise.  

If presenteeism returns, alongside more flexible working, it is entirely possible that some of the biases that businesses have spent years trying to strip out could return – understanding this will be key for remote working policy.

Conclusion

How we attract, retain, and manage a remote workforce is still a set-up that many of us are finding our feet with. Inevitably, there will be mistakes. However, the pandemic has taught us that we all respond to situations differently. The workforce of the future is likely to be more nuanced, more flexible, and more open to change. HR needs to get a handle on the expectations and the needs of its people as soon as possible, in order to factor these differences into its return to work strategy. We’re all in different boats in the same storm, and that doesn’t change after COVID-19.