Comp & Ben Talks is dedicated to people who are interested in Compensation and Benefits, HR topics, and challenges in those areas; to people who wish to understand what IT could offer in that regard.
We are back with a new episode of Comp&Ben Talks!
In this episode, we would like to touch: ➡️ Work from home vs work from anywhere - inspired by Total Rewards Conference and Exhibition held by World at Work org. ➡️ How does it affect Comp & Ben? ➡️ What is remote work? ➡️ Challenges related to working from home
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Bartek Podolski: Hi Magda!
Magdalena Tur: Hello!
Bartek Podolski: It is good to see you in the Comp & Ben talks. It is already the fifth episode. And today we are going to talk about remote work. We will consider working not only from home but also from various locations and how it affects the Comp & Ben. We will also discuss about what the Compensation and Benefits departments should or could do in such situations. But before we start I just wanted to ask you a question about your last days. How are you doing? I assume you might be quite busy as the Comp & Ben consultant at the beginning of the year. So how do you feel lately?
Magdalena Tur: Yes, right now I can very-well imagine the feelings of everyone involved in the Comp & Ben work. Indeed, at the beginning of the year there are salary reviews, bonuses payout, and a set up of the key performance indicators for the next year. So it is a crazy and busy time for everyone who works in the Comp & Ben department.
Bartek Podolski: Thank you for finding time for me and our audience.
Magdalena Tur: It is a pleasure! Thank you for having me here. I always enjoy our talks.
Bartek Podolski: For the topic of this episode I was inspired by an article published in Works that work after the conference organized last year, One of the main topics was the aspect of working from home and its influence on companies. Especially one issue from this conference, which is not very obvious, captured my attention. There was a statement saying that people misinterpretate two terms: “working from home” and “working from anywhere”. I will explain it a little bit because it might be confusing. A couple of years ago everyone was working from the office and working from home was a benefit. Then, everybody had to switch to remote work. As an employer, I would assume that people work actually from home when they are saying: “I work from home”. But for employees, it does not mean the same. They understand it as they can work from anywhere, meaning they can move to any location. Sometimes they go on holiday and work from there from time to time. I suppose there is a misalignment. I also guess that companies do not know what to do with it… What do you think about it?
Magdalena Tur: I think it is a complex issue. It is complicated due to regulations and some legal aspects. Indeed it is one of the problems in HR. The second issue is related to Comp & Ben, as it is hard to define the salary range when the work is being done in different cities. It is also associated with soft elements such as team spirit, daily tasks engagement, motivation, and so on. Indeed, there are a lot of aspects that need to be considered. However, I think that the new model of work will be something in between. Most probably it will be a hybrid model that will combine good behaviors from the old, all-the-time in the office model, which will never get back, and experiences from the fully remote times. In most of the companies, I observe such a trend.
Bartek Podolski: I read one of the recent survey findings from the Gallup Institute - one of the famous institutes focused on unlocking the full potential of people and organizations through personality tests and talent exercises. They claim that the hybrid model of work will persist. According to their data, only 30% of people want to work only from home, whereas 10% of employees want to work only from the office. The other 60% of people prefer the hybrid solution. Speaking from the experience, have you ever encountered some issues regarding the employees' dishonesty? I am wondering if you have ever had of a situation when somebody told you that he or she is working from home but in reality, they traveled or lived in another city and companies had troubles because of it. Have you worked with companies that were thinking about how to adjust to such situations?
Magdalena Tur: I think that in Poland I have never encountered such a situation but I heard about it in mature markets such as the United States, where locations mean a lot in terms of living costs. It happens. And companies are dealing with these situations. For example, Google adjusted salaries to the location and place where an employee lives. Companies may not only adjust the salary to the location but also cut down the remuneration for people who work fully remotely. As far as I know, Google wants to have people in the company at least in the hybrid model; therefore, they try to motivate them for coming back to the office by offering higher salaries for those who are available in the office.
Bartek Podolski: So Google took two different approaches: they either cut the costs and employees’ salaries or reward workers who show up in the office. However, I feel that the first solution is very unlikely to happen…
Magdalena Tur: Yes, it is very hard to imagine. And it is a risky approach.
Bartek Podolski: Sounds like Google made a bold move. Their second solution is based on paying more when people go to the office… This is also a surprising perspective. It is quite interesting that from the employee's point of view going to the office is more beneficial.
Magdalena Tur: Probably the most comfortable situation for the employee is to work from home all the time. But taking into consideration the team spirit, motivation, and some kind of control, managers want to have people in the office. This is one of the reasons for giving extra money to employees who can visit the office from time to time.
Bartek Podolski: In one of the podcasts that I was listening to, and from my personal experience, I can say that remote work may function pretty well but with people that you already know. It is an easy model of collaboration with people who already have an experience of working together. Building relations via Zoom, MS Teams, or any other online platform is really hard. Using these tools you are not able to feel the person that is on the other side.
Magdalena Tur: I agree with you. I heard about the online onboarding programs. However, I suppose it was rather a necessity caused by COVID-19 than the best-chosen practice available on the market.
Bartek Podolski: If you could share your perspective with us, what are the biggest challenges related to working not only from home but from other locations. As we already discussed, people may change their locations from time to time. What is more, some of them may become digital nomads. I suppose you are familiar with this term which is describing people who are changing locations constantly and work from all over the world, right? So, tell us, how Comp & Ben can adjust to current trends in terms of remote work.
Magdalena Tur: First of all, I think that the type of contract between employee and employer is important. For example, people on the employment contract have a specific location from where they can work written down. Most of the time, a company offers a certain standard of living for certain work. Earned money should enable an employee some level of life with a possibility to use goods and services available in the place of living. If an employee changes a place of living, the cost of living may increase or decrease; however, Comp & Ben’s role is to adjust the salary, so that an employee is sure that his or her salary still enables the same level of living. This is one of the reasons why salary is different and is related to the location. It happens also in Poland, especially for people who need to live close to the office which is located in a bigger city.
Bartek Podolski: Let’s think about an example. Imagine that there is a company with a certain pay scale where employees are paid the agreed amount but then they either start working remotely or change their place of living. Do you think it is possible to cut somebody’s salary but as a result they will not leave the company? One of the current trends is to offer a possibility of remote work as one of the benefits. It can change; however, right now it might be very difficult to explain to people why their compensation is lower than agreed at the very beginning just because they do not work from the office. I can't imagine such a situation and, in my opinion, it will not happen.
Magdalena Tur: Google already did that. As we said, it was a bold move, but it might be something that begins some kind of a trend. Indeed, cutting down the salaries will not be a regular practice on the market, but it will happen. We know that salaries differ even in factories located either in a bigger city or a small town. It is quite understandable, especially if an employer can explain it by referring to the budget and overall costs. Here I just have to mention that budget is a vital part of the Comp & Ben management; therefore, it might be a strong argument. What is more, the budget is very often adjusted by location; therefore, salaries cannot be the same everywhere. A little bit different story is in the IT sector, where people can work remotely. For programmers, it is a way of living…
Bartek Podolski: Indeed, the IT sector is specific.
Magdalena Tur: Exactly! So I can imagine that for IT specialists different rules are created. On the other hand, while doing salary reviews, very quickly you will notice if the remuneration is in line with the employee’s location. You may not cut the salaries down, but you will notice who is working from San Francisco or New York City, and soon they might ask for a pay raise because the cost of living in those cities is high.
Bartek Podolski: It all makes sanses. What is more, it is possible to explain to other employees. Probably when the salary is negotiated, the decision of an employee whether he or she wants to work fully remotely (and from where) will be taken into account by employers. For sure, it will affect the compensation.
Magdalena Tur: Additionally, I think that remote work is still be treated as a benefit, one of the non-financial advantages of the company. It is seen as something extra that employees may get while working with this particular employer.
Bartek Podolski: On the other hand, it is something that employees expect. Companies may be divided into two groups: those who offer either a fully remote work or a hybrid form and those who do not offer the remote mode at all. As you said, it is just one of the benefits (just like additional insurance or card for sports activities) and not every company has to offer it.
Magdalena Tur: Yes, it will be rather a benefit than something that determines your salary. To sum up, probably the pay scale will not change, but salaries still will be adjusted to the location. I have doubts regarding cutting salaries for fully-remote workers, but still, we have an example of such action - Google just did it!
Bartek Podolski: Well, they did it smartly. As far as I know, they prepared a tool for the employees enabling them easy calculation of how much they will be paid if they change the location. I guess the adaptation of people to the policy change was done very cleverly. Now, people have a better understanding of the company’s remuneration approach. When employees know the rules based on which they signed up for work, they accept them easily.
Magdalena Tur: Exactly. At the end of the day, it is your decision, right?
Bartek Podolski: And this is the reason why I think it was smart. Showing people upfront consequences of their decision, enabled employees to choose the best option for them.
Magdalena Tur: Indeed, the most important is to let employees decide. While the consequences occur because of your decision, it is easier for you to accept them, right? Yes, Google implemented it in a very good way.
Bartek Podolski: Another challenge for Comp & Ben in regards with working from home is the expectation of refunding bills for electricity, heating system, or internet. Employees may ask for extra money for everything they use to perform work. Have you encountered such situations?
Magdalena Tur: Yes, it happens. I think the easiest solution is to agree on the general terms because it is not possible to calculate a fraction of electricity used only for work for every month for each employee. The problem of regulations is worth mentioning at this point. No one knows how to treat working from home. No one considered the health and safety issues… All of it is outside of Comp & Ben, but it is within HR and it needs to be taken into account while creating a model of remote work.
Bartek Podolski: There is one more challenge related to the work from different locations that comes to my mind. Undoubtedly, there are plenty of companies that have headquarters in the West and hire people on the salary from a certain country. For example, a company from the UK hires somebody who is living in London and pays him or her a salary agreed on the London location. Then an employee moves to Poland, where the company has one of its branches. An employee still performs the same work and stays on the London salary. People who work for the same company but are hired by the Polish affiliate might raise questions about the differentiation in salaries for those who are working from the same location. I believe it is also quite a big challenge for Comp & Ben department to explain such a situation, right? What are your thoughts regarding such a situation?
Magdalena Tur: We already talked about a similar situation but not from the global perspective. I already mentioned the situation when a company has two workplaces in one country, the salary may differ between locations. Everyone knows that cost of living is different for example in Warsaw and in a small town in Małopolska voivodeship. It is the same situation, but between two countries. There are more expensive countries, like the UK, and less expensive countries, like Poland. In your case, the hardest job for a company is to preserve a certain standard of living for the employee that is doing a particular job. If you are for example a developer, you should be able to have a car and buy other goods. Salary for basic needs should be provided by the company. If it is different, there is no point in creating a new facility in another country. Creating a branch in another country means that you have to face time differences, cultural diversity, etc. If you pay the same salary everywhere, the cost of your company operations increases instead of going down.
Bartek Podolski: I agree 100% with you here. If you want to have a salary equality policy, there is no point in opening an affiliate in another country where the labor costs are lower. On the other hand, being a global company gives access to more talented people. It may become a way to build a competitive advantage in the market. Anyways, thinking about salaries based on employees’ location takes more time than it was even 3 years ago, right?
Magdalena Tur: Indeed, we have to think about it more but it is not a new concept. People have always been migrated for work. Maybe in the past, most of the companies had small departments that were dealing with remunerations in different locations. Now, when mobility increased, HR departments have more work to do and they need to figure out the best ways to adjust the cost of living and the salary. Especially because they need to take into consideration tax issues and other legal regulations. It is out of the scope of Comp & Ben, but definitely, this department should work closely with those who are dealing with mobility and creating a well-balanced package for employees.
Bartek Podolski: In the past, we had expatriates who were registered officially. Now we have expatriates who are just moving from one country to another and you do not even know about it. As borders are pretty much opened, people are changing locations easily and an employer does not always know from where the job is being done. It all wraps up to the same question: should people be paid more when they go to the office? If they work in the office, most of the issues regarding the location are fixed. On the other hand, I do not know if it is possible. In the past, offices were crowded and now there are only a few people in the open space. And it is a normal situation right now. Right now I cannot even imagine 50 people in the office on the same day… So I guess there are (and will be) plenty of challenges in Comp & Ben regarding the remote work soon.
Magdalena Tur: Remote work has a lot of advantages, like not wasting time in traffic jams while traveling to work…
Bartek Podolski: I like being in the office because getting here is faster than in the past. Streets are empty these days. And there are some other advantages of such a situation, but it is a topic for another conversation… Magda, is there anything else we should talk about regarding the challenges of remote work?
Magdalena Tur: It is a broad subject and everything is changing so fast. I believe we could talk about it for many hours. But for such a discussion I would also invite a mobility expert, who could share an experience with us. For now, I think we covered the main topics.
Bartek Podolski: Ok, I understand. Thank you for this talk and for meeting you again. I know you are very busy lately, so thank you for your precious time.
Magdalena Tur: Thank you!
Bartek Podolski: I wish everyone in Comp & Ben a good time. Magda, thank you one more time, and see you in the next episode!