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The Ongoing Debate on Remote Work Compensation

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What is my worth? That’s probably one question that crosses our minds every few days when we are negotiating for better pay, when we are doing a task that forces us to go out of our comfort zone, and probably every time we spend our non-office hours over a task that’s nearing a deadline. Why is it so complicated? The simple answer is ‘the variables are just too many’, including:

 

  • Industry and company size: The size and type of the company, as well as the industry in which it operates, can have a significant impact on salaries.
  • Job responsibilities: The level of responsibility and the duties involved in a job will also impact the salary offered.
  • Education and experience: The level of education and experience required for a job, as well as the years of experience an individual has, will also play a role in determining salary.
  • Location: Geographical location can also have an impact on salaries, with higher salaries often found in urban areas compared to rural areas.
  • Supply and demand: The number of people available to perform a job, relative to the number of job openings, can also influence salary levels.
  • Market trends: It is also important to consider market trends and industry standards when determining salary for a job. This information can often be found through industry associations, government reports, and online resources.

 

This is further complicated by the increasing popularity of remote work. According to Buffer, 97% of people recommend remote work to others. This means that despite the economic uncertainty, and businesses wanting to get employees back to office, a large percentage of the working population would prefer working remotely or in hybrid environments and probably even switch jobs if forced to work otherwise. 

 

If The Great Resignation has taught us anything, it’s the fact that there is a fundamental shift on how we perceive work. Previously, our personal priorities were hugely influenced by how we work. But now, our work adapts to our personal life. Employees find time to work the requisite hours around their personal lives including going for that jog, dropping kids to school, meeting friends for lunch, etc. So now the question is, should the employees retain their compensation as before, or should that be calculated differently. 

 

The impact of remote and hybrid work on employee compensation can vary depending on the company and industry. Here are a few possible ways remote and hybrid work could affect compensation:

 

 

  1. Cost of living adjustments: Some companies offer cost of living adjustments to remote employees to account for differences in the cost of living between their home location and the location of the company headquarters.
  2.   Flexibility premium: Some companies may offer higher salaries or bonuses to employees who are willing to work remotely or on a hybrid schedule, as it can offer greater flexibility for both the employee and the company.
  3.   Reduction in benefits: In some cases, companies may reduce certain benefits, such as healthcare or transportation allowances, for remote employees.
  4.   No change in compensation: Some companies may not adjust compensation for remote or hybrid employees, viewing the arrangement as a change in the way work is performed rather than a change in the value of the work itself.

 

Overall, the impact of remote and hybrid work on employee compensation will depend on a variety of factors, including company policies, industry norms, and individual negotiations with employers. However, we have already seen massive cost cutting efforts in real estate involving large organisations like Meta and Microsoft, according to Seattle Times. This is just a preview of how organisations are preparing for the future shifts in work practices. 

 

Remote work cultures will evolve over time but it’s going to be panacea to work-life harmony instead of the work-life balance that organisations have been preaching for far too long. Employees now better understand the value of their time, how they prefer to spend it one day at a time than ever before. At the least remote work should lead to less clogged streets during office hour traffic. At the most, we could come to a lifestyle where work defines the very purpose of an employee’s life and defines who they are. There is however, a long journey ahead before organisations can fully prepare and execute a proper remote work environment. 

 

 

This is because working remotely can present several organizational challenges for companies, including:

 

  1.   Communication difficulties: Maintaining clear and consistent communication can be more difficult when employees are working remotely.
  2.   Collaboration and teamwork challenges: Remote work can make it harder for employees to collaborate and work together effectively, which can impact productivity and the quality of work.
  3.   Difficulty in managing remote employees: Managing remote employees can be more challenging, as it can be harder to monitor their work and ensure they are meeting performance expectations.
  4.   Lack of face-to-face interaction: Remote work can result in a lack of face-to-face interaction, which can lead to feelings of isolation and disconnection among employees.
  5.   Technology issues: Technical issues can arise when working remotely, such as problems with internet connectivity, software, or hardware.
  6.   Difficulty in maintaining work-life balance: Remote work can blur the boundaries between work and personal life, making it more difficult for employees to maintain a healthy work-life balance.

 

 

To address these challenges, companies may need to implement new management and communication strategies, invest in technology and tools to support remote work, and provide training and support for remote employees. There’s no magic bullet here. A lot of this will evolve over time, but one thing is certain – remote work is here to stay. 

 

Challenges with Remote work

 

Remote work brings with it some new challenges that are easier to do given there is no continuous monitoring of employees remotely. There’s always the question of the nature of tasks accomplished on a day-to-day basis, and how much time they require, which will vary from individual to individual. If the employee is adept at something, he may need a fraction of the time to complete the tasks than a novice or someone new to a job. 

 

Then there is the component of collaboration that could hugely impact a project completion. Collaboration is very hard in remote environments. What employers can do is have a hybrid work model where a lot of tasks that require brainstorming and collaboration to be held physically on days when teams make it to office. 

 

However, the chief challenge that has grown with remote work is the concept of moonlighting. Moonlighting, or working a second job in addition to one’s primary employment, can be more likely with remote work. The flexible schedule and ability to work from anywhere can make it easier for employees to take on additional work. Additionally, the anonymity of remote work can make it easier for employees to keep their second job hidden from their primary employer.

 

However, it is important to note that moonlighting can negatively impact an employee’s performance and commitment to their primary job. It can also create conflicts of interest, particularly if the second job is in a similar or related field.

 

Employers may want to address the possibility of moonlighting by including language in their remote work policies and contracts regarding outside employment and conflicts of interest. They may also want to regularly monitor and evaluate the performance and workload of remote employees to ensure they are not overextended.

 

Switching to a value-based compensation plan

 

A value-based compensation plan can be used to counter moonlighting by aligning the interests of employees with the goals and values of the company. Here are a few ways a value-based compensation plan can help address moonlighting:

 

Encouraging engagement and commitment: A value-based compensation plan that rewards employees for meeting specific performance goals and contributing to the success of the company can encourage employees to focus on their primary job and be more engaged and committed.

 

Aligning incentives: By tying compensation to the values and goals of the company, a value-based compensation plan can help align the interests of employees with those of the company and reduce the temptation to moonlight.

 

Providing transparency: A value-based compensation plan that is transparent and clearly communicated can help build trust between employees and the company, reducing the likelihood of employees engaging in unethical behavior such as moonlighting.

 

Monitoring performance: Regular monitoring and evaluation of employee performance can help ensure that employees are meeting expectations and not overextending themselves through moonlighting or other outside employment.

 

It is important to note that a value-based compensation plan should be designed and implemented in a way that is fair and equitable for all employees, taking into account individual circumstances and contributions.

 

Whether a time-based or value-based compensation plan is better depends on the specific needs and goals of a company. Here are some advantages and disadvantages of each:

 

Time-based compensation:

 

Advantages:

 

  • Easy to implement: A time-based compensation plan is simple to implement and understand, as it is based on the number of hours worked or a set salary.
  • Predictable: Employees know exactly what they will be paid for the work they do, which can provide stability and predictability.

 

Disadvantages:

 

  • Does not incentivize performance: A time-based compensation plan does not directly incentivize employees to perform at a high level or contribute to the success of the company.
  • Does not take into account individual contributions: A time-based compensation plan does not differentiate between employees based on their level of performance or contributions, which can lead to resentment among high-performing employees who feel they are not fairly compensated.

 

 

remote work

 

 

Value-based compensation:

 

Advantages:

 

  • Incentivizes performance: A value-based compensation plan directly links an employee’s compensation to their performance and contributions to the company, which can incentivize employees to perform at a high level.
  • Reflects individual contributions: A value-based compensation plan takes into account individual contributions, which can help ensure that high-performing employees are fairly compensated.

 

Disadvantages:

 

  • More complex to implement: A value-based compensation plan can be more complex to implement, as it involves setting specific performance goals and determining how to measure and reward performance.
  • Can be unpredictable: A value-based compensation plan may be less predictable for employees, as their compensation is tied to their performance and the success of the company.

 

In conclusion, the best choice between a time-based and value-based compensation plan will depend on the specific needs and goals of the company, as well as the culture and values of the organization and its employees.

 

But an easier implementation of a value-based compensation plan would be focused on skills. A skill-based compensation plan is a type of pay structure that rewards employees based on their skills, knowledge, and experience. Here’s how it works:

 

Identify key skills: Determine the skills that are most important to your organization and the positions within it. This may include technical skills, leadership abilities, or project management expertise.

 

Assess employees’ skills: Evaluate each employee’s skillset to determine their level of proficiency in each of the key skills. This can be done through performance reviews, assessments, or a combination of both.

 

Create a skills matrix: Map each employee’s skillset against the key skills identified in step 1. This will provide a visual representation of each employee’s strengths and weaknesses.

 

Determine compensation tiers: Based on the skills matrix, create different compensation tiers that correspond to different levels of skill proficiency. For example, an employee who has mastered a key skill may be placed in a higher tier than an employee who is still developing that skill.

 

Implement the plan: Roll out the skill-based compensation plan to your employees, and make sure to communicate the expectations and criteria for each compensation tier.

 

Regularly review and adjust: Regularly review the plan to ensure that it remains relevant and aligned with your organization’s goals and values. Adjust the compensation tiers as needed to reflect changes in the job market, the economy, and your employees’ skillsets.

 

By using a skill-based compensation plan, you can reward employees for their strengths and provide incentives for them to continue developing and improving their skills. This can lead to increased job satisfaction and engagement, as well as improved performance and productivity. Above all, it removes the need to continuously monitor the activity of employees 9-to-6 and creates a great environment for employees to thrive and meaningfully contribute to the growth of the company. 

 

 

Interviewer.AI is a technology platform purposely built to support Recruiters and HR teams in finding top talent for their companies. Our mission is to make hiring equitable, explainable, and efficient. to screen in advance and shortlist the candidates that meet the criteria set. 

Learn more about how Interviewer.AI can help your business.

 

Increase your hiring team’s efficiency using a combination of resume scoring, skill assessment, and asynchronous video interviews. 

 

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Sunny Saurabh is the Co-founder and CEO of Interviewer.AI. At Interviewer.AI, he is focused on building the penultimate step to hire great talent. He wants to make hiring more equitable and help businesses hire top talent effortlessly.

 

 

 

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