As technology continually advances, it makes some jobs possible to be done remotely. Remote work or telecommuting allows professionals to work outside of the traditional office setting, and it is fast on the rise for many reasons.
Rather than spending hours commuting and being stuck in traffic, remote workers can execute their tasks and accomplish goals from the comfort of their own homes, coworking spaces, coffee shops, or even in foreign countries. All they need to achieve their work is a steady internet connection and a computer.
There are many benefits to remote work, including a flexible lifestyle because it allows remote workers to mix their professional and personal lives. They can clock in for work while looking after their homeschooling kids or furry companions at the same time. Telecommuting also contributes to better health and wellness. By eliminating stressors such as commuting, employees can be more motivated, productive, focused, and engaged in their tasks.
Because of these advantages, a majority of employees prefer working remotely even after the COVID-19 pandemic. Some of them might go to the extent of looking for a new job should their bosses not allow them to work remotely, while others are likely to consider relocating once their remote positions are secured.
On the part of the employer, having remote workers is also beneficial for the company. Aside from increased productivity and higher employee engagement, cost savings are possible with decreased overhead expenses and operational costs for rent, utilities, equipment, and office furniture. Plus, remote work allows companies to hire talent from overseas.
Before the coronavirus (COVID-19) pandemic, there were two reasons why an employee would stay with a company: if their company values them and if they are paid well. These elements create an employee’s sense of loyalty to the company. Providing competitive compensation packages was also a common practice.
Compensation packages refer to the salary and benefits that the employer provides in exchange for the work that employees do. These packages vary, depending on the company, industry, position, and location; some companies offer more benefits, while others offer only the standard package.
How to draft compensation strategies
With the COVID-19 pandemic still ongoing, companies have realized that adopting work-from-home policies can work in their favor so they intend to continue doing so. However, major adjustments must be made for this scheme to work efficiently.
Remote employees need to be compensated correctly. Business owners and employers will have to develop a compensation strategy to pay their workers without undermining them but still keep the company afloat.
Before drafting a compensation strategy, research the industry you are in extensively. See how competitive the industry compensation is and if there is a wide range of talent pool available for the jobs you need to be filled. Determine the salaries being offered in both the local and international markets, too.
To help you decide on how to go about compensating your employees, here are some strategies to consider while formulating their salaries:
1. Employment status – Determine if an employee is on your payroll as a full-time employer, freelancer, or independent contractor as each of these options has different tax liabilities. Base the employee’s status on the work that they are hired for, their services, and their work tenure or how long you’ll need them to work for you.
2. Location of remote workers – Computing your remote employee’s salary based on where they live can have a significant impact on how you calculate their pay. People who live in more expensive cities will have higher salaries compared to their colleagues who live in less expensive places because of the difference in the cost of living. Some companies encourage their employees to move somewhere that has a lower-priced but better standard of living – provided that they agree to a deduction in their salaries.
3. Company location – Some companies use their current location as a basis for their pay scale. This means offering higher salaries to attract the best talent available in the city. Through this strategy, employees don’t feel they have to relocate to get a job.
4. National averages – Determining salaries based on the national averages is a more simplified method, but it has its downsides as there are many factors to consider. Among these are weighing in the national average of your industry, company goals, and individual positions. Another downside of basing salary on the national average is that it could limit access to talent living in more expensive areas.
5. Work track record – Keep track of your employee’s professional backgrounds to ensure they’re capable of clocking in the hours you require and, therefore, get paid properly. Tracking the number of hours employees have worked can make managing pay for remote workers easier on the part of the employer while the workers are paid accordingly. What’s good about this strategy is that there are many online applications and tools available for you to use.
6. Incentives and allowances – With remote working policies still in place for many companies, consider cutting off certain allowances and incentives such as commuting allowance, parking allowance, or clothing allowance, as these are no longer beneficial to employees working remotely. Rather, offer other incentives and allowances, such as internet allowances for virtual meetings and online check-ins.
7. Tax obligation – Different locations require different tax payments. Some are obligated to pay their taxes on the reported income earned from the location of the company, while some base their taxes on where they reside. Either way, tax policies should guide your strategy in determining how to compensate your remote employees fairly.
In Closing
Most people think that working remotely would be a breeze for both the employee and the employer. But the truth is, there are many adjustments to be made for the company to function effectively and for the employees to feel their employer’s support and appreciation for their work. However, having multiple perspectives when it comes to arriving at a compensation strategy that both the employer and the employee can agree on creates a working environment that is beneficial for both.
Author Bio:
Mary Crogan is currently the Vice President of Marketing at Salary.com, the leading SaaS provider of compensation market data, software, and analytics. She is an accomplished marketing executive with 20+ years of experience crafting successful market strategies within the B2B and technology sectors. When not working, she loves reading biographies and historical fiction, traveling, and adventures with her dog and two kids
