Facebook's decision to join other big tech firms in allowing employees to work remotely--but adjust their salaries based on where they live--has many wondering if there will be a ripple effect.
CEO Mark Zuckerberg told employees the decision should help the company improve its retention rate and allow Facebook to hire people who previously wouldn't consider moving to big cities to work for the social media company. This would make the company more inclusive of people with different backgrounds and perspectives, Zuckerberg said during a recent Livestream with employees.
Within 10 years, Zuckerberg believes about half of Facebook's 45,000 employees will be working from home permanently.
There has been a growing emphasis on the trend toward remote work in the past few years, as well as people and organizations moving to lower-cost, mid-sized cities, said Brad Denny, a principal with Deloitte Consulting. This movement is due in part to the rising cost of living in popular coastal cities and is often catalyzed by people being ready to own a home or start a family, Denny said.
CEO Mark Zuckerberg told employees the decision should help the company improve its retention rate and allow Facebook to hire people who previously wouldn't consider moving to big cities to work for the social media company. This would make the company more inclusive of people with different backgrounds and perspectives, Zuckerberg said during a recent Livestream with employees.
Within 10 years, Zuckerberg believes about half of Facebook's 45,000 employees will be working from home permanently.
There has been a growing emphasis on the trend toward remote work in the past few years, as well as people and organizations moving to lower-cost, mid-sized cities, said Brad Denny, a principal with Deloitte Consulting. This movement is due in part to the rising cost of living in popular coastal cities and is often catalyzed by people being ready to own a home or start a family, Denny said.
"The idea that professionals may now have the option to move away from the expensive urban centers where their organizations are headquartered, and in doing so have access to even more work options within their organizations and other organizations, adjustments for cost of living may be worth it to a lot of people."
Deloitte's 2020 Global Human Capital Trends report found that in the wake of uncertainty, organizations need to adopt compensation practices that aren't just based on data and numbers, but on a set of human principles that reflects how the organization values individuals, Denny said.
"This requires a shift to understanding what the workforce wants. We found that 58% of respondents reported that the workforce has little to no input in the organization's compensation strategy, with 24% reporting they have no input whatsoever,'' he said. "Giving people the option to work remotely from where they want with adjustments for cost of living is a bold move that allows people to have a say in their compensation."
Blind, an anonymous community of verified professionals with 3.6 million users, recently conducted a survey (PDF) to gauge whether tech and finance professionals, given a choice to work from home permanently, would consider relocating out of San Francisco Bay Area, New York and Seattle Area. Some 66% of respondent professionals said they would consider relocating, Blind said.
Further, 38% of Facebook professionals said they would consider relocating with a pay cut, the survey found. Thirty-two percent of working professionals also said they would consider relocating with a pay cut, Blind said. Other findings from the survey:
- The Bay Area (35%), New York (30%), and Seattle (31%) showed similar proportions of intent to relocate with a pay cut
- New York (75%) has the highest proportion of those wanting to leave the metropolitan area
- Only (25%) of New Yorkers would not consider relocating out of the metropolitan area
Another recent study by GoTo and LogMeIn revealed that 62% of US participants would take a pay cut if it meant they could work from home indefinitely. Other studies have shown that many office workers feel less guilty about the impact their commute has on the environment now that they're working remotely and that the financial benefits of staying out of an office (reduction in childcare, car maintenance, and gas), as well as increased quality of life, would help offset a pay cut.
The precedent for salary adjustments
Tech hiring site Dice expects to see tech companies continue to embrace more flexible schedules, offering more remote work options, or becoming entirely remote. But there will always be a need for some roles to be in-office and for some tech teams to collaborate in person when it's safe to do so, said Art Zeile, CEO of DHI Group, Dice's parent company.
The issue of pay adjustments for multi-location companies is a complex one, but it makes sense, Zeile said. "Even the government has had a history of making cost-of-living adjustments to compensation based on locale,'' he said. "This, in my opinion, is a signal of a more complex world, but one that is fair to employees' conditions."
Denny agreed, saying that already, organizations with offices in different cities and regions often adjust compensation based on the cost of living. "This practice isn't necessarily groundbreaking at its core, but this version of it allows professionals more autonomy in where they choose to live their lives, without being tied to a physical office."
Companies with diverse benefits and workplace options tend to attract a larger range of talent with varying values and priorities, he added.
The issue of pay adjustments for multi-location companies is a complex one, but it makes sense, Zeile said. "Even the government has had a history of making cost-of-living adjustments to compensation based on locale,'' he said. "This, in my opinion, is a signal of a more complex world, but one that is fair to employees' conditions."
Denny agreed, saying that already, organizations with offices in different cities and regions often adjust compensation based on the cost of living. "This practice isn't necessarily groundbreaking at its core, but this version of it allows professionals more autonomy in where they choose to live their lives, without being tied to a physical office."
Companies with diverse benefits and workplace options tend to attract a larger range of talent with varying values and priorities, he added.
Pay has always followed the dynamics of local labor markets, which includes factors like cost of living and local competition for talent and can vary widely across the country, as a result, echoed Glassdoor Senior Economist Daniel Zhao. For example, pay data from Glassdoor's Job Market Report shows a software engineer in San Francisco makes an annual median base salary of $128,682, whereas a software engineer in Philadelphia sees a median base salary of $89,976, Zhao said.
But as many employees shift to long-term remote work, this becomes a tall order as employers must navigate how to ensure fair pay for a more dispersed workforce, he said.
"If employers decide to lower salaries for those who relocate, communication surrounding these decisions will be essential to prevent workers from feeling undervalued for doing the same daily work from a different location,'' Zhao said. "On the other hand, if employers struggle to fill key roles, they may keep salaries higher, even in lower cost-of-living areas, to attract and retain top talent."
The coronavirus crisis is expected to have a prolonged impact on the workplace, which is forcing many companies to re-examine existing compensation, "office perks" and other parts of the employee experience that change when employees aren't physically in the office, Zhao added.
But as many employees shift to long-term remote work, this becomes a tall order as employers must navigate how to ensure fair pay for a more dispersed workforce, he said.
"If employers decide to lower salaries for those who relocate, communication surrounding these decisions will be essential to prevent workers from feeling undervalued for doing the same daily work from a different location,'' Zhao said. "On the other hand, if employers struggle to fill key roles, they may keep salaries higher, even in lower cost-of-living areas, to attract and retain top talent."
The coronavirus crisis is expected to have a prolonged impact on the workplace, which is forcing many companies to re-examine existing compensation, "office perks" and other parts of the employee experience that change when employees aren't physically in the office, Zhao added.
Will others follow suit?
Companies that innovate first will be watched closely by others trying to navigate the right approach, Zhao said, "but don't expect things to change overnight. Wider adoption will be a more challenging and slower process."
If the option for remote work continues to be successful on a wide scale, Denny believes other companies will follow suit, "I think we'll see a lot more organizations feeling incentivized to offer the benefit as well,'' he said.
But the level of productivity is not totally clear right now and more needs to be done to make the case for remote work on a wider scale, he added. "In order to sustain remote work, more productivity tools will need to emerge at scale. For example, more consumer-grade virtual whiteboarding, visualization, and workflow tools. And of course, individuals and teams will need to upskill in the use of these technologies to demonstrate higher levels of business productivity at work."
Historically, the tech industry has been at the forefront of remote working thanks to better infrastructure and capabilities to adopt this way of working, Denny said. "It stands to reason that opportunities to work remotely permanently--especially with the addition of smart tools to enhance productivity--will bring forth a new wave of adoption."The COVID-19 pandemic has upended nearly every aspect of our society – including the way local government workforces perform their day-to-day operations. The virus forced employees out of their offices and into their homes. Essential workers have staggered their shifts and limited their interaction with the public and each other. Remote work has become the norm, and virtual service delivery has become critical, leaving many communities scrambling to digitize services.
But the level of productivity is not totally clear right now and more needs to be done to make the case for remote work on a wider scale, he added. "In order to sustain remote work, more productivity tools will need to emerge at scale. For example, more consumer-grade virtual whiteboarding, visualization, and workflow tools. And of course, individuals and teams will need to upskill in the use of these technologies to demonstrate higher levels of business productivity at work."
Historically, the tech industry has been at the forefront of remote working thanks to better infrastructure and capabilities to adopt this way of working, Denny said. "It stands to reason that opportunities to work remotely permanently--especially with the addition of smart tools to enhance productivity--will bring forth a new wave of adoption."The COVID-19 pandemic has upended nearly every aspect of our society – including the way local government workforces perform their day-to-day operations. The virus forced employees out of their offices and into their homes. Essential workers have staggered their shifts and limited their interaction with the public and each other. Remote work has become the norm, and virtual service delivery has become critical, leaving many communities scrambling to digitize services.
However, the pandemic might also be an opportunity to reassess the way we think about the way the work of local government is performed. Questions of how, why, and where abound. One thing is for certain, though, this is a turning point for government, and it’s up to local leaders to determine what the new normal will look like.
The importance of policy
The workplace policies most local governments] had in place prior to the pandemic were really meant for in-person engagements Ryan Park, state and local government marketing manager at Laserfiche, says. “As the shift to remote work has taken place, it’s definitely caused a disruption in being able to effectively and collaboratively work from home.”
However, despite these dramatic changes in how and where the work is being performed, it’s still the ultimate goal of local government to provide programs and services to their residents as efficiently as possible and at the best return on investment for their tax dollars, Jason Grant, director of advocacy at the International City/County Management Association, says. Although the current situation has necessitated less face-to-face interaction, the work of local government still needs to be accomplished – we don’t have the luxury of closing up shop to wait this out, he says.
While there are no one-size-fits-all approaches to these workforce transitions, it’s important to ask how we will manage the needs of the people and protect local government employees while following the guidance coming from the leaders in the state and federal governments as well as the scientific community, Grant says. This balancing act should be at the core of every decision made during the pandemic.
With this in mind, Grant says there are a lot of opportunities for re-imagining how local governments accomplish their work, and various communities are approaching the challenges differently. “Some immediately implemented telework, some didn’t. For some it was necessary, for some it wasn’t,” he says. Some communities were better prepared for this transition than others – they had the IT infrastructure in place, they had the crisis management plans written. “The challenges or obstacles will be different from locality to locality,” Grant adds.
However, that doesn’t mean there aren’t best practices for managing decentralized teams. For these lessons, it’s helpful to look at both private and public sector entities that were implementing remote work structures before the pandemic.
The transition to telework and virtual service delivery
“If you’re going to use telework, there are certain things you need to have in place,” Grant says. “One is your management practices and personnel policies.” During this period of transition, these policies must be clearly defined, and they need to be robust. Employees need to have defined communication paths to their supervisors; they need to know how they will be submitting deliverables in the new virtual environment. Expectations need to be clear, and communication needs to be open and frequent.”