Close
Learning Methods
Classroom
A traditional classroom couples on-site learning with the added value of face-to-face interaction with instructors and peers. With courses and exams scheduled worldwide, you will be sure to find a class near you.
Interaction
Highly Interactive
On-going interaction with instructor throughout the entire classroom event
Interaction with peers/professionals via face-to-face
Components (May Include)
Onsite
On-site instructor-led delivery of course modules, discussions, exercises, case studies, and application opportunities
Supplemental learning elements such as: audio/video files, tools and templates, articles and/or white papers
E-course materials available two weeks prior to the course start date; printed course materials ship directly to the event location
Duration
One + Days
Varies by course ranging from one to multiple days
Technical Needs
Specific requirements are clearly noted on the course page
Virtual Classroom
Ideal for those who appreciate live education instruction, but looking to save on travel. A virtual classroom affords you many of the same learning benefits as traditional–all from the convenience of your office.
Interaction
Highly Interactive
On-going interaction with instructor throughout the entire virtual classroom event
Interaction with peers/professionals via online environment
Components (May Include)
Live online instructor-led delivery of course modules, discussions, exercises, case studies, and application opportunities
Supplemental learning elements such as: audio/video files, tools and templates, articles and/or white papers
E-course materials available up to one week prior to the course start date. Recorded playback and supplemental materials available up to seven days after the live event.
Duration
Varies by course ranging from one to multiple sessions
Technical Needs
Adobe Flash Player
Acrobat Reader
Computer with sound capability and high-speed internet access
Phone line access
E-Learning
A self-paced, online learning experience that allows you to study any time of day. Course material is pre-recorded by an instructor and you have the flexibility to view content modules as desired.
Interaction
Independent Learning
Components (May Include)
Pre-Recorded
Pre-recorded course modules
Supplemental learning elements such as: audio/video files, online quizzes
E-course materials start on the day of purchase
Optional purchased print material ships within 7 business days
Duration
120 Days - Anytime
120-day access starts on the day of purchase
Direct access to all components
Technical Needs
Adobe Flash Player
Acrobat Reader
Computer with sound capability and high-speed internet access
Close
Contact Sponsor
E-Reward
Online
Paul Thompson
Phone: 1 44 01614322584
Contact by Email | Website
Close
Sorry, you can't add this item to the cart.
You have reached the maximum allowed quantity for purchase in your cart or the item isn't available anymore.
Product successfully added to your cart!
Price
View your cart
Continue shopping
Please note our website will be down this Friday, November 5 from 9pm ET – 11pm ET for routine maintenance. We apologize for any inconvenience.
WORKSPAN
WORKSPAN DAILY |

Navigating the Changing World of Geographic Pay Policy

Figure
anyaberkut / iStock

Over the past year, companies have reacted swiftly to unprecedented disruptions. Changes wrought by the COVID-19 pandemic have not only accelerated the future of work, but also brought long-anticipated changes to workforce models and workplace designs in a highly accelerated time frame. As a result, organizations across industries are reviewing changes to their workforce, and from there, are looking at how new model(s) or new work environments call for a review of their overall compensation strategy.

Even organizations that have been less adversely affected by COVID-19 should preemptively consider revising their compensation strategy to meet the demands of their current workforce model and ensure preparedness for talent market shifts. The technology space has been perhaps the most vocal within the market, with media headlines citing pay reductions, and one-time bonuses taking center stage.

Facebook, Twitter, and VMware have all proposed (or are considering) reductions in pay for employees who move away from high-cost cities near their company headquarters; Spotify has said it will set its national salary rates to a level equal with its salary rates in San Francisco and New York; and others, such as Reddit, have not made any change in compensation. Ultimately, the imperatives are to avoid losing key talent, to ensure equity in one’s approach, and to make sure that the approach aligns to the workforce and broader business strategy.

Aligning Workforce Model to Strategy

Before conducting a full-scale review of its compensation strategy, an organization must first be intentional in solidifying its remote work strategy and determine which workforce model (remote, hybrid, on-site) to employ moving forward.

A remote workforce is one where workers do not commute or travel to a central working space, an on-site workforce is one where workers perform their duties at an organization’s central location, and a hybrid workforce is one where workers perform their duties in part remotely and in part on-site. Choosing the ideal workforce model requires an assessment of the current-state segmentation of the organization’s workforce — that is, where workers are currently working — and consideration of the organization’s future talent strategy. Misalignment between the two will likely result in failure to reach the organization’s strategic vision.

In fall 2020, Deloitte Consulting, in partnership with Empsight, conducted a survey on remote work practices and trends. When determining your approach to remote work, consider:  1) over 90% of companies surveyed have a remote work policy; 2) 42% of companies have an ongoing and permanent remote work policy; and 3) most companies (68%) don’t restrict where remote individuals can work (see Figure 1). Organizations with remote work options are leading the market, which may force peers into carefully considering a workforce’s preferences.

Image

Determining Use of Geographic Differentials

Once an organization has determined its remote work strategy, the next step is to consider whether it will use a national average to compensate jobs or employ geographic differentials.

Before determining use of geographic differentials, consider the finding that 70% of companies use geographic differentials to adjust salaries based on the individual’s location; and that geographic differential policies could present a significant cost-saving opportunity, particularly with increased remote work becoming the “new normal.” However, organizations with a large, geographically disbursed remote workforce may want to use national averages to ease the administrative burden. 

Comparatively, WorldatWork’s “Geographic Pay Policy Study” found that of the 62% of companies with geographic pay policies already in place, 44% are considering or have recently modified those policies. 

Read: Remote Work Raises Geographic Pay Policy Questions

Image

Talent retention is an important consideration to keep in mind. For example, reducing the salary of a top or even average performer because of a move to a lower cost of labor location may be demotivating to the employee and result in unintended turnover or lower productivity. Furthermore, most data show that at a certain salary level (typically somewhere above $150,000), geographic differentials, except for locations with the highest cost of labor, become statistically insignificant, as the talent market at that salary level is more of a national market and not as sensitive to geographic variances.

After an organization determines its point of view on using geographic differentials, it will want to consider for which populations it will use them. For the remote workforce, for example, most companies Deloitte surveyed with a geographic differential policy apply it to their remote workforce, and 70% of companies that have a remote work policy apply geographic differentials to individuals working remotely 100% of the time. For the hybrid workforce, only 55% of surveyed companies apply geographic differentials for hybrid remote work arrangements.

Image

WorldatWork’s survey found that, of the 1,063 responding organizations, 55% used the city/metro area as the indicator for pay differentials. Furthermore, cost of labor was a much greater influence than cost of living in determining pay policy approach.

Regardless of which model an organization adopts, it will want to consider developing a formal policy on how to treat its workforce to promote consistency and pay equity. For example, an organization may choose to maintain existing base salaries when employees relocate and redline their compensation for future adjustments based on new location — i.e., if the employee is relocating to a lower-cost area, freeze their salary and allow the market to catch up over time. 

The WorldatWork survey revealed that 41% of surveyed organizations apply pay differentials as a premium/discount to either structure or individual pay, whereas 33% create separate base pay structures per geographic location.

After the organization has determined for which, if any, populations it will employ geographic differentials, it will want to consider whether to apply them differently for disparate jobs and levels. If there is an appetite to employ different approaches by job, consider paying a high, competitive wage regardless of location for specialized talent that is hard to find, or paying by location and targeting areas with a lower cost of living for positions for which there might be an extensive talent pool. And, again, if there is an appetite to employ different approaches by level, consider that geographic differentials are generally paid up to base salaries of about USD $100,000-$150,000. Based on research and client experience, the geographic differential for compensation has only negligible impact at a salary level of approximately $200,000 and above.

Read: Remote Work Revolution: Where Compensation and Compliance Fit In 

Addressing Tax and Equity Implications

Organizations will also need to plan for how to address geographic tax and regulatory landscapes, paying particular attention to budgeting appropriately for income tax payments and defining “work from anywhere” parameters. Failure to correctly report taxable wages, and to collect and remit withholdings to the correct state agencies, presents employers with a compliance risk (with associated penalties).

Where remote work locations have created a taxable presence in a new jurisdiction, additional or amended W-2s (and W-2 equivalents outside the U.S.) might be needed, and workers are likely to look to their employers to address these reporting failures. Organizations not proactively monitoring the location of their remote workforce would be well served to revisit their compliance strategy and address payroll obligations, especially as state revenue agencies may be looking for revenue in the current environment.    

Organizations will also need to consider how changes to the compensation structure affect different populations of workers to ensure employees experience compensation increases or reductions fairly. Any changes to compensation mix, levels, and/or vehicles should be reviewed within the context of the company’s broader total rewards strategy (benefits, well-being, culture, etc.).

About the Authors

Gregory Stoskopf, CCP is a managing director and national practice leader at Deloitte’s Compensation Community of Practice.

Sheila C. Sever, CCP is a senior manager at Deloitte’s Compensation Community of Practice.

Chad Atwell, CCP, GRP is a senior manager at Deloitte’s Compensation Community of Practice.

Anneliese Sendax is a senior consultant at Deloitte’s Compensation Community of Practice.


About WorldatWork

WorldatWork is a professional nonprofit association that sets the agenda and standard of excellence in the field of Total Rewards. Our membership, signature certifications, data, content, and conferences are designed to advance our members’ leadership, and to help them influence great outcomes for their own organizations.

About Membership

Membership provides access to practical resources, research, emerging trends, a professional network, and career-building education and certification. Learn more and join today.