Month: May 2022

Over the last two years, employees have come to appreciate the benefits to a fully remote or hybrid work environment. These benefits include saving time commuting, more productivity, schedule flexibility, and better work / life balance. A vast majority of workers do not want to relinquish these benefits as we begin to migrate back into the office. According to Payscale’s 2021 State of Remote Work Report, 43% of employees expect more remote work options moving forward. Yes – remote work is here to stay. Considering the high number of employees anticipating opportunities for remote work and the bourgeoning talent retention challenges from the Great Resignation, organizations must consider how they will respond. In this Astronology®, we’ll briefly discuss a weakness many organizations are facing in connection with the recent demand for remote and hybrid work environments, and some compensation options to deal with this new work environment.

Three Common Approaches to Remote Work Base Pay Compensation

Payscale’s 2021 State of Remote Work Report exposed a weakness many organizations possess: 81% of surveyed organizations did not have a compensation strategy that incorporates any form of remote work. Let’s begin by considering what compensation approaches could be used for those opting to provide a fully remote and / or hybrid working environment. There are three common approaches to remote work compensation:

Establishing pay based on where the employees live – Using this approach allows the organization to incorporate the cost of living where the employee lives. This is a major concern for employees that live in locations with a high cost of living. They will find this approach beneficial as it guarantees they will at least earn a wage that will allow them to maintain their current living conditions. A disadvantage to this approach is that staff with the same tasks / job title, but with a lower wage due to their location, may feel negatively impacted. In time, this approach can lead to low employee morale and a lack of motivation.

Establishing pay based on the location of the organization – This approach involves using the organization’s headquarters as the benchmark for base pay. Doing so could eliminate unfair pay issues as employees with similar responsibilities would have the same pay – regardless of where they are located. Organizations must keep in mind that this approach could result in talent retention issues. For example, remote workers from a high cost of living area may not be inclined to work for an organization that has its pay centered on a lower cost of living headquarters.

Establishing pay based on the national pay average – A third approach could be to use the national average as the benchmark for base pay. While using the national average seems to be a fair approach, be mindful that workers from locations of high cost of living may find themselves being paid lower than their location’s cost of living. To alleviate this, some organizations have offered a 15% to 20% premium to workers from major cities such as New York and San Francisco. This approach also means workers from rural areas may possibly gain a bump in pay if the national average is higher than the local average.

Incorporating Total Rewards into Compensation for Remote Employees

Regardless of your stance for a fully remote, hybrid, or fully in office work environment, Astron recommends constructing your compensation philosophy on Total Rewards – no matter the industry or the workforce population. Total Rewards is the combination of benefits, compensation, and other rewards that an employee receives for their work. By combining both the intrinsic and extrinsic rewards and providing transparent messaging of these rewards, employees can see the bigger picture of how the organization values their contributions.

The main purpose of a total rewards compensation strategy is to help organizations strike the perfect balance of budget constraints and organizational culture, mission, and goals. By thinking about direct and indirect forms of compensation strategically, organizations can develop more effective compensation plans that support long-term engagement goals while also making the most of available resources. With this new phase of hybrid work environments, incorporating a total rewards approach to compensation may provide the best solution for both employers and employees.

Is your organization part of the 81% that does not have a compensation plan in place that considers remote compensation? Contact us today to learn how you can update your compensation program to reflect our ever changing world.

Is your organization part of the 19% that does incorporate geography into pay? Share your thoughts with us in the comment box below!

Over the last two years, employees have come to appreciate the benefits to a fully remote or hybrid work environment. These benefits include saving time commuting, more productivity, schedule flexibility, and better work / life balance. A vast majority of workers do not want to relinquish these benefits as we begin to migrate back into the office. According to Payscale’s 2021 State of Remote Work Report, 43% of employees expect more remote work options moving forward. Yes – remote work is here to stay. Considering the high number of employees anticipating opportunities for remote work and the bourgeoning talent retention challenges from the Great Resignation, organizations must consider how they will respond. In this Astronology®, we’ll briefly discuss a weakness many organizations are facing in connection with the recent demand for remote and hybrid work environments, and some compensation options to deal with this new work environment.

Three Common Approaches to Remote Work Base Pay Compensation

Payscale’s 2021 State of Remote Work Report exposed a weakness many organizations possess: 81% of surveyed organizations did not have a compensation strategy that incorporates any form of remote work. Let’s begin by considering what compensation approaches could be used for those opting to provide a fully remote and / or hybrid working environment. There are three common approaches to remote work compensation:

Establishing pay based on where the employees live – Using this approach allows the organization to incorporate the cost of living where the employee lives. This is a major concern for employees that live in locations with a high cost of living. They will find this approach beneficial as it guarantees they will at least earn a wage that will allow them to maintain their current living conditions. A disadvantage to this approach is that staff with the same tasks / job title, but with a lower wage due to their location, may feel negatively impacted. In time, this approach can lead to low employee morale and a lack of motivation.

Establishing pay based on the location of the organization – This approach involves using the organization’s headquarters as the benchmark for base pay. Doing so could eliminate unfair pay issues as employees with similar responsibilities would have the same pay – regardless of where they are located. Organizations must keep in mind that this approach could result in talent retention issues. For example, remote workers from a high cost of living area may not be inclined to work for an organization that has its pay centered on a lower cost of living headquarters.

Establishing pay based on the national pay average – A third approach could be to use the national average as the benchmark for base pay. While using the national average seems to be a fair approach, be mindful that workers from locations of high cost of living may find themselves being paid lower than their location’s cost of living. To alleviate this, some organizations have offered a 15% to 20% premium to workers from major cities such as New York and San Francisco. This approach also means workers from rural areas may possibly gain a bump in pay if the national average is higher than the local average.

Incorporating Total Rewards into Compensation for Remote Employees

Regardless of your stance for a fully remote, hybrid, or fully in office work environment, Astron recommends constructing your compensation philosophy on Total Rewards – no matter the industry or the workforce population. Total Rewards is the combination of benefits, compensation, and other rewards that an employee receives for their work. By combining both the intrinsic and extrinsic rewards and providing transparent messaging of these rewards, employees can see the bigger picture of how the organization values their contributions.

The main purpose of a total rewards compensation strategy is to help organizations strike the perfect balance of budget constraints and organizational culture, mission, and goals. By thinking about direct and indirect forms of compensation strategically, organizations can develop more effective compensation plans that support long-term engagement goals while also making the most of available resources. With this new phase of hybrid work environments, incorporating a total rewards approach to compensation may provide the best solution for both employers and employees.

Is your organization part of the 81% that does not have a compensation plan in place that considers remote compensation? Contact us today to learn how you can update your compensation program to reflect our ever changing world.

Is your organization part of the 19% that does incorporate geography into pay? Share your thoughts with us in the comment box below!

By: Jill Krumholz

There was a time when compensation and benefits were relatively simple and straightforward. Companies provided wages in exchange for employee time and effort, and some sweetened the deal with insurance benefits such as health, life, and long-term disability. Over time, the competition to attract and retain a dedicated, productive workforce has driven employers to rethink the perquisites (perks) they offer.

This reevaluation led many to adopt a Total Rewards strategy, and the changes in workforce management in recent years has made the concept of Total Rewards even more relevant. 

A company’s culture – who it is and its values – plays a significant role in identifying the Total Rewards components that speak to an organization’s workforce and drive success, for both the business and individuals. Creativity is the key to a cutting edge Total Rewards program.

In this article, we will introduce the idea of Total Rewards and discuss how such a focus can shape and reinforce your culture.

• Total Rewards is a Holistic Approach to Employee Recognition 
• Distinguishing Direct and Indirect Compensation
• The Flexibility of Indirect Benefits 
• Building a Total Rewards Program Aligned with Your Company Goals, Culture, and Workforce
• Balancing Corporate Interests and Employee Expectations
• Synergies with Other Human Resources Initiatives

Total Rewards is a Holistic Approach to Employee Recognition

Total Rewards takes a broader and more comprehensive view of compensation, extending beyond wages and health insurance, to address all facets of an employee’s life – work-related as well as personal. 

The approach recognizes that employees value more than a paycheck. They appreciate and in many instances expect companies to reward their service in ways that support all aspects of their lives with both direct and indirect compensation. Additionally, more workers are pressing employers to stand up as good corporate citizens and address current challenges facing society. One way many organizations address these concerns is with original Total Rewards designs. 

Distinguishing Direct and Indirect Compensation

Total Rewards programs encompass both direct and indirect forms of compensation. Direct compensation refers to the cash paid to employees for the work they perform. Direct compensation seems straight forward, but there is more to this category than just base pay. Bonuses, commissions, stock options, profit sharing, and other monetary earnings fall into this category. 

Indirect compensation is everything else.This broad concept is limited only by legal parameters, corporate budget, and the levers that drive an organization’s overall compensation strategy. Some standard perks that fall under this umbrella include health insurance, paid time off, and retirement plans (pension and 401(k)), but any non-monetary “extra” conferred is an indirect benefit.

The Flexibility of Indirect Benefits

In recent years, we have seen an explosion in the innovative ways companies attract, retain, and recognize their employees. In the most effective programs, Total Rewards offerings mirror the company’s values, mission, and overall culture. 

A company’s catalog of indirect benefits speaks volumes about who they are, where they are going, and how they want to get there. They inform applicants prior to the interview stage, thus attracting candidates who value the culture and direction of the organization. Once on board, indirect benefits greatly impact employee commitment and morale.  

Examples of indirect benefits that extend beyond paid time off and insurance coverages include:

• Flexible work schedules 
  • Hybrid
  • Remote
  • Compressed workweeks (i.e., 4-day workweek)
• Employee assistance programs supporting mental health needs
• Wellness benefits, such as gym memberships
• Tuition reimbursement
• Child and elder care 
• Sabbaticals to pursue work and non-work related interests
• Student loan repayment

This list could go on and on. Each organization needs to reflect on their unique situation and devise a comprehensive Total Rewards strategy that dovetails with their business goals and the characteristics of their employee population. 

Building a Total Rewards Program Aligned with Your Company Goals, Culture, and Workforce

Whether updating your current program or migrating to a Total Rewards model, how you decide to appreciate and recognize your employees should tie back to your organization’s mission and values – what the company aims to accomplish in the world at large and how it appreciates and recognizes the people who help get it there. 

By reflecting on these big picture themes, companies can then distill those drivers into actionable items. By identifying meaningful formal and informal offerings, employers can craft tangible Total Rewards strategies that support those goals and evidence their corporate cultures. 

Balancing Corporate Interests and Employee Expectations

The better an organization understands who it is (or wants to be) and the traits that make its workforce unique, the more effectively it can integrate that knowledge into a dynamic Total Rewards design. To be successful, Total Rewards components must always align with corporate objectives and budgets, but they must also match the specific makeup of a company’s workforce. 

What motivates manufacturing facility employees may not be successful in an office setting. Similarly, younger workforces may be focused on career pathing, education and development opportunities, wealth accumulation, and childcare alternatives, while seasoned workforces may be looking for assistance with elder care, college preparation for their high school aged children, and retirement planning and transitioning.  

Synergies with Other Human Resources Initiatives

Total Rewards factors into a number of Human Resources policies, with indirect benefits being the backbone of many initiatives. Recruitment, performance management, recognition programs, and diversity, equity and inclusion are only a few of the HR programs that a strong Total Rewards approach enhances. 

Here are some examples where Total Rewards adds value:

• In addition to a competitive salary and bonus, unique and broader thinking indirect benefits may help with talent recruitment by differentiating your company from the competition
• Targeted, indirect benefits, such as company cars for field sales representatives, may improve engagement and productivity as part of innovative recognition programs
• Performance management programs utilizing unique and specific incentives may increase employee productivity and engagement by focusing on what motivates particular groups or individual employees
• Ensuring equitable distribution and access to benefits reinforces a company’s commitment to value all employees equally and create a welcoming, comfortable, and innovative work environment
• Flexible work arrangements, such as remote options or work sharing, may result in higher retention and engagement rates

While wages are always the starting point for compensation discussions, today, applicants and employees require broad rewards packages that recognize their financial needs, personal interests, and address important societal issues. This expectation places a value on indirect compensation as never before seen, and it is through an inventive application of indirect compensation that a company’s culture and values can shine through – not only to employees but the greater marketplace. 

If you need assistance reviewing your existing compensation strategy and designing an effective Total Rewards program, we encourage you to contact us at RealHR. We welcome the opportunity to discuss your needs and help you reach your desired goals. 

We are facing an interesting time in compensation. The events of 2020 and 2021 have left a mark on how both employers and employees view work. Many have changed course on what they believe is most important, resulting in chain of events: record breaking employee turnover and a scramble by leadership to curtail the surging storm of The Great Resignation. In this Astronology® we will review some of the factors in play with the current compensation upheaval. We also will discuss three suggestions employers can consider in order to successfully steer through these challenges.

The Current Global State

We must acknowledge that there is a lot happening in the world right now. Currently, the world is moving into a “new normal” where COVID-19 isn’t directly impacting our daily lives as much as in 2020. We are learning to “live with COVID.” Additionally, we are facing high inflation rates – the highest we’ve seen since 1981. With these high inflation rates comes the whispers of an incoming recession – a whisper that seems to be getting louder recently.

We also are in the midst of The Great Resignation – 4.3 million people quit their jobs in January 2022 alone. What are the biggest factors in why so many are leaving their jobs? According to a 2022 Ceridian Pulse survey, “Nearly half (46%) of those who reported looking for new employment said it was because they wanted better compensation, including higher salary and benefits, while another 33% seek more flexibility, such as remote work and flexible hours.”

We also must acknowledge the ongoing Eastern European conflict with Ukraine and Russia. Aside from the natural anxiety and stress from watching the news on this topic, both employees and employers are concerned about the global effects this conflict could have long-term.

In these turbulent times, it is important for employers to develop a plan to guide their organization through the storm.

Navigating Compensation Challenges in 2022: Three Tips

1. Focus on retaining current employees.
   As mentioned in our “Employee Recruitment and Retention” guide, before scavenging the talent pool for new people, be sure to take care of the current people within your organization! There’s no point in recruiting new team members if you can’t keep your current ones. In the big picture of organizational success, employee retention is important. Try to improve how you recognize your employees for their contributions. You can start by surveying them to see how you can optimize your total rewards offerings to better compensate them.
2. Offer more training and professional development opportunities to better leverage current talent.
   As mentioned in our “How to Create an Effective Performance Management Process” guide, providing improvement feedback through performance reviews is not enough. Employees are more willing to stay if they see your organization as a place where they have opportunities to build on their skills. Show your staff you really care about their professional growth by investing in training and professional development opportunities. Allocating a small portion of your budget to offer learning opportunities can help your current employees level up their skills, which can result in their ability to take on new responsibilities and / or move into management roles.
3. Embrace indirect compensation.
   Yes, proper and fair cash compensation will always be preferred. However, including moments of indirect compensation or employee recognition can have a positive impact. A blog post from Payscale explains, “A 2019 study found the average turnover rate for organizations with no benefits plan is 157 percent, while organizations that offer benefits (including standard health benefits, vision or dental insurance and life insurance, to name a few) saw a 138 percent decrease in turnover. Indirect compensation, when done thoughtfully and intentionally, benefits all employees, regardless of seniority, age, title or tenure.”

Some forms of indirect compensation to consider incorporating include the following:

• Insurance Programs
• Life insurance
• Retirement Contributions
• Equity Program
• Extra or Unlimited Paid Time Off
• Fitness Reimbursement Programs
• Childcare
• Parental Leave
• Hybrid and Flexible Schedules
• Relocation Expenses
• Tuition Reimbursement
• Company “Swag Bags”
• Company sponsored lunch / dinner

We may not know when the current swirl of economic challenges today will settle. But in the meantime, there is plenty leadership can do to assist in navigating these turbulent times. Are you looking for assistance in creating a compensation strategy that matches up to 2022’s challenges? Contact us today to learn more about our total rewards consulting services.