My Employees Have Moved…How Do I Compensate Them?
Throughout the pandemic, businesses were shut, schools were closed, but one thing that did not slow down was the housing market. Many employees started working remotely, which created an opportunity for them to think about where they really wanted to live. People left the city for suburban spots, houses with yards and outdoor space were at a premium, and since “the commute” no longer existed, it gave some employees the opportunity to move to another state.
Now some employers are scrambling to track down where their employees currently reside, and in jobs that remain remote, employers are finding their key talent is dissipating. Employees now have the option to take job offers with companies that are paying competitively in typically higher-paying regions, including the Bay Area or New York without the employee having to move there. It’s a win-win for the employee; get paid CA wages and live in a lower cost of living state, such as AZ.
Now what? Although the war for talent is heating up, many companies have chosen to take a conservative approach to see what unfolds. Employers are still deciding what their future workplace will look like – 100% remote, hybrid, etc., and don’t want to make any permanent compensation decisions until that is in place.
Other companies are choosing to keep employee pay constant regardless of where the employee resides. In a study done by Willis Towers Watson in November 2020, 61% of employers are expected to continue to pay remote employees the same as in-office employees while other companies are choosing to adjust employee pay based on location.1 The same study reported 26% of employers are setting pay levels by first determining the market rate of an employee’s skills and then applying a geographic differential based on the employee’s location.
If budget and ongoing salary considerations are a concern, a retention bonus may prove to be effective for high-performing team members, who may serve as a potential flight risk. Retention bonuses should be structured with staggered milestones, and the key is to be consistent in how these are paid, the criteria used to determine the bonus and the amount by job level.
Compensation can often be a tricky topic in the workplace, but it doesn’t have to be when partnering with SDHR Consulting! Our team of HR experts is ready to assist you through the various challenges that may be present when your employee relocates. In addition to other services, we will strategize with your organization on employee retention, pay adjustments, cost-of-living differentials, structuring retention bonuses, and/or creating remote work policies. For more information on our compensation services, head to our compensation page and contact us at email@example.com for more information!
- “Flexible Work and Rewards Survey: 2021 Design and Budget Priorities” Willis Towers Watson, 19 Nov. 2020.
About the Author
Katie Pierce, “Perceptive Pierce”
Katie provides over 10 years of experience in HR with her primary focus in comp analysis, consulting and project management. Katie attended Saint Louis University for her BS in HR Management and her Masters of Science in International Employment Relations and HR Management from the London School of Economics.