Should You Pay Both Your Remote and In-Office Workers More?

In a rush to return to normal, your remote and in-office workers may be asking for more than before. Technology has made it easier for people to work anywhere. This makes it difficult for companies to justify paying remote employees less than those in an office setting, especially when competitors offer higher-paying jobs. Remote workers want the same salary as their in-office colleagues. In-office workers are asking for more than their remote counterparts as remote workers enjoy the added convenience of working from home. Work from home expenses are a fraction of what in-office employees have to pay. There is no need to buy train or bus tickets to get from the suburbs into the city. These employees also don’t have to spend as much on buying expensive clothes, dry cleaning, or dining out for breakfast, lunch, and sometimes even dinner. As companies are herding people back into the office, workers expect higher pay to compensate for additional costs. Soaring inflation together with rising food, gasoline, and public transport ticket costs add stress to the already overburdened office worker, who reluctantly accepts the reality of going back to work at the office. While some companies are starting to adjust their salary rates accordingly, others are resisting by claiming lower remote productivity. However, the great resignation signaled to employers that workers are tired of being taken for granted. They want to work somewhere that brings meaning and fulfillment to their lives. So if you want to retain your employees and get them back into the office, you’ll need to decide if you will offer additional benefits.

Comparing office and remote worker productivity

In comparing office and remote worker productivity, value takes center stage. Airtasker found remote employees to be more productive and work 1.4 days more per month regardless of taking more breaks. Another study found employees working from home permanently increase performance by 22%. However, there are some drawbacks to working remotely. Remote workers can often feel isolated or disconnected from their team. And in some cases, remote workers may be less productive, lacking the motivation that comes with working in an office environment. Regardless, on the whole, if remote workers are more productive, should their compensation be higher than office employees, no matter where they live? Again, major zeitgeist shifts can be expected if the remote workforce increases. This will lead the compensation conversation to focus on expertise, skill, and performance over geography.

Why employers might want to pay remote workers equally

People who work remotely tend to be more productive than their in-office counterparts. When your employees work remotely, no one shows up at their cubicle to discuss trivial matters. This equals fewer distractions. Moreover, remote jobs allow your employees to work outside your regular office hours. Suppose you have employees overseas. They can connect with clients whose hours fall outside your time zone. It also gives them the freedom to choose to work at times of the day when they are more productive. Would it matter to you what your employee's hours are if they finish their tasks on time?

People who work remotely tend to be more productive than their in-office counterparts.

Your remote employees already have to eat the cost of building and maintaining a home office, buying expensive ergonomic chairs and desks for the 10 hours of work each day, and on weekends. On top of those costs, there are additional phone, internet, and software subscriptions, energy bills, and other incidental costs. So naturally, they will require further compensation for these costs. People have collective power in this competitive job market as around 11 million jobs become available each month. Your employees can pick and choose a better opportunity. Then you’ll have to spend more money and hope your productivity, customer service, and team morale don’t suffer. Aside from those considerations, remote work means your employees spend more time with friends and families. Happier employees are more productive. Create a schedule that helps them achieve the optimal balance between work and personal life. Remote work removes the daily commute, so these saved hours equal quality time with their loved ones. Spend less on office space and spend more on the lifeblood of your company, your workforce.

In-office workers want better compensation

If remote workers are more productive, should they be paid more than office employees working from a distance, or is it just about being there? Far less time has been spent on in-office workers. If you ask your workers to give up working from home, will you have to pay them more? Most of your employees will have little desire to return to the office full-time. In fact, 54% of remote workers surveyed said they would consider finding other employment if required to return. For those who do not return full-time, women and people of color are more likely to stay fully or partially remote. If pay raises go to employees who return to the office, you’ll have to keep a detailed record of those who come back by race and gender to determine if a pay gap exists. Beyond DEI, you'll have to ask yourself if pay raises and other benefits will be enough to draw employees back to the office.

If you want employees back in the office, you’ll need to pay them more.

Do you really want your employees back in the office? The post-COVID labor market is perfect for those who want to find other jobs, especially if their remote work demands aren’t met, or they are being asked to come back to the office. One study found that 72% of surveyees would take long-term flexibility over a 10% pay raise. If you want them back, you’ll need to pay them more.

How should you compensate your employees?

Pre-COVID, determining compensation was already a struggle. However, fully remote, distributed, and hybrid teams are challenging traditional standards of compensation considerations. For example, your compensation package could be based on skills, expertise, education, and demand. More recently, location has become another factor in deciding how much to compensate employees. Other avenues worth exploring are technical, social, and personal skills. Those skills, expertise, work history, and how well they communicate with a distributed team may be much more valuable than location when determining how much to pay an employee. So, why not mix it up and decide if location will affect compensation or if you're willing to pay your workers more regardless of their zip code?

Does location matter regarding employee salaries?

As an employer, you'll want to make sure your employees can live off their salaries and not have to pursue any side hustles. Location has been used as a variable for salaries because some cities are significantly more expensive than others. High cost of living areas could lead to higher salary demand for employees who live there. Wages vary by geography, and there will always be pushback from employees if you choose to compensate leaving location out of consideration. However, if 2 of your employees are remote and the only salary difference is location, should that determine who gets paid more? What makes an employee in San Fransisco worth more than 1 in Fargo? Their worksite doesn't tell you anything about their quality of work. What if your Fargo employee is more productive than your San Francisco employee? The same could be said for talent. Is a remote employee of equal merit to an onsite employee? What if 1 is more motivated and disciplined than the other? This is where you might consider intangibles like communication, trust, commitment, and employee-employer cultural match.

Giveth employees raises or taketh away via pay cuts?

If you want to get your people back in the office, it might be easier to offer more money to your in-office workers and pause remote workers' salary increases. Prospect theory posits that people measure their losses and gains differently, making giving something to someone easier than taking it away. Instead of asking remote workers to take a pay cut, offer your in-office workers a raise. Don't punish your workers who wish to stay remote but offer incentives for those willing to return. Keep in mind, though, 1 survey found that 44% of workers asked would be willing to take a 10% pay cut to stay remote forever. While there are benefits to paying in-office and remote workers equally, they also benefit from paying them differently. Therefore, it is crucial to weigh the pros and cons of each option enough before you decide.

Instead of asking remote workers to take a pay cut, offer your in-office workers a raise.

Ultimately, whether or not to pay in-office and remote workers the same amount depends on the company's specific situation and needs. For example, if your company feels that it would benefit from having all its workers in the same location, you should pay them equally and more than before COVID. Regardless of whether you decide to keep your team distributed or get your employees back into the office, you will have to pay if you want to keep your team motivated and committed long-term. With inflation rates the highest since 1981, employees deserve the right to demand more, whether remote or in the office.