During the coronavirus pandemic, HR has become a critical and strategic function of the business. The decisions made by HR today could make or break a business in the troubled times ahead and reward is an enormous and indispensable part of this responsibility. Although some companies are making redundancies or thinking about having to do so in the future, the remaining workforce must still be managed, with employee attraction, retention and engagement more important than ever.

The Talent Landscape
With virtual offices the new norm for many, and with organisations such as Twitter allowing its employees to work from home “forever”, we are now looking at a new geography of talent which will come to define workplace recruitment and reward. 
Ultimately, the pandemic is simply accelerating organisations thinking about much of their workforce and the realisation and feasibility that a certain demographic of role does not have to be in the same room or even the same country as each other to work effectively – for example, a software engineer or web developer based in Italy or India can work just as productively as someone sitting three desks away in an office in London. Not only that, but many workers across HR, Sales, Science and pharmaceutical roles also want to continue working from home once lockdown restrictions have been lifted, new research has found. Hitatchi Capital UK’s research cited the lack of commute to and from the office (31%) as the main reason for wanting to work from home going forwards, while 19% said they were better able to structure work commitments around daily life. 

The Distributed Company
If this “distributed company” becomes a viable model for businesses, the future of recruitment will undoubtedly require a change and for those who have generally shopped for talent based on a domestic labour market, in one or a few locations, a workforce which is predominantly office based, it is going to require a much more agile way of attracting, engaging and retaining talent than ever before. Not only will HR have to be more flexible in the way they recruit individuals they will also have to move beyond their local knowledge into wider geographical settings to snap up talent in the virtual market. 
But just because you can recruit from anywhere, does not necessarily mean you should.  Whilst borderless recruiting pools might seem enticing, factors like travel, compliance, and taxation for certain countries could exceed the amount that you would save on office space and local market rates. Companies should do their homework by carefully identifying areas or specific countries that will meet their hiring objectives, for example to fill a skills gap or industry experience gap.

Reward
The consideration for many employers when recruiting internationally is whether their current reward strategy strong enough to facilitate the recruitment of virtual employees across further geographies beyond the UK. Is it expansive enough to reinforce a unified company culture? Up to now, many companies’ reward strategies have most likely concerned themselves with policies and practices to support and advance overall company goals and culture in one domestic market, and primarily focussed on office-based workers, but what happens when that company culture has to reach virtual workers, across multiple geographies? 
Tailoring total reward packages to the various demographics of the organisation is nothing new - all astute companies ensure this is running through their reward DNA - however, with this opportunity to have more virtual employees, how do you ensure your total reward offering reinforces your company culture across expanding locations and drives home the same key messages about reward regardless of location? i.e. “we provide a fair, competitive, holistic reward package that nurtures the needs of all our employees (virtual and non)” 
There is no doubt that the challenges in a distributed company are many, but they are not insurmountable so how might you assess your own post pandemic “Reward Readiness”? 

Here are five key areas to consider: -

1.    Statutory obligations
Moving to a distributed model requires HR to be fully up to speed with the statutory pay landscape of each country, including sick pay, holidays, paternity and maternity leave as well as many other employee rights can vary significantly from country to country. Obtaining reputable and current data sources to ensure compliance is key.

2.    Fairness in reward
Equal Pay, Gender Pay and CEO pay ratio reporting to name but a few have different levels of reporting requirements by country. In globalising your workforce this will form a critical part of ensuring you remain accountable and that pay across geographies is fair. With penalties for failing to publish UK gender pay gap reports for 2019/20 suspended due to the pandemic, there are fears that equality may fall off the agenda for some companies; however in a changing employee market where similar roles work across different countries it is even more important that fair pay remains at the heart of the reward strategy. The extent to which your organisation reinforces fair pay across geographies will hinge on a combination of consistent and thorough statutory reporting and an effective pay structure underpinned by a robust job evaluation system that speaks to all geographies. This is a tall order for some especially for organisations who have yet to employ a formal job evaluation system in their own domestic market however the most successful global organisations employ job evaluation with a confidence and rigour that not only ensures good pay governance but also allows for effective communications around pay thus building levels of trust which will be an increasing expectation across virtual workforces.

3.    Competitiveness in reward
In normal circumstances, pay tends to increase over time, even if it fluctuates month to month. In the current climate, with a likely recession on the horizon, employees will still expect fair and competitive levels of pay in exchange for their skills and expertise. Even through the pandemic, certain skills will continue be in high demand, pay may continue to increase, with increases happening at different rates and degrees for different geographies, markets, industries and sectors. It has never been more important therefore for companies to have ready access to robust and relevant market data particularly where global talent markets are being considered. 
Tracking the market across a multitude of countries, keeping on top of rates for niche roles, and staying abreast of market rates for skills shortages, requires HR time and financial investment. Global survey providers such as Willis Towers Watson, Birches Group, Radford, Mercer and Aon Hewitt can prove costly to access particularly when you have employees across multiple countries however most organisations would admit that using sub-standard market data has often left them in vulnerable positions when advising the line or dealing with challenges on pay levels. Investing in market data may not be top of the priority list for many companies at this point in time but ultimately the way to effectively bolster a fair pay proposition is to ensure you are also competitive, consistent and attractive in your reward offering. Factoring in market forces built on reputable data sources is the best way to achieve this. Perhaps with a reduction in office space costs, employee travel expenses etc. companies may finally find that extra budget to invest in tools such as global pay and benefits surveys.

Benefits
Whilst tracking base pay across the geographies is a primary focus for organisations, knowledge around benefits practice typical to each country is also key. For example, what is offered within one country as a statutory arrangement may be offered as an additional benefit in another.  On top of this is the cultural perception of what is seen as valuable: what feels like a benefit in one country or region may not land the same effect in another or what is offered to an office based worker may not be practically available to that of a virtual worker. On top of this is the increased attention to the behavioural and emotional health management of employees as well as their financial wellbeing. In the virtual talent market where aggressive recruitment could become a way of life, companies will need to ensure their benefits package not only stands out but is also holistic in approach, catering for the physical, financial, social and emotional health of all employees . 

4.    Technology in reward
It is without dispute that, when used properly, technology is the key to making reward fit for the future. There are several digital platforms on the market that provide accurate, transparent global overviews on pay whilst ensuring market competitiveness. Our own proprietary pay benchmarking platform, Paylab, helps companies identify those employees who are underpaid or overpaid compared to their markets (domestic and global), identify pay inequities based on grade, role, performance, gender or ethnicity, manage third-party survey data, and evaluates how employees are paid against internal pay structures (domestic and global).  This insight is really valuable to our clients who understand the impact that reward has on employee attraction, retention and engagement and how critical these factors are in being a company that not only survives a pandemic and potential recession, but thrives afterwards.

5.    Reward goes beyond pay
What many employers often ignore but some are starting to realise during this pandemic is that asides from a fair and competitive remuneration package the real weapon to win the war for talent in a widening talent pool is flexibility. This includes flexibility in workplace settings but also flexibility in working patterns and working styles. According to the State of Remote Work 2019 produced by Owl Labs and Global Workplace Analytics, schedule and location independence are currently the most sought-after employment benefits in the job market. It’s sobering to think that even after a well-considered reward offering, if remote work is offered as an option, professionals are less likely to leave their employer, more likely to choose one employment offer over others (even with more recognised brands), and would even take a pay cut to accept. So, whilst virtual jobs benefit the individual, they can also reward your organisation.

If the current state of business has taught us anything, it is that work will never look the same again with many companies operating as, if not more effectively in a virtual capacity. Reward priorities will require a reshape with an agility of approach like never before. Are you ready?

If you would like to discuss global reward strategies further, or any aspect of pay and reward, give us a call on 020 3457 0894 or email emer.bucukoglu@innecto.com. 

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