Before flexible working became the norm, the link between reward and an employee’s place of work was limited to compensation. Typically, this is to compensate for working in regions where the cost of living is higher – usually in the form of higher base pay or an allowance.
After much uncertainty and debate, many organisations are now confirming their policy on flexible working, varying from the fully remote ‘Work from Anywhere’ culture to the mandatory five days back in the office, and all of the hybrid variations in between.
It’s important that organisations freshly examine their approach to reward to determine if it’s promoting or detracting from the flexible working culture they’ve established.
Regional pay and the ‘London weighting’
Arguably, hybrid working disrupts the current thinking that pay should vary depending on where an employee works. What is considered a ‘reasonable’ commute time can go up or down depending on the number of times per week a worker is expected in the office. Therefore, employees aren’t necessarily working and living in the same region anymore.
A company headquartered in London that requires its employees to come in a couple of times a week, for example, might attract individuals that live well beyond the borders of the M25. Should a London allowance still be paid in this scenario? It’s an interesting question and careful consideration should be given to its continuation or removal. If you’re an organisation that wants to promote in-person working, removing the allowance may disincentivise staff to come into the office, as they weigh up the costs of working from home versus the expenses associated with getting to the office.
With this in mind, are we simply exchanging one cost for another? Is the cost of working and living in London comparable to the cost of living further afield and then commuting? Might we go so far as to say they are interchangeable?
We are yet to see popularised allowances designed to cover both commuting and the expense of working in the office. However, we are seeing ‘home office’ payments being made to staff to help them improve their working environment at home to support remote-first cultures.
Total Reward
For organisations that do require an element of in-person working, it’s more important than ever to ensure pay is commensurate with the cost-of-living in their region. Without staying across these details they will struggle to compete with remote-first organisations offering employees complete freedom over where they live, and the added benefit of zero commuting expense. These are all factors that employees weigh up when choosing to stay in a job or move.
However, it’s not all about the financials. For many, there is value placed on in-person working, and this will be weighed up against its financial cost. Employees want return on investment when they come into the office, and this is where it is important to widen the lens when we talk about reward and flexible working and look at the total employee value proposition (EVP).
Employers can find many ways to increase the ROI of in-person working – from costly office space redesigns to promote collaboration to ping pong tables and free beer Fridays, although sometimes it can be as simple as clearly communicating your existing offering.
For example, benefits platforms like HAPI offer a whole host of discounts. Why not make these more tangible to staff by calling out where they can cash these in close to the office? Alternatively, in hybrid and remote-first cultures, companies can share which retailers they can use to improve their work-from-home set-up.
The more value employees can see and derive from in-person working, the more time and money they will be willing to invest in coming to the office.
Reward is a powerful tool to incentivise the right behaviours and promote organisational culture. So whichever your stance on flexible working, it’s important that your reward policies and practices are reviewed in light of your new stance to flexible working to ensure the best fit.
