What Do CIOs Have To Know About Wages And A Hybrid Work Environment?

The workplace has changed, are CIOs ready?
The workplace has changed, are CIOs ready?
Image Credit: yasmary

The world that CIOs are responsible for has changed dramatically since the arrival of the Covid-19 pandemic. As workers have the opportunity to come back to the office, some are coming back; however, some are remaining remote. This starts to bring up a tricky question that all CIOs are going to have to deal with. For workers who have the same job, should the pay be different depending on if they are in the office or if they are remote. How this question gets answered can have big impacts on your workers and your company.

Dealing With Titles And Locations

Imagine this workplace scenario that a CIO has to deal with. As the pandemic starts to recede, the IT employees are given the option of returning to the office or working remotely. One employee decides to return to the home office in New York. Another decides to remain in Omaha, Neb., where he has been living since the pandemic began. This is where things start to get tricky for the CIO. Both workers have the same titles and the same responsibilities. Should they also have the same pay? That is just one of many compensation issues CIOs are likely to wrestle with, as businesses reimagine how to pay and reward employees in a world where some workers may not return to the office.

What CIOs need to realize is that the remote workforce is here to stay. With that change, a shift in compensation structures has to occur. CIOs have to admit that they don’t know what the best policies are right now and that there is going to be immense opportunity and variation. What CIOs are going to need to do is to take a look at the compensation strategies and issues that their companies may need to re-evaluate as we enter the new era of remote work.

Location Based Pay

CIOs may need to consider location-based pay. Back in the day, before the pandemic, many employees received additional compensation if their principal office was located in an area that had a high cost of living. Examples of this was New York City or San Francisco. That concept may now become less straightforward as we move into the remote-work era. Indeed, while some tech firms have said they won’t cut the pay of employees who relocate to cheaper areas and work remotely, others have indicated location will continue to play a role in their compensation packages. In all honesty, that might seem fair: a dollar in New York doesn’t go nearly as far as it does in Omaha. If the two employees who live in these two different locations get paid the same amount, the employee in New York is effectively getting paid less for the same job.

However, experts say that’s misleading because an employee’s ultimate worth should be really about the quality of their work, not the geographic area where they do it. If a CIO is asking employees to do the same job that they did before, why do they become less valuable if they’re doing it from somewhere else? Many CIOs believe that says cutting pay for employees who relocate isn’t a good idea. While remote work can give CIOs access to a much wider pool of talent nationally, it is predicted that any CIO that opts to reduce pay in these situations stands to lose its best employees. CIOs need to realize that once you pay different salaries for the same job based on where people live, you are on a slippery slope of pay fairness, equity and gender discrimination. It is possible that it could expose the company to liability unless reasons for the pay differentials are properly disclosed and communicated. CIOs need to understand that the best performing companies strive for a culture of pay transparency and pay-for-performance, where the results of an employee’s work matter more than their location.

Multiple Tiers For Pay

Alternatively, CIOs may consider creating a two-tiered system. Even if the office worker and remote worker are in the same city, compensation and promotion issues will always arise. When employees are working remotely, they will lose the career advantages that come from working and socializing face-to-face with their bosses. When you work remotely you can’t schmooze as well and find out about opportunities. This means that you will be paying a price by not being there.

That divide could also leave CIOs unwittingly paying better salaries to those who work in the office versus those who work at home. This is particularly true with new employees, since CIOs will be less familiar with them. The challenge is to make CIOs aware of this so that they can take steps to level the playing field. If CIOs want to balance things out, they can set aside time each day specifically to engage with their remote employees. This is one way that they can keep things more equal. A CIO’s human-resources departments may have to more closely review and calibrate pay decisions to make sure that compensation processes are being implemented in the same way for employees who work remotely as for those who work in the office. There also are risks that remote work could exacerbate gender-equity divides. This could occur if more women choose remote work due to family responsibilities. This is something CIOs will need to closely monitor and consider when analyzing compensation packages.

Boosting Personalized Perks

Another tactic that CIOs can use is to offer more personalized perks. I think that we all realize that perks such as cafeterias, company gyms, and on-site child care won’t be of much use to remote workers. This means that CIOs may need to create offerings that are more open-ended or even personalized. An example of this would be if a CIO considered giving a lump sum to remote workers to purchase items that protect their health and safety. Such items could include ergonomic chairs and stand-up desks. Instead of offering commuter benefits, CIOs could subsidize parking for remote workers who live in urban neighborhoods, where they may have to pay to park.

CIOs need to realize that child-care options and assistance paying for the care of elderly parents who live with them are the types of perks that are likely to be very popular with remote workers. CIOs may be more supportive of such benefits, as well as scheduling flexibility, now that they have seen the reality of their workers’ strained home lives via the Zoom meetings that they have participated in. Likewise, mental-health benefits also are being taken more seriously. The issue is even being discussed by boards, which typically were not involved in crafting the company’s benefit plans. CIOS are improving communication about these types of benefits and encouraging employees to use them.

Offering Bonuses Based On Projects

Back before the pandemic, many CIOs were moving away from project-based bonuses tied to individual and department goals. Instead, they were basing bonuses on broader company targets such as revenue growth and profitability. That has started to change with the increase in remote work. To encourage teamwork, CIOs are once again beginning to incentivize “project metrics” that compensate individuals for accomplishing specific project goals.

Doing this could change employee relationships with their employers. Under this scenario, workers become something more like “entrepreneurial consultants,” who are always working on projects for their company. Instead of filling 40 hours a week, a worker has this set of tasks to do, and if they finish them, maybe you get a bonus. As we all know, the quality of work is what really matters, and it is what should be rewarded. This is true no matter where the work is done.

What All Of This Means For You

The Covid-19 pandemic has changed everything for CIOs. As the pandemic starts to fade, offices are starting to reopen. Workers are also starting to come back to the office. However, not all of the workers are coming back – some prefer to remain remote. Now a CIO is going to be faced with a split workforce. What is the best way to go about managing this hybrid work environment?

CIOs need to understand that if they are now going to have members of their department working from different locations, they are going to have to decide if they want to pay workers who are in high priced locations more. They have to be careful if they choose to do this because it can cause other problems. An alternative to this is for a CIO to create a multi-tier payment system for in office and remote workers. Since many workers may no longer may be coming into the office, perks that CIOs can offer to workers will have to change. Customizing the perks to better meet remote workers needs will be required. Finally, CIOs may want to consider once again offering bonuses based on project based performance.

The most important thing for CIOs to realize is that the world in which we are working has changed. This means that the old ways of doing things will no longer work. We need to take a look at our workforce, understand how their lives are different, and then adjust to best meet their new requirements. How we go about paying the people that work for us is one of the things that will need to change. We need to understand that we’ll be dealing with a hybrid workforce and this means that each worker is going to have different needs and expectations. If we can find ways to meet our workers wage desires, then we can adjust to the new way that the post pandemic world works.

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: Do you think that CIOs should tell workers that there will be different salaries for in office and remote workers?

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What We’ll Be Talking About Next Time

As though CIOs didn’t have enough to worry about, now all of sudden they are going to be in charge of what is being called a “hybrid office”. What does this mean? A hybrid office occurs when some of your workers return to work in the office after the pandemic and some of them do not. You now have effectively two different classes of workers. How are you going go about handling this situation?