U.S. employers with flex work rethinking approach to total rewards, pay: report

In the wake of the coronavirus pandemic, U.S. employers are embracing flexible working arrangements and considering adopting a hybrid model for rewards and pay, said a report by Willis Towers Watson.

The report showed a majority (59 per cent) of employers surveyed have workers who are currently telecommuting, including 25 per cent who are able to work from anywhere, with expectations these numbers will remain steady through the first quarter of 2021. And although almost all (91 per cent) of the respondents cited employee safety concerns as the main reason for the shift to flexible working, others cited employee retention (67 per cent), maintaining or increasing employee engagement (39 per cent) and enhancing productivity (35 per cent).

Read: HR teams focusing on total rewards, not just salary, for 2021

Almost half (49 per cent) of employers indicated the shift to flex work necessitates a hybrid reward and pay model. Indeed, 29 per cent of respondents noted they’re providing additional benefits to employees, such as back-up daycare, subsidies for daycare or virtual learning. As well, most of the respondents agreed their retirement and financial well-being (62 per cent) and health and well-being programs (64 per cent) provide the security necessary to support workers. However, over a fifth (24 per cent and 30 per cent respectively) said change is needed in these areas to provide the financial and health well-being security necessary to support workers in a more agile and flexible workplace in the future.

The report also noted an almost even split in the proportion of full-time employees working in person or onsite (45 per cent) compared to those who are working remotely (44 per cent) currently. Though the respondents expect the proportion of their full-time employees working from home to decline from current levels in the next three years, the percentage (31 per cent) will still be significantly higher than it was three years ago when it was just five per cent.

Read: Total rewards shifting to more person-centric programs

In light of this, 18 per cent of employers surveyed noted they’re setting pay levels by first determining the market value of skills and then applying a geographic differential based on where the employee is located. And only 26 per cent reported they’ll base pay on the location of remote workers for all jobs. A majority (61 per cent) said they’ll pay fully remote workers the same as in-office employees in 2021, regardless of location. Of note, approximately a quarter (26 per cent) expect to see an increase in allowances and subsidies for working from home in 2021 and over the next three years (27 per cent).

Additionally, 37 per cent of organizations surveyed didn’t have a formal policy in place to help manage flexible work arrangements during the pandemic and just 25 per cent created one this year. Those without a formal policy noted they aim to catch up quickly, with 60 per cent planning or considering adopting one this year or next — and most (58 per cent) expect these new policies to be permanent.

“As companies continue to evaluate the cost benefits of [flexible] working arrangements, many indicate that the workplace changes as a result of the pandemic are here to stay,” said Catherine Hartmann, North America rewards practice leader for Willis Towers Watson, in the report.

Job function was the most common criteria for determining eligibility for using flexible work arrangements, now (62 per cent) and in the future (74 per cent), with some employers indicating all employees will remain eligible, now (21 per cent) and in the future (14 per cent).

“Employers that are able to create and manage a flexible workplace through automation and adaptable policies while reinforcing an enhanced employee experience will not only meet the needs of their employees but be better positioned to compete in the new world of work,” Hartmann said.

Read: City of Toronto pivoting to permanent hybrid work model