All the debate prompted by first Yahoo's and then Best Buy's decision to end their telecommuting/flex work programs reminded me of a great podcast released a few months back by WorldatWork, facilitated by Alison Avalos and featuring practice leaders Rose Stanley (work-life) and Jim Stoeckmann (compensation). The podcast addressed a question I hear frequently: whether and how to apply geographic differentials in compensating remote workers who are located in higher paying regions than the rest of the organization's staff (or at least the worker's particular organizational cohorts).
Brief background. Geographic differentials, of course, are the mechanism by which we pay employees in some locations differently in order to reflect geographic differences in competitive salary levels. (Notice that I said differences in salary levels, not differences in cost of living. Critical distinction.)
As the WorldatWork team notes, the question comes up in two ways with respect to remote workers. It will come up in response to a general workforce strategy involving remote work, proactively chosen and pursued by the organization. Or it can come up on a more case-by-case basis, typically in response to the request or circumstances of a particular employee, in an effort to accommodate and retain that worker. The former clearly demands careful consideration of business priorities, competitive demands and costs, at the organizational level. It is the latter, however, that I want to focus on here.
The case-by-case scenario comes up for a host of different reasons. A common situation involves a valued employee who must relocate, as the result of a spouse accepting employment in another area, an aging parent demanding care and attention, or any number of things.
Jim Stoeckmann's position -- and I agree with it -- is that there isn't (and shouldn't be) a one-size-fits all policy for these situations. It may be wise to establish a "default" position (I'd propose that an employee whose remote work location is at his/her own election, and not the company's request, not be paid at a higher level if their election takes them to a higher salary city), but it is also worth retaining the flexibility to respond to a specific employee and their case.
Where there are concerns about retaining the employee or where the employee has critical skills, fills a key role or is at high risk of being recruited away by an organization willing to pay the local upcharge, it might be worthwhile coming to a compromise. Jim mentions "splitting the difference" as a good option for situations like this. Depending on the risk, it may be smart to do even better.
Regardless of whether the bigger pendulum of remote and tele-work continues to swing out or stalls somewhat in the wake of the Yahoo and Best Buy announcement, I believe we'll see a continued rise in the case-by-case requests generated by the conditions facing individual employees. Are you prepared to address all the pay implications of this trend in your organization?