How to build a fair and equal benefits strategy for hybrid working
The move towards hybrid working is still very early on, with many companies unsure about what their working practices will look like. However, reward and benefits innovators are starting to think about all of this now. Here, we share some of the considerations employers need to make.
The shift to hybrid working
In theory, many people can now work for anyone, from anywhere. In practice, it’s not quite so simple. Full-time home or hybrid working necessitates considerable thought from both employees and employers. As many will have realised over the past 15 months, there are plus points and minuses. And while, on the face of it, saving time and money on the daily commute might represent a big plus point, it’s worth noting that homeworking doesn’t come cost free. Some may even end up worse off, financially speaking; a big minus.
From an employer perspective, hybrid working could end up leaving companies with pay and benefit strategies that are no longer fit for purpose, translating into recruitment and retention issues.
What will become of pay differentials?
On the subject of pay first. The question now is whether it’s realistic to continue to pay regional salary premiums, such as London weighting, when employees may only be visiting the office a few times a month – particularly if they have relocated to an area where living costs are significantly lower.
There are also issues around organisations that don’t necessarily pay a premium, but they do have a location where staff are on higher salaries. Pay in London is higher than in other regions of the UK, whether organisations explicitly pay a London premium or not.
Big cities across the UK saw people exiting last year in a search for larger homes with more space for home offices and gardens sparked by life under lockdowns (and no doubt boosted by the stamp duty holiday). London leavers bought 73,950 homes outside the capital; representing the biggest exodus from London in four years and the largest amount spent since 2007, according to research by the estate agent Hamptons.
So, as the regions from which companies recruit staff grows, it will require a rethink about how they pay their people; will this be based on location, the value they bring to the firm, or something else? Those that have relocated or chosen to shift to a full-time homeworker – or hybrid worker – probably won’t be very happy if they continue to do the same work but see a reduction in their pay simply because they have relocated. Likewise, employees may deem it unfair if a colleague continues to be paid in the same way, despite living somewhere where housing costs are much lower.
Homeworking costs to people
People working from home may also feel that they should continue to receive an allowance because they are incurring electricity and heating costs, amongst other things, while they are working.
In conjunction with EQ Data, which has developed a tool to help employers calculate the cost to people and business of full-time home or hybrid working, we have done our own calculations and found that the average worker might actually be around £1,000 a year worse off from home working.
This is based on the average cost of energy bill increases, internet usage and the creation of office space, minus average savings from not having to do the commute or buy lunches out and about, plus factoring in the home working tax credit.
In short, total reward packages and work life experience will become ever more critical to recruitment and retention.
The future of total reward
Pay differentials aside, it has long been the case that earnings growth has been hard to achieve without upping sticks and moving employer. Total reward, as part of an integrated benefit and wellbeing programme, was gaining importance pre-pandemic and that has only been accelerated.
The difference in the future might be how that total reward package is structured, so that suits the changing needs of full-time home and hybrid workers. For example, it’s likely that reward and benefit innovators will look at using their combined negotiating power to leverage discounted rates from energy and broadband providers.
Equally, with commuters used to subsidised off-peak train tickets, train operators (now the government) will need to rethink how this works. Will they offer subsidies for organisations to encourage commuters back?
Communicating these more tailored reward packages also demands a more personalised approach, with messages and channels tailored to employee interests, needs and where they like to hang out, as opposed to the traditional one-size-fits-all that long since failed to connect.
What the predicted hybrid working shift will mean on a wholesale basis remains to be seen. But what is for sure is that recruitment and retention is likely to get harder. Those reward strategies that look beyond pay, bonus and pension towards something that helps organisations nurture a culture of inclusion, fairness and flexibility – that helps people feel good about who they work for – will be the winners in the future way of working.
The author is Tim Brook, head of engagement & platforms at EQ HR Solutions.
This article is provided by EQ HR Solutions (Equiniti).
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