Employees’ desire to work from home presents CFOs a new opportunity to recalibrate staff costs, said Gartner recently.
Many organisations have accepted that they will have a significant percentage of their staff remain in remote or hybrid roles for the foreseeable future, said Emily Riley, director in the Gartner Finance practice.
“CFOs now have a rare opportunity to both provide employees with the flexibility and quality of life adjustments they desire, while improving the organisational cost structure as many employees indicate an openness to relocating to lower cost of living areas.”
Of late, PwC revealed its plan to allow all its 40,000 client services employees in the US to work from home or anywhere they want forever while Google said in August that employees can chose to work remotely though they might face a pay cut as high as 25% depending their chosen work locations.
Multiple variables in employee preferences
Proactive CFOs can now better engage employee segments and collaborate with HR to better tailor offers to new and current employees about where they choose to work from and recalibrate pay scales accordingly.
Riley suggests that CFOs need to carefully analyse data trends and understand what drives individual employee preferences on this issue.
“While younger employees are generally more open to taking a pay cut in order to relocate, senior-level positions are significantly more open to the idea than lower-level roles,” said Riley.
This suggests many factors such as family status and how secure an employee feels within the organization may play a greater role than age alone, she added.
CFOs seeking to operationalise employee preference data to recalibrate staff costs should collaborate with partners in HR to develop a plan to engage employees through surveys, focus groups and manager conversations, Gartner advised.
They can then begin identifying segments that are most interested in relocating and whether they are willing to accept salary adjustments based on cost of living in their new locale, the advisory firm noted.
In companies where willingness to accept pay decreases is high—at least among certain groups, cost savings can be realised relatively quickly through immediate pay adjustments, Gartner added.
Where there is greater hesitancy among employees to accept pay cuts, some savings can still be realised over the long-term by extending offers to work remote without an immediate salary decrease and “calibrating” salaries to local costs of living through decreased wages and bonuses over the course of multiple years, the firm observed.
Each employee has different values and CFOs need to understand the preferences of various employee groups in their organization, said Riley.
“The goal should be to establish a remote work pay policy that is tailored to realise available cost savings while also being a clear, widely-applicable policy that avoids forcing HR and managers into repeatedly making one-off decisions when employees relocate,” she advised.