Why Employees Shouldn't Have to Take a Pay Cut when Choosing to Work Remotely

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by: Stephen Ralph, Product Manager, Zarion

A recent report carried out by a large multi-national Technology provider claims that 75% of UK based workers are willing to take a pay cut in exchange for remote work.

The blog, authored by a Regional Director of Sales, breaks down the various segments of people who are willing to take a pay cut for fully remote work and to what extent. The vague report was picked up by a number of news organisations. However, closer inspection from the Zarion Research Team recognised that this blog post and associated report findings are potentially harmful – especially for workers in the UK and Ireland.

Although we understand that the research may have been carried out to bring employers around to the idea of permanent remote work, it missed the mark.

I caught up with Zarion CEO Gerry O’Connor and Communications Editor Ania Sherlock to break down some of the findings and highlight why we believe these messages are irresponsible.

What are the main findings?

What the findings say: Based on survey results from 1,000 UK office workers, three-quarters of respondents said that they would accept – or have accepted – a pay cut in return for a fully remote role.”

Many companies today are making the strategic operational decision to embrace remote work for the foreseeable future. Others are introducing a blended model of remote work and office work. In both cases, it is unreasonable for employees to face a financial penalty as a result. Remote work and pay cuts should be viewed as mutually exclusive.

The idea that work should no longer be inextricably linked to a place is just one facet of the Future of Work.

“The pandemic has brought on 3-5 years of change in a matter of months – and what we’ve proved from this rapid evolution is that people can do the same quality work from anywhere, with thanks to the cloud,” says Ania.

Pay cuts aside – the blog fails to mention the fact that employees are taking on the costs for highspeed broadband and other household utilities. In actual fact, the only party who gets immediate cost savings is the business.

So with that in mind, a decision to work remotely should not be used as a bargaining chip to lower salary. If the company values the work that is being done, then it is only fair that workers should get paid the same regardless of the location it is carried out in. Remote work means businesses can take advantage of a more diverse talent pool, made up of people from various countries, economic backgrounds, and genders.

Twitter has announced their staff can work remotely “forever.” Spotify goes even further saying they will take advantage of a global talent pool by paying San Francisco-level salaries for people working remotely anywhere in the world. These are forward-thinking responses are leading the way for businesses all over the world, helping them to be competitive in this new era of work.

What the author says: “We’re now in a world where employees have seen the potential that remote working holds to improve their work/life balance – so much so that they’re willing to forgo a significant portion of their salaries to achieve this on a permanent basis.” 

People have always wanted more flexibility and even more so now with millennial and Gen-Z workers challenging the working habits of their parents. Simply put, the modern worker should not have to give up salary to gain flexibility.

“The Harvard Business Review says that some workers actually end up working up to 10-20% longer hours from home but are happy to do so because of the perceived flexibility in their day. In these cases where an employee is working over the contracted hours, a pay cut certainly does not add up.” says Ania

Flexibility can be understood outside of time or place; consider job roles and responsibilities. Upskilling people and allowing for more flexible job roles means the business can essentially take on more types of work with the same amount of people.

“It’s time for society to move on from legacy thinking around employment and say goodbye to the residual practices from the Victorian age,” says Gerry. He continues “Flexibility is an advantage not just for employees, but also for the business – it’s a win win situation.”

What the author says: …those wishing to spend more time working remotely are no longer burdened by outdated cultures and stigmas. 

Remote work and pay cuts are mutually exclusive. Imposing a mandatory salary reduction for those who want to work remotely is an outdated culture in and of itself. It perpetuates the idea that the quality or value of the work is somehow devalued based on location. This type of underlying message only highlights a lack of trust toward remote employees.

If pay cuts are the only motivation for business leaders to enable a flexible environment for their employees, it can be assumed that it is because they don’t trust the worker to do the same work from home. That says a lot for the culture of a business and the value that is put on employees.

There is still some work to be done in terms of introducing open, flexible and diverse work cultures. Employee engagement is so important and will become a business focus over the next 3 to 5 years.

“Intelligent technology that puts people at the heart of it is central to shaping new behaviours and will help us to keep pace with the current work evolution”, concludes Gerry.

Research Initiative with Trinity College Dublin

Research Initiative with Trinity College Dublin

Zarion are currently collaborating with School of Psychology and Business at Trinity College Dublin to understand what the future requirements for work are, and what the workplace of the future looks like. The Triple Bottom Line concept (Elkinton, 1991) is central to understanding the findings and making predictions for the future – and it’s all about balance.

A very basic explanation of the TBL is that corporations can no longer simply focus on economic success. The idea is that corporations need to balance their efforts and attention between The People, The Environment and The Economics, and have a responsibility to all three if they want to be sustainably cost-effective in the future.  

Some considerations from our “Designing the Workplace of the Future” research initiative

Some considerations from our “Designing the Workplace of the Future” research initiative

Roles and responsibilities are changing because of digital transformation.  This supports the idea that there will be less transactional workers in the future due to automation and customer self-service. But it’s the onus of the organisation to train and upskill them to a knowledge worker, who can then do higher value work from anywhere.  

The more you invest in your people the more you get back.  People should be front and centre when making operational decisions The long term negative effect of a pay cut results in a demotivated workforce, with top talent leaving the organisation to find the flexibility they need.  

This is an opportunity to invest in people and support them to become more productive from home. Leaders need to ask the question – how we can instil an element of trust again and help the workforce to deliver better value for our customers. Understanding how to achieve this and setting out a realistic plan with people at the centre will result in a better overall economic position for the business.  

Watch the introduction video to the research