CFOs have a new opportunity to recalibrate staff costs by more proactively engaging remote and hybrid employees on their relocation preferences and adjusting salaries in line with the local cost of living, according to Gartner, Inc.
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 CFOs need to carefully analyze 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; 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,” said Riley.
CFOs seeking to operationalize 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. 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.
In companies where willingness to accept pay decreases is high (at least among certain groups), cost savings can be realized relatively quickly through immediate pay adjustments. Where there is greater hesitancy among employees to accept pay cuts, some savings can still be realized 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.
“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 realize 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.”