'You can ruin your culture by doing this'
With the recent finding that more than a quarter or survey respondents (28 per cent) will try to impose location-based pay policies to manage the new world of working, what effect might this have on workers?
By imposing this type of pay structure, employers risk losing employees, especially considering how the balance of power has shifted in many industries, says Helen Ofosu, HR consultant at I/O Advisory Services in Ottawa, who spoke with Canadian HR Reporter.
“A lot of people are rethinking their priorities after the horrible two years they’ve had during the pandemic, just by virtue of being unable to do so many things, and having all these restrictions,” she says. “Because so many people have reevaluated work [they] sometimes left their jobs to find a better workplace environment to find opportunities that made more sense, that were better aligned with their values, their interests.”
This idea of pay based on geography was first raised about a year ago, says Ofosu, as many tech companies such as Facebook began to seriously consider changing pay structures.
“Personally, I always thought it was a bad idea. I understood it but it’s a bad idea because the work hasn’t changed so why go and change some compensation?” she says.
Role of demographics
Demographics in the workplace also play a role in making this idea a non-starter, says Ofosu.
“There are more older people who are retiring and there aren’t as many younger people that fill many of those spots, so demographically, unless there’s radical transformation where we need way fewer workers, there’s not going to be a shift for that reason. Personally, I think it’s a bit of bluster.”
Besides the risk of an employee leaving, imposing this new structure “seems a bit oppressive: if you sign a contract with somebody living within a certain geographic area and they decide, ‘I’ve been here for a year or so and I’m usually working at home, so I’m going to roll the dice. I’m going to go and live in my cottage full-time and just come in once a month,’ then if you scale back the person’s pay, they may not stay. Are you going to be monitoring where people live?” says Ofosu.
Helen Ofosu
In a past career, Ofosu worked as a psychologist with the federal government and it had policies around this that have since been abandoned.
“They had this thing where you can only apply for certain jobs if you live within a certain radius of where that job was supposed to be done. That was a policy but I’ve heard that that has even changed so that going forward, people who live in different regions can compete for jobs that would normally have only been in Ottawa or Gatineau,” she says.
'Think carefully’
For those organizations who are thinking about changing things, the advice is clear: “Think carefully before you do it and think about who you might lose,” says Ofosu.
“It’s possible that some of them are doing it as a calculated way if they’re trying to downsize by attrition or replace some more established people with more junior people, then this actually might be a very interesting way to do it but if they want to keep the people they have, then I don’t think it’s a great idea.
“The flip side is that if you have an amazing corporate culture, then it may make it easier for you to improve this kind of a policy because you’re probably not having turnover and attrition that other organizations are having but you can ruin your culture by doing this.”
