Even a Monkey Knows …

Even a monkey knows that it’s only fair to offer equal pay for equal work. How come some employers can’t figure it out?

There are some interesting shifts happening right now in the way people are paid for the work they do. I’m not sure where it will leave everyone when it all comes out in the wash. In the meantime, it’s creating confusing and conflicting situations for employees and employers alike, and creating a logistical nightmare for HR professionals.

It started with the talent shortage

The first began to emerge over the past half decade or so in some sectors, particularly software development and other technology intensive industries. There’s a talent shortage that’s getting worse by the day; in short, there are fewer and fewer people to fill more and more jobs. Companies have responded – where they can – with increased compensation. Signing bonuses aren’t bad as a temporary solution, but they’ve probably only kicked the problem down the road. In many cases, though, companies have been (or felt?) forced to offer higher salaries, creating an internal imbalance between longer-term employees and new ones. The dynamic has even produced a new term, ‘loyalty tax‘, framing that imbalance as a financial penalty paid by employees who are loyal to their employers and stay.

In sectors where this has occurred, I find myself wondering if there will be a giant game of ‘Musical Chairs’, in which most employees ultimately end up moving from one company to another, pursuing an offer equivalent to those they see their newer colleagues getting. If so, this could be a positive thing for income equality – seeing higher salaries sift down from the executive offices to the middle ranks and front lines of more companies. A rising tide lifting all boats, in other words. On the other hand, though, it may create a tough reckoning in affected sectors, through which a swath of newer, smaller companies just won’t make it, because they simply can’t afford the higher salary ranges.

It continued with the shift to remote

The other shift underway has more to do with the growing number of employees who have had the opportunity to work remotely, and want to keep doing that.

In some cases, their desire to continue working from home – either all the time, or in some sort of hybrid arrangement – conflicts with what their employer would like. David Solomon of Goldman Sachs has called working from home “an aberration”, and he’s not alone. A lot of companies would very much prefer to repopulate their costly real estate investments with the employees who were dutifully filling that space prior to the pandemic. And don’t get me wrong; there are plenty of employees who’ve missed being back in the office, too. This is why I firmly believe that the future of work is neither remote or in-office, it’s both. In any case, as I’ve said before, I think that if employees are told to come back to the office (for no good reason other than ‘because we said so’), they will be looking elsewhere.

But I digress.

Some companies are offering employees lower salaries if they choose to work from home, than if they come into the office. I’ve seen this differential justified in terms of being in exchange for lower costs. I’ve also seen working from home described as a ‘perk’. In other words, something of value that you can trade for. The employees are getting in on it, too. I’ve heard more than a few people musing about how much of a pay cut they’d be willing to take, to work from home.

What are employees paid for?

To me, that’s interesting. All along, I’ve believed that an employer paid an employee for the work they did, and for the results that work produced for the company. I didn’t realize that companies were paying employees for commuting to an office. I mean, if that were true, surely the time spent commuting would have been factored into compensation packages. Right?

Right?! Okay, fine. Sarcasm aside …

It gets even more complicated when large companies hire people to work remotely from a very wide selection of locations, with wildly different costs of living. Arguably, working from home in midtown Manhattan is costlier than working from home in Pocatello, Idaho.

The question is, does that matter? Some people think it should. James Gorman, chairman and CEO of Morgan Stanley, sent an internal memo to his staff which read, in part: “If you want to get paid New York rates, you work in New York. None of this ‘I’m in Colorado … and getting paid like I’m sitting in New York City.’”

It’s not just the Wall Street crowd, either. In a video directed to Meta employees, Mark Zuckerberg told them, “We’ll adjust salary to location.” If that weren’t inspiring enough (oops, there’s the sarcasm again), he went on to add, “There’ll be severe ramifications for people who are not honest about this.”

I’ll be honest, I don’t get it. Someone sitting in Pocatello could be making investment analyses that are as good as a colleague sitting in Manhattan. Why should their pay be less? Someone in Lincoln, Nebraska may be writing code that’s as good as that being written in Menlo Park. Shouldn’t they be compensated at the same level?

To me, it seems pretty clear. I mean, even monkeys can figure it out …

There are interesting things happening already, and even more interesting days ahead. It seems to me that we’re in the midst of a redefinition of work itself. It’s changing how we think about the contributions an employee makes to their company, and how those contributions are measured. And – perhaps most of all – how they’re rewarded. Buckle up, it’s going to be a bumpy ride.

 

Photo by Patrick Beznoska on Unsplash