Compensation in a Reinvented Work Environment

The notion of a “typical” workplace is evolving before our very eyes, and with it, remote work sales compensation plans. As quickly as the pandemic drove offices to remote work, major cities in the U.S. are seeing community Covid numbers go down. Therefore, many organizations are eager to bring their employees back into the office, sourdough sandwiches in tow and all. As Dr. Fauci stated at the end of April, the ‘pandemic phase’ is over and we are moving into a ‘transitional phase.’ Around the beginning of the pandemic, the Bureau of Labor Statistics reported that a full 57% of professionals worked at some capacity through “telework.” The latest BLS March 2022 report indicated that, since then, that number of people utilizing “telework” is down to 18%. However, within this subgroup, some occupations such as those in the information technology sector are still working remotely at a rate of 37%.

Will remote work become just a relic of the pandemic, where companies were forced to quickly cobble together a remote work strategy just to keep the lights on? Now, companies are facing a fork in the road when it comes to remote work and remote work compensation plans. Working remotely can largely be viewed in two camps. The former group will look at it as purely an accommodation and perquisite. The latter group will view it is as a window into the new work landscape. Those in the first camp may see the road forward as a focus on minimizing any damage done, as well as managing unrealistic expectations created when Covid gave even untraditional roles the opportunity to work from home. The second camp looks towards an entirely new work landscape, left after those blistering days of the pandemic, as a sliver of light shining from Narnia’s door, providing new opportunities to create global teams who can quickly activate, share ideas, and share and shift resources as they meet their client needs.

remote work sales compensation plan

Adjusting to the New Work Environment

remote sales compensation plan Remote working technology, the acceptance of these platforms to conduct work, and the pervasiveness of technology in our personal lives all increased dramatically during the pandemic. Fortune Magazine reported recently that 80%+ Millennials and Generation Z reported (video) gaming weekly, and often times, daily. The convergence of new technology development, the ubiquity of virtual reality technologies in the lives of Millennials and Gen Z, and the fluidity of technology across our work and personal lives lay the groundwork for a portion of the “workplace of the future” to be constructed without brick-and-mortar. Given this convergence, how ready are organizations to have employees report to their metaverse office space?

To support the new remote and digital workplace transformed by the pandemic, the world of remote work requires its own supporting human resources infrastructure, as well as new norms.

The world of remote work is certainly not new. Employees frequently worked from home for their convenience or to meet business needs prior to the pandemic. With more employees having experienced remote work because of the pandemic and vast improvements to technology, organizations looking to return to the “pre-pandemic” normal will find that a very different landscape has emerged. Organizations that are merely accommodating remote work will likely apply existing programs that were developed for the traditional brick-and-mortar workplace to the new workplace. This misalignment will likely lead to negative impacts on retention, productivity and attracting a world class workforce.

As an example, last summer, a number of large tech companies such as Google, Facebook, and Twitter announced plans to adjust and reduce pay for remote employees who moved to less expensive cities, applying the traditional approach of geographically influenced pay levels to a new, evolving workplace. Employees who made the move during the pandemic from expensive metropolitan areas would be paid at levels aligned to the less expensive cities they now lived in. From a consistency of applying similar pay practices across employees located in the same office, there would be no dispute as to the importance of ensuring pay was administered equitably. However, while treating employees equally based on geographically developed pay rates, the negative fell on employee morale and productivity, which likely was not intended. Leaning into remote working to support new business models will require a new Human Resources framework to optimize the opportunities and address challenges inherent to remote working and remote work compensation plans.

sales compensation plan remote work

Developing a Framework for Remote Work

sales comp plan remote work Organizations developing a framework to scaffold remote work will provide managers who are redesigning their organizations tools to reach markets and to create scalable organizational structures that attract and retain top talent. Organizations can benefit from a roadmap for remote workers in many ways, including:

  • Supporting visualization for organizational redesigns. A remote work HR framework establishes a roadmap for functional and business leaders to visualize how their employees can work in a new way, by specifically addressing common needs and challenges of remote workers. This enables organizations to scale work processes to include a remote workplace. In this tight labor market, using remote workers helps to engage shared staff functions and resources, as well as enables the organization to quickly activate groups of employees during times of peak or overflow demand.
  • Harmonization and consistency across the organization. The HR framework provides a basis for harmonization across business lines and supports movement across the organization for remote workers.
  • Improved employee communication for remote and non-remote workers. A common framework offers realistic job previews to new candidates and helps to manage expectations for employees and their managers who are exploring options to create remote workspaces. Non-remote workers working closely with remote workers may gain a clearer understanding of the expectations of the remote environment and integrate their processes accordingly.

Organizations designing a remote work framework will want to provide a comprehensive work experience similar to that of a traditional brick-and-mortar office. These framework focus areas should consider including specific designs for:

  • Salary structures and ranges.
  • Pay mix and incentive opportunity and payment frequency.
  • Remote work environment and culture.
  • Norms, expectations, and communication.
Salary structures and ranges. A separate “Remote Work Pay Structure” should be developed for roles that are 100% remote work. These structures would provide industry specific and nationally benchmarked pay ranges to reflect the principle of pricing a job in the labor market from where talent is drawn. Jobs assigned to a “remote work” location would be tied to this Remote Work Pay Structure which includes midpoints and ranges. The creation of a Remote Work Pay Structure will eliminate the need to apply geographic pay premiums necessitated in high-wage cities or remove premiums after an employee has moved. Communicating pay within a Remote Work Pay Structure sets clear expectations for pay opportunities and career progression for jobs housed in this structure.
Pay Mix and Incentive opportunity, payment frequency. As part of designing a remote-work-specific pay structure, a closer look at base and incentive pay mix will also support this comprehensive framework. Companies may consider offering a different level of incentive opportunity by making modifications to pay mix and shifting some salary to incentive pay. In the Sales Compensation Programs and Practices August 2021 survey, 472 private and public polled organizations indicated their “field sellers” who worked remotely on average had more pay tied to incentive. In this study, the Field Seller on average had a base to incentive pay mix of 60/40, whereas a Remote Field Seller had a pay mix of 54/46. Click on the study here. By shifting the pay mix in favor of more incentive-based pay, the performance management and pay expectations of the role are automatically shifted. This greater emphasis on performance through increased incentive pay aligns to a frequently cited challenge of remote work: performance management. This realignment supports an increased focus on developing the right performance measures and goals for remote roles. In conjunction with separate pay structures, increasing pay administration frequency for incentives from say annually to semi-annually could also further support performance management. Increasing incentive in the overall pay mix allows for clear expectation setting, generates opportunities for structured performance conversations and establishes focus without increasing overall compensation costs to the company.
Remote work environment and culture. Guidelines around office equipment, ergonomic considerations, allowances, branding and marketing tools such as virtual backgrounds will be important for creating a similar baseline experience across remote work teams. Creating a work environment friendly to remote working teams will mean redesigning on-boarding to rapidly integrate employees to the environment, ranging from assigning buddy systems to tours of the virtual space. Additionally, employee events will need to consider how to include remote workers. Bringing in IT, facilities, finance-accounting, legal, and marketing partners to develop a complete package is critical to this success. Designing a role with accountability for the virtual space, a virtual facilities manager if you will, may assist in alleviating the burden of managing the work environment from managers.
Norms, expectations, and communication. With whole teams potentially working remotely, managers will be challenged to create an environment that promotes teamwork, creativity and seamless communications among the team and their internal and external clients. This will require managers to build acumen in engaging and managing performance of remote workers and work teams. While some expectations may be established at the company level, such as core weekly hours and availability to non-remote workers, local leaders are still responsible for further management of their culture through regular communication cadence. One example of establishing expectations for work environment came from a client of ours here at SalesGlobe. This client had already established core working hours but placed additional requirements to ensure their remote workers worked distraction free. They required their remote workers to have childcare arrangements during working hours, thereby clearly communicating their expectations for remote work. Expectations and norms for the cadence of communication and teaming would be needed locally to cater to the needs of the work group.

It is a good time to take another look at those human capital systems that were designed for brick-and-mortar spaces and to rethink them for the new workplace. One remote work program may not fit all, but organizations need an updated framework to leverage the opportunities provided from remote work. What challenges are you facing around remote workers? What type of framework has your organization put in place or planned to address remote workers?

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