Mobility via Podcast

PODCAST

Episode 12: Work anywhere, together: Reward considerations

Michael Bussa, lead Partner of the Global Reward Services team, sits down with Glen Collins from the US Mobility Consulting practice, to share his thoughts on the reward considerations for organizations in a "work anywhere" environment.

Michael A. Bussa

Michael A. Bussa

Partner, Global Reward Services Leader, KPMG US

+1 212-954-1811

Glen Collins

Glen Collins

Senior Manager, Global Mobility Services, KPMG US

+1 202-533-6238

Podcast transcript

Glen:  Welcome to our next episode of Mobility via Podcast. In our last podcast on Work Anywhere, Dave Mayes and Kshipra Thareja discussed how the remote workforce is today’s reality and very likely here to stay. They emphasized that companies need to consider turning Work Anywhere into a strategic opportunity to support growth and focus on how the work gets done, rather than where. It was also suggested that as companies begin to work through their crucial workforce alignment issues to evaluate and support a remote workforce, they need to focus on the operation and governance considerations including areas such as corporate tax, payroll, immigration, and rewards.

In today’s podcast, we are joined by Michael Bussa, who leads KPMG’s Global Reward Services team and will be sharing his thoughts on some of the reward considerations organizations need to be focusing on to attract, retain, and compensate their employee in a Work Anywhere environment. 

Michael: One of the most critical issues companies need to consider is how much to pay employees who will no longer be working at the same location where they were originally hired. For example, if an employee currently working in a high cost location such as New York City or Silicon Valley, wants to relocate and work in a less expensive location, a decision needs to be made as to how much they will be paid.

Historically, most organizations relied upon survey data to determine salaries based on employees’ level, position, and geography. However, with many organizations looking to rapidly migrate to a Work Anywhere model, the use of survey data may not be as appropriate as it once was, as employers look to balance the retention of talent and employee “asks” against the economic and business challenges arising from the global pandemic. In the near term and until the market begins to work through the initial remote workforce challenges, there will likely be “testing of the waters” on both sides; employees will probably look to test the job market to see what competing companies may be willing to pay for a remote work arrangement……employers, on the other hand, in an effort to mitigate overall compensation expense, will probably look to push for salary in line with their current (and more traditional) policies based on work location. At some level, equilibrium will be achieved as the market arbitrates the difference between employees’ “ask” and employers’ “offer…but this will take some time. 

Glen: Is the challenge around compensation limited to the United States? 

Michael: Not at all. Depending on each organization’s sector and policies, Work Anywhere, as the name implies, could be far reaching and potentially enable employees to not only relocate between states, cities, cantons and provinces, but countries, as well. Continental Europe, with the relative flexibility by employees to cross borders, could prove to be particularly problematic. Companies with operations in this region will not only need to assess compensation levels and establish policies across a wide range of geographies, but also, as a practical matter, may need to place limits on where employees are permitted to work remotely. 

Glen: What other time sensitive reward-related issues do companies need to be considering? 

Michael: Organizations are going to need to re-assess the types of benefits they currently provide against what will be needed or required under local employment laws to support employees in remote work locations. Broadly speaking, these fall into 2 categories; 1) health & welfare, pension, and insurance and, 2) in-kind or monetary benefits to support employees in a remote work environment.

In the case of the first, companies will need to assess the benefits that are required to be provided or can be offered in the remote work location and how these are required to be delivered; e.g. under public or social programs or, through private carriers and whether, additional coverage is required as a direct consequence of the remote work arrangement.

In the case of the second, and as many of us have experienced during the pandemic, balancing family and work commitments has become more challenging and the boundaries between “time working” and “family/personal time” have become blurred. One of the more significant challenges for many employees revolve around child care and elder care, requiring organizations to provide additional support in these areas – either through third-party providers or flexible work schedules. Going forward, companies will need to give careful consideration to the support framework needed for employees who will work remotely on a permanent basis.

Also along these lines – what will be needed by employees to maintain a “remote office” and enable them to perform day-to-day job-related tasks, e.g., computers, peripherals, printers, communication devices, etc.? How quickly and creatively companies respond to the needs of their employees will also likely be key to job satisfaction and effectiveness, and thus the retention and attraction of employees. Engaging employees early in the process, will also likely result in benefits that are best aligned with their needs and promote goodwill.

Companies are encouraged to assess benefits needs quickly by understanding required and available benefits in relevant jurisdictions, evaluating them against employee requirements and survey results, and whether tax-favorable alternatives or delivery mechanisms exist.   

Glen: Michael, you have shared a few of the immediate reward-related items companies should consider. Any thoughts on intermediate-term issues? 

Michael: As companies continue to adjust to the new realities brought about and accelerated by the pandemic, they will likely be evaluating their strategic imperatives to support and grow their businesses. Assessing the talent required and the performance criteria to drive these imperatives will shape LTIP design. While talent alignment is certainly not unique to a Work Anywhere reality, the factors which have brought us here and the trends for future and sustained growth certainly are. Some organizations, particularly those in sectors not currently positioned for the new reality, and the evolving needs and preferences of customers, may require significant “talent re-alignment”, as well as changes to existing LTIPs or the introduction of new LTIPs.

Some examples of design changes and the motivations behind them to support companies’ objectives to remain resilient through the new reality transition and position them for future growth, might include:

LTIP Design Change

Motivation

Shift in overall LTIP award mix, such as greater % allocated to Performance-based awards, or stock options

Greater proportion of potential award value tied to  achieving business objectives and/or equity price targets

Performance metrics and award targets aligned with strategic imperatives to grow the company’s business.

Align senior executives with the company’s strategic objectives to drive growth such as, new products; increased digital presence/sales; global supply chain diversification; and an expanded/more diverse customer base

ESG driven award targets

Align employees with the company’s initiatives regarding sustainability, inclusiveness and equality, and governance. Companies are being increasingly challenged by institutional shareholders and other stakeholders to successfully drive environmental and social policies and will need to align and incentivize their employees accordingly.  

These are just a few very high level examples of LTIP design considerations, but in conclusion, I believe the more relevant point is that companies are going to have to also think differently in evaluating the “best” design alternatives to drive their employees and ultimately, their business in the new reality. In my view, relying exclusively on survey and benchmarking data will only take companies so far and they will need to entertain a greater use of analytics to drive LTIP design. Analytics, if structured and tested appropriately, provide companies with LTIPs which are most correlated with their desired business and talent objectives and, a high probability of success.  

Glen: Michael. Thanks for joining me today me today to provide insights into Work anywhere – reward considerations. In future episodes, we’ll continue to address the top-of-mind issues of interest to our listeners. In the meantime, we’d love to hear from you.  If you have thoughts on today’s episode or ideas for future episodes, please send us an email at US-taxwatch@kpmg.com. One final thanks to our audience for listening in. 

 

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