Work anywhere, but at what cost?

The ongoing COVID-19 pandemic continues to challenge long-held assumptions and redefine the very idea of what work is. Managers who had previously been against allowing employees to work from home now have no choice but to admit that workers are just as productive (and in some cases more so) when they are in an alternate work location. Executives who insisted that teams needed to be on-site to drive collaboration and innovation have been proven wrong. And the very notions of “business hours” and “company time” are being challenged. Ultimately, this pandemic has revealed that much of which we regarded as “business as usual” was, in actuality, little more than micromanagement. 

Most data I’ve seen indicate that workers want to continue with the levels of flexibility to which they’ve become accustomed and do not want to be constrained by office locations or set hours for working. The pandemic has brought about existential crises for many, who wonder what their purpose is. Why live in a large, overcrowded, expensive city when you can do your job just as effectively from an isolated location? For workers who decide to leave Boston, for example, and go live in the mountains of Vermont, the improved quality of life can be compelling. But what if you and your employer don’t see eye to eye on this? 

This article in the Wall Street Journal addresses one key point of contention between employees and employers: location-based compensation. The conventional thinking has been that workers are paid in accordance with their skills, knowledge, education, and geographic location. After all, the cost of living in the Boston suburbs is much higher than in Vermont's wilds, right? One financial services CEO recently stated that if his employees are going to earn “New York money,” they must work in New York. Never mind that any reduction in overhead from reducing the company’s real estate footprint in Manhattan will save the company even more money—they want to do bed checks.

I’m sure you can see the fundamental flaw in this type of thinking. It’s not as if the employer can’t afford to pay the big city salary. They’ve been paying it all along, after all. It’s just that they don’t want to do it and are using geography as an excuse to justify this. As the knowledge worker's role continues to evolve, so does the idea of the value of the work that a knowledge worker performs. It used to be that your boss needed to see you at your desk from 9 to 5 to ensure that you were “working.” It also used to be that your boss would disappear for 2-3 hours in the middle of the day and return a bit tipsy. Workplace norms and cultures change, and employers need to keep up.

Although this phenomenon seems to be primarily centered on jobs in the tech sector, no field is immune. Companies that wish to remain competitive will realize that they do not pay workers based on geolocation. They pay them for results. Whether those results come from an office in downtown Chicago or a cabin in the woods of Wisconsin should be of no consequence. I predict that companies that force pay cuts on employees who move to less expensive locales will reap short-term benefits but will suffer long-term adverse effects in the form of loss of talent, damage to employer brand, and inefficiencies across the board.