Google has created a calculator to potentially slash – by up to 25 percent – the pay for employees who choose to work remotely forever. As an example, a Google employee who previously commuted the hour from Stamford, Conn., to Manhattan before the pandemic would see their salary cut by 15 percent if they choose to continue working from home.
And Google is not alone. Facebook, Twitter, and LinkedIn have warned employees who plan to leave expensive cities like New York and San Francisco that their pay will be reduced. However, tech companies like Reddit and Zillow say they’ll pay the same regardless of where employees live.
A Google spokesperson defended the action, telling Reuters, “Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from.”
Google doesn’t have to do this. They raked in $61.9 billion USD in revenue during the second quarter of 2021 and its stock is up 79 percent in one year. As a culture expert, I can tell you one thing this action will probably do: decrease employee engagement. Is it really worth it?
Jill, What Can I Do? Every organization must decide how they will manage post-pandemic salaries. Will you pay the same regardless of where employees live or cut pay based on the employee’s geographic location? Only you know what’s right for your firm, but I advise that you think long and hard about the true cost of slashing pay. You may end up losing much more than what you save in payroll dollars. Employees may disengage, costing you in productivity, retention, quality defects, creativity, sick days, and customer satisfaction. Is it really worth it?