The working world as we know it has permanently changed, pushed forward by the pandemic. As technology has evolved in recent years, it shifted how we shop, learn and work. Consumers who traditionally purchased goods and groceries at brick-and-mortar stores transitioned to relying on online orders. People who were previously hesitant to try new technology found themselves chatting away on group video calls. As schools and offices closed, most students attended school virtually, and many worked from home for the first time. Workers who lost employment reconsidered how to earn a living.
Over a year later, it is clear the gig economy, remote work and hybrid models that enable employees to do parts of their jobs on-site while also working from home have become entrenched, forcing employers to rethink the hiring process and their talent retention strategies.
A Closer Look at This Trend
At the same time, the landscape shifted for workers in many industries. Once the economy started to emerge from the worst of the pandemic job losses and the general public began to return to pre-pandemic activities, job openings correspondingly grew. This provided job options for both employed and unemployed workers to consider change.
April 2021 marked the beginning of the “Great Resignation” or "Talent Transition," when a record 3.8 million workers voluntarily left their jobs. As unemployment ebbed and job openings and hiring grew nationwide, it became clear that most of these “quitters” were changing jobs for better ones. A record 10.9 million job openings in July 2021 continues the trend that has contributed to labor shortages across the U.S.
As a result, employers were in a bind to support business reopening and meet customer demand (and still are), and they began sweetening employment terms to attract urgently needed workers. Wages suddenly had to compare to government-subsidized pandemic unemployment benefits, which showed many low-income wage earners what it was like to be able to afford daily living without working two jobs in grinding conditions. Major employers raised compensation to meet levels that more closely aligned with worker needs.
To attract working parents and caregivers, companies began to provide more flexibility. They adjusted workspaces to help reduce employee fears of contracting COVID-19 on the job and invested in infrastructure to enable many to work from home. When customers behaved antagonistically toward employees, employers began to implement protections. Overall, what emerged is the trend of employers improving pay and benefits for their employees and being more responsive to employee concerns in the ongoing uncertainty, which in turn has helped attract and retain employees.
While it is clear that a substantial percentage of the labor force now expects options such as flexible hours and the ability to work remotely, it has created multiple challenges for those who recruit and hire, employers and workers, each of whom has different perspectives and priorities.
The Talent Acquisition Perspective
For talent acquisition, recruiters and hiring managers, remote and gig work has provided some clear benefits. The overall goal of meeting the hiring manager’s need is to find candidates with the best fit and skillsets for the job. Even a huge city like New York is still home to a small portion of workers in any given industry. Remote hiring creates a larger talent pool, enabling candidates to be found beyond local labor markets.
With advances in technology and the internet, recruiters can fill job openings with remote, qualified workers wherever they are available, except where these jobs rely on face-to-face interaction with equipment and customers such as in Manufacturing and Transportation. Yet even in these industries, some percentage of jobs could be fulfilled remotely.
In the case of short-term labor needs, hiring managers also benefit from the trend toward gig work. Whether hired directly or through recruiting agencies, the labor pool of people willing to accept short-term contract opportunities has grown. In some cases, this leads to paying a higher hourly rate than for a full-time employee; however, the effect on overall cost to the business is limited since costs are incurred only when the occasional service is needed. In other cases, if labor for minor jobs is secured through services such as Fiverr and Upwork, it could cost less.
One challenge of hiring remote workers is knowing the level of compensation to offer. In this scenario, local salary norms may not apply. Should compensation be a competitive local wage for the worker’s location, the company’s location or a highly competitive rate regardless of location to attract top-quality candidates who won’t easily be lured away?
Business Perspective Pros and Cons
A challenge for businesses when remote work provides a viable option for a position is getting the compensation strategy right.
One the one hand, a compensation strategy of paying as little as possible based on worker location may have negative results. It limits the talent pool available to recruiting. Lower wages may also result in lower employee engagement and productivity and higher turnover, which brings higher replacement costs and additional decreases in productivity. It could also unintentionally lead to increased diversity pay gaps.
Due to the rapid adoption of remote work as a norm from pandemic necessity, people are now more likely to discount location as a factor in their pay expectations. Using AI (Artificial Intelligence) software such as LaborIQ® can help establish equal pay to attract and retain talent regardless of gender, age, and diversity factors.
On the other hand, hiring remote workers can also allow companies to cut compensation-related costs or upskill their workforce while paying fair and competitive salaries to their employees based on location.
For example, using LaborIQ Compensation Answers enables recruiters and other talent acquisition professionals to assess the competitive salary requirements for workers across industries and locations. Employers can then decide whether it makes sense to pay an analyst with a bachelor’s degree with 1-2 years of experience $105,000 in New York or $90,000 in Dallas. Alternatively, the employer may choose to upskill the position, with a $109,000 salary for an analyst with a bachelor’s degree and 6-8 years of experience in Dallas.
Another challenge remote work presents is the company's compliance with multiple states’ employment laws. An employee’s local law often takes precedence, creating a challenge for HR (Human Resources) departments. As remote work has become more common, services to address this challenge have entered the market.
Regarding gig or contract workers, businesses face a fine line in some cases. Hiring self-employed workers turns an employment relationship requiring HR overhead into a vendor relationship. Over the past several decades, many organizations have opted to outsource jobs such as customer support centers and other support roles rather than keep these services in-house, frequently influenced by the mantra of “focus on your core business.”
Unfortunately, using these external workers can result in lower service quality due to the workers not being personally invested in the company, ultimately leading to a lower satisfaction rate among customers. A more recent challenge is that of legal liability due to ongoing clarification over what constitutes outsourced or contract labor versus employee status.
The Employee’s View
From the employee perspective, remote work provides the benefits of employment opportunities that wouldn’t otherwise be available in their local community, of avoiding a daily commute or permanent relocation and its related costs and typically enables more flexible work hours that accommodate individual needs and caregiving responsibilities.
Salary and benefits are still top concerns for workers when looking for a remote job. A reliable competitive salary and health care benefits are table stakes for remote employees, just as they are for local employees.
Staying connected to their boss and colleagues can be a challenge for remote employees, depending on the company’s communications, culture and inclusivity. Some employers apply procedures that are overly intrusive and inflexible, while others can leave remote employees feeling uniformed and unappreciated.
Gig work provides an alternative to commitment to a single employer, and services like Fiverr and Upwork enable many freelancers to find clients and projects online. Some people can master these platforms and build their presence to the point that they may pick their clients and often negotiate their prices.
The challenge to gig work is that just because a person may have skills and talents worthy of hire, they may lack the ability to promote themselves. These people may end up with less work and settling for lower pay. A meta challenge for workers as a whole is that when employers choose gig work, there may be overall fewer full-time jobs with reliable pay and benefits.
Every industry is unique, with some that are better suited to remote and gig work than others. For better or worse, these forms of work are here to stay, so understanding the benefits and challenges from all perspectives will give you an advantage.
Adopting a remote work or hybrid work model enables companies to accommodate the flow of market demand, leveling the playing field and providing the flexibility to better respond to growth opportunities.
For recruiters, talent acquisition and hiring managers, remote work enables them to attract the best-fit employees wherever they live and develop diverse, inclusive and talented teams. And for employees, remote work opens opportunities for work and life that might not otherwise be possible.
When challenges for all players in this growing trend of remote work are carefully considered and addressed, everyone can benefit.