Companies are widely embracing hybrid work policies, but some leaders are considering cutting the pay for workers depending on where they live or move to.
Organizations like Facebook, Google, Microsoft, and Twitter were among the first to adopt flexible work policies, but also reminded workers that this practice could lead to a pay cut of up to 25% in some cases.
According to Jason Walker, cofounder of Thrive HR Consulting, cutting an employees’ pay to provide them with remote working capabilities is “an empty threat” and leaders should prepare for pushback from their employees.
“Chances are, if you have to go out to market to replace them, you’re going to have to pay [their replacement] more anyway,” said Walker on CNBC’s Make It.
He added that these types of policies reveal “a lack of understanding of what the talent market is really telling people.”
In fact, according to estimates from fellow Thrive HR Consulting cofounder Rey Ramirez, an employee that makes $200,000 a year in Silicon Valley could lose 20% of their pay, or $40,000, if they move.
“Are you going to risk a $200,000 replacement cost to save 20% in their pay?” said Ramirez.
Even if a worker doesn’t leave their job after receiving a pay cut, this action may lead them feeling unhappy, disengaged, and hinder their retention in the future.