How Has The New Work Culture Affected Employers? 

We are now seeing a world whereby two years ago, employees were nervous; they were trying to figure out “what’s going to happen to me”. Employers are going to lose revenue and therefore jobs are going to become scarce. So people were trying to dig into their place of employment to secure their place. Over the last two years, what we’ve realized is that it hasn’t decimated a number of employers and a number of employers have actually had for one reason or the other, demand increases in certain sectors that offset the losses in other sectors. Employees have realized that they can work in a different way, and they have a number of different choices about where they can work and how they can work. 

What ends up happening is they’re paying more and it’s disrupting. Finance has to help them to figure out “what does that mean for our organization?” Does it have a lasting impact or is it just a one-off because of the point in time?

How Has Increased Choice Affected Existing  Salary Demands?

Rodney: Many companies are facing this dilemma, but the cost of the replacement staff is out of whack with current salary levels within their organization. How do we deal with this? Am I really going to bring in new recruits at a higher level than experienced recruits or experienced staff, team members, because the market demands that I pay more in order to get those replacements? 

The dilemma is I have to fill the position, but the cost of filling that position is outside of my current salary bands. Do I bring people in and hope that nobody talks about salaries and therefore I never have to deal with the situation? The rule of thumb for smart managers is assume that it’s going to be public. 

Rodney: It’s a very difficult issue that many companies are dealing with because the ultimate outcome of that is higher prices to your customers. Because if the cost of delivering the service goes up, if you’re going to retain the profit, then ultimately you’re going to have to pass that cost on to your customers.

What Is The Role Of Finance In The Changing Workforce?

Rodney: It’s determined if the cost of what the business wants to do will have a single or sustained impact on the profitability of the business. So the operating folks are going to say, I need this. Finance is going to say, at what cost and at what benefit? And so when you’re talking about disruption to salary bands. It’s quite possible to model what the knock-on effect is of changing those salary bands in terms of the service delivery costs. 

So finance steps into that equation to say, OK, we understand what it is that you say you need to do or you would like to do, here’s what the implications are going to be in terms of service delivery cost. How do we make that up? Do we get more volume or more output from the same staff complement, or do we just have to raise the price to our customers? If we raise the price to our customers, are we still competitive in pricing against our competitors? Do we have to worry about that? Or is our value proposition such that our customers are willing to take on that additional cost? So finance is trying to make sure that that conversation is part of the decision.

Is There An Intrinsic Cost To Attracting And Retaining Staff?

Rodney: Well, there are two things, two areas of the lifecycle of an employee that employers are having to deal with right now. One of them is attracting the employees in the first place. Then the other is retaining those employees. If you’re thinking about how do I attract them, what we’re seeing come out in the marketplace these days is employees are saying, I want to work remotely. So to what extent can I work remotely? And remotely might mean I may never even live in the country where you’re hiring me to work. It’s gotten to be that kind of a conversation sometimes. They might say, I want flexibility of hours. They might say that if I have to travel to come into the office, you actually have to pay for my transportation and or accommodations if I’m working remotely. I’ve seen those in employer/employee discussions, and those are very difficult discussions because employers aren’t used to these kinds of discussions. They might be discussions about longer vacations than you’re used to giving and therefore, you now have to look at your vacation policy. Employees are talking about the benefits and whether you’re giving them a set of benefits that they find acceptable. 

We’ve got to make sure that we give them diversity of work. We’ve got to make sure that we’re aware of their likes and dislikes of doing their jobs and find the work-life balance and the work assignment balance that gives them that reward that they’re looking for that’s the non-financial component. Ultimately, they probably will get the financial reward if they perform.

How To Measure Remote Employee Performance?

Rodney Davis: Well, with a remote staff, it becomes that much more important that you have ways of measuring output because you can’t simply have them clock in and clock out, and they’re not necessarily doing predefined supervisable tasks. So even though you’re supervising in an all-on-site work environment, the supervisor has a number of visual ways that they can determine if staff are being productive. Whereas in a remote environment, it’s going to be a lot more based on the metrics, the level of output. So that means that you’ve got to define what’s expected of the staff in a more measurable way with a higher degree of specificity so that you can determine if people are actually giving you the value of output that you require based on their compensation levels. It’s just going to require a whole new set of dashboards for a lot of companies.

Final Thoughts

Rodney: Don’t be afraid of what’s happening to compensation. Be much more concerned and spend a lot more of your time figuring out what that compensation level is going to do to your service delivery costs and try and decide how as an organization you’re going to make sure that you can offset some of those costs. And as I mentioned earlier, with price increases and or with just better efficiencies and higher productivity from the team. In the long run, it’s definitely cheaper to retain your staff and to continually be looking for new staff. So you’ve got to figure out how to make it work.