Great companies find opportunities in chaos, and while the COVID-19 pandemic has created nearly 2 years of chaos in the United States and around the world, there are some notable silver linings. One of the most impactful—in terms of the sheer number of people affected—is the shift to widespread remote work. Millions of employees across a variety of industries have spent months and months working remotely, and by and large, employers have not seen the precipitous drop in productivity many feared.
While remote work has certainly been a boon to the countless employees who love the flexibility and convenience of working from home, employers also benefit from the ability to hire workers from virtually anywhere in the world, or at least the country. This opens up a massively expanded talent pool from which to recruit new team members, which may be particularly crucial for companies struggling through the labor market woes of the Great Resignation.
Of course, there are logistical and personnel challenges to consider with this expanded dimension of recruitment. We spoke to industry experts and those with experience broadening the geographic reach of their recruitment efforts to get a sense of the approaches companies are taking.
Are Companies Taking Advantage of an Expanded Hiring Range?
Are companies taking advantage of the opportunity to cast a wider net for recruitment? The short answer is yes. Particularly considering the challenges businesses are facing with the Great Resignation and record levels of job vacancies, employers are happy to look wherever they reasonably can to fill those vacancies. Now, with many workforces still largely or fully remote, it’s perfectly feasible for a company in New York to hire staff in Florida, California, or Wisconsin.
Moreover, companies in areas that have a high concentration of employers relative to available workers may face less competition for talent if they’re able to recruit from more rural areas—for example, areas that aren’t home to major competitors for talent.
What Challenges are Companies Seeing?
Broadening the geographic range of recruitment certainly offers benefits, but it does bring some challenges, as well.
One issue companies are seeing with the expanded number of candidates is, well, the expanded number of candidates. “As expected, the talent pool has drastically increased along with broadening our recruiting locations,” says Diane Cook, an HR and recruiting specialist with over 7 years of experience with Resume Seed. “However the unintended consequence is also that my recruiting team is spending more time cleaning up requisitions, data management due to the increased applications. While the number of qualified, available candidates increased so did the number of unqualified candidates,” she says.
Another challenge is that the ability to separate the geography of recruitment from the geography of a corporate headquarters is a double-edged sword because other companies can do the same thing. That means a company that once was the only big employer in town could now face competition for workers from anywhere in the country or even the world.
Speaking more broadly, not all companies are willing or able to embrace remote work, and this new norm poses particular challenges for them. “Companies that aren’t going remote but still need to hire are having a hard time winning talent because a large majority of employees will not work for an employer that won’t allow remote work even a few days a week,” notes Michael Moran, owner of Texas-based Green Lion Search Group.
What Is the Prevailing Wisdom on Location-Based Salaries?
This is a bit of a mixed bag. One school of thought argues that salaries for geographically dispersed employees necessarily need to take cost of living into account. When we asked Cook whether she believed location-based salaries are important, she said, “Yes—of course.”
Cook says she understands that in certain locations throughout the United States, the cost of living will be significantly higher than the average or where the home office is located. “To help counter that, we add in a pay zone differential,” she says. “For example, a candidate living in NYC will require a higher salary band ($100k + 25% pay zone differential, or PZD = $125k total) than a candidate living in Oklahoma ($100k w/o regional pay differential, or RPD). However, we do put a clause in that should the candidate move from the higher cost-of-living zone, they will forfeit the added differential.”
But that approach isn’t universal. “For decades most companies have been using outdated compensation models, partly basing employee compensation on geographic location,” says Jason Medley, Codility’s Chief People Officer who manages the people ops, talent acquisition, IT, and security teams. For instance, “Higher compensation for employees living in tech hubs like San Francisco and New York and lower compensation for areas inside the coasts like Omaha, Birmingham and Pittsburgh.”
But, Medley says that “we believe geography should not be a limiting factor for talent and no matter where you live in the U.S., we believe the salary for similar roles should be consistent. As a remote-first company we decided to make a bet on our people and change the outdated models of compensation by taking a progressive and human focused approach, recently announcing a United States wide salary band. So no matter where you live, the compensation is based on the role, not the location.”
Moran says he’s seen both approaches with his clients, but he feels the latter approach, embraced by those like Medley, is becoming the more popular trend.
Of course, before hiring someone, most companies want to go through an interview process. Not surprisingly, in-person interviews are not widely seen as essential for positions that are entirely remote. However, some companies report asking candidates for key positions or in the final stages of the interview process to travel to the company headquarters for an in-person interview.
Handling employee requests for remote work was long an unpleasant experience for managers who were loath to give out that privilege for fear of lowered productivity and diminished ability to supervise staff. COVID-19 thrust employers around the world into a forced experiment, and many have since embraced remote work, as well as the expanded geographic hiring range remote work makes possible. Widespread remote work is still in relative infancy; however, companies around the country are already learning important lessons about the pros and cons of the broadened hiring net.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.