Money vs Home – A Google Riddle

Would you accept a pay cut to keep working from home? Google’s recent decision has stirred the hornet’s nest – again.

While the world is getting ready to welcome the “new normal” once the pandemic subsides, and organisations are busy figuring out how to grant maximum flexibility to their employees, a recent move by Google has taken everyone by surprise. Going against the grain by completely ignoring the emerging trends of “work from anywhere” and “hybrid workplace”, Google has formulated an entirely new pay structure for its US offices, which advocates a pay cut for those employees who would opt to continue working from home as office reopens.

It was working fine!

As COVID-induced lockdowns swept through the world in spring last year, the speed with which companies adapted was nothing short of remarkable, switching to a remote work model virtually overnight. Employees with desk-bound responsibilities even experienced a productivity ‘honeymoon’, as fallow commuting hours could be reclaimed both for organisational and personal use. From hiring to training to implementing technological infrastructure, every aspect of the organization has completely changed during the pandemic. Companies that are mulling a return to offices must accept that more nearly two years of remote working has altered employees habits, and it is highly probable that some of these transformations towards workplace attitude would be permanent.

And against this backdrop, Google’s recent decision has stirred the hornet’s nest – once again renewing the “office or home” debate. However, the decision to go for a pay cut is being seen by the industry as too drastic and too early, given that COVID is not yet fully under control and overall it has been proved that working from home did not turn out to be counterproductive. So why raise the hackles?

The Google formula

Google is trying out a peculiar salary model for its employees’ post-pandemic. It has developed a pay calculator that lets employees see the effects of working remotely or moving offices. According to the new model, an employee who opts to work from home on a permanent basis will have to accept a pay cut that could be up to 25%, depending on the location of residence. As of now, this applies only in the US, but could well be a global company standard once it gains traction. In fact, it is an experiment taking place across Silicon Valley, which often sets trends for other large employers. Big tech firms including Microsoft, Facebook and Twitter already have a differential pay structure for employees based in office locations where it is less costly to live. However, the Google pay structure would mean employees at the same office and at the exact same job profile would be offered a two-tier salary structure – a lower pay for working from home and a higher package for attending office physically.

Justifying the move to the media, a Google spokesperson said: “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.”

However, all experts do not agree. Speaking to media agencies on this issue, Jake Rosenfeld, professor of sociology at Washington University, said: “What’s clear is that Google doesn’t have to do this. Google has paid these workers at 100% of their prior wage, by definition. So it’s not like they can’t afford to pay their workers who choose to work remotely the same that they are used to receiving.” According to Prof. Rosenfeld, Google’s move will raise alarm among employees about who will feel the impact most acutely.

On the contrary, Google maintains that they are being more employee-friendly. According to the Google spokesperson: “Our new Work Location Tool was developed to help employees make informed decisions about which city or state they work from and any impact on compensation if they choose to relocate or work remotely.”

Where is the office, anyway?

But the pandemic has made it evident that having multiple sprawling office buildings in central business districts of every major city might not be the sustainable in the future. There is conclusive evidence that the office is shrinking. In major cities across the world office spaces are increasingly going empty. This is going to be a permanent trend as organizations raise the critical question; do they need large offices that they had in the pre-Covid era? While on one hand the employees are reluctant to come back to office for more than two or three days a week, the investments of creating a remote work environment are paying rich dividends for companies on the other. While output-based profits have remained the same despite working-from-home – or even slightly increased – there have been huge savings in terms of physical infrastructure. The rentals for the building, water, electricity, furniture, coffee-and snacks-vending machines – all definitely adds up to astronomical figures. Organisations are seriously thinking whether all that is really required.

A survey by JLL, a real estate professional services and investment firm, of the Indian office space market showed that in Q1 2021, occupiers adopted a cautious approach and focused on reassessing their real estate portfolios and long-term commitments. Workplace activity in London, New York, and San Francisco is running at half what it was before the pandemic. In New York City, office vacancy rates have risen 11.3% in the last year, and now stand at the highest level in 27 years. Organizations that wanted people back to office have faced serious pushbacks from their staff, who have argued that there has been no loss of productivity or even innovation during work from home, despite no physical supervision or the much-talked-about water-cooler moments creating that spark.

Is this discrimination?

The new Google salary calculator will consider which area the employees live in and the distance they commute to reach office. It emerges from early reports that those living in the same city where their reporting Google offices are located will not experience any pay cut, even if they chose to work from home permanently. However, employees living in adjacent towns and areas and choosing to work from home will likely see a pay cut. On the face of it, this appears to be lacking in reason and common sense.

• From an employee perspective, it would be demoralising to be paid less for doing the same job,
• From a business perspective, it would needlessly create two tiers of employment, one attending office and the other not – but both doing the same work.
• From the HR perspective, it would offset the advantage of harvesting remote talent – a grand possibility thrown open by the pandemic.
• From the diversity perspective, this could widen the gender pay gap as women continue to take the main responsibility for childcare and has benefitted most from WFH.
• From an organisational perspective, this might be the perfect recipe for differential treatment in terms of training, appraisals, promotion, and access to opportunities – thus dealing an ugly blow to team spirits.

Everyone thought that a hybrid work model would be the way to go once the pandemic subsides. This sudden Google move may pose unnecessary hurdles in the way of a smooth transition to that model. Let us wait and watch.