The Great Return - are you willing to pay your employees to stop working from home ?

?Media coverage, traditional and social,?tend to give a polarised view of The Great Return. Are we being dragged back to the workplace kicking and screaming, or are we really rather pleased to ditch the off-camera joggers and keep warm on someone else’s heating bill??

It is now several years since the pandemic, and a Great Return hasn’t fully materialised. For non-customer facing roles, hybrid working has become the norm, with employees attending the office some days, often to collaborate with colleagues rather than to do work in the office which could easily be done at home. So how likely is it that five days a week back in the office will ever become the default option again??

A recent Gett survey of 2,000 office workers suggests that 55% of employees would consider a return to full-time office attendance, but they would be likely to want to renegotiate their compensation package to do so.??

A look at home working versus commuting costs suggests why this might be so.??

The principal cost of working from home is energy, as equipment is a one-time fixed cost which largely landed during the pandemic. A 2022 exercise by Channel 4 estimated that working from home might add about ￡50 per month to energy bills between October and December, although this would vary with location and personal comfort. Although currently rising, average electricity and gas prices are down from their 2022 historic highs, so are unlikely to be substantially higher than that now. We can assume that ￡50 a month is still a reasonable benchmark for the energy cost of working from home.??

Commutes are all different; some of us might be driving ten minutes down the road. Others might be making a substantial train journey to a different city. For motorists, fuel prices are also down from 2022 highs; the cost/benefit analysis for motoring commuters is likely to be very similar today. Rail fares, however, have increased each year; 5% in 2024 and 5.7% in 2023.? A hybrid worker commuting by train would take a greater financial hit from a return to full time office attendance.?

If we look at the current season ticket price for a modest rail commute, the cost of a 2 day per week annual season ticket from Hemel Hempstead to London would be ￡2,408. Going up to 5 days per week would be an additional ￡2,978, equating to ￡248 per month, and landing as a substantial up-front cost.???

A further factor, and potential expense, is the personal time lost to commuting. Commuting represents time unavailable for other areas of life, but not directly paid for as part of employment. For some, that unavailable time translates into payments for wrap-around school care, or increased nursery fees. Not to mention the constant concern that a travel delay will result in a childcare penalty payment and, more importantly, a distressed child left waiting for a parent who hasn’t turned up. Childcare is one area where a reduction in commuting time has had a substantial positive impact on family life.?

It is now some years since the Covid-19 crisis. Those are years where people have built lifestyles around a home or hybrid work pattern. They may have moved house or employment on the basis that they can afford increased per-journey commuting costs over fewer days. They may have made schooling or other life decisions based on personal time and reduced expenses. They will also have been better able to absorb the cost-of-living shock that peaked in 2022 if travel expenses and childcare expenses were a smaller part of it.?

If hybrid working doesn’t work for someone, due either to their work environment preference or unsuitability of their home as a permanent work environment, they are likely to be back full-time already. The ones still at home now will be the ones who find hybrid working beneficial. So no real surprise then, that these employees would be seeking to offset the loss of these benefits using their compensation package if they are to return.??

More surprising is that employers also appear to be open to renegotiation of compensation packages. 70% of the London business leaders in the Gett survey indicated that they would be likely to renegotiate compensation in return for more frequent attendance.??

At first glance, a return to full time office attendance would only represent a return to normality, with the recent years being an outlier. If an employee’s salary was acceptable to them for full-time attendance before Covid-19, why would it not be acceptable now??

Part of the answer may lie in that cost-of-living shock. Our own forums and surveys around that time showed that employers were very concerned about the impact on their employees and trying to find ways to help within their available budgets. However, the spike in inflation went well above what they could restore via a pay award. In a very real sense, salaries for most people don’t go as far as they did before. If key employees look at their pay and conclude that they can’t make the numbers work anymore with the addition of new travel and childcare costs, they become a flight risk.???

That the survey was of London employers and business leaders is relevant here too. We find that regional pay variations are generally modest, but that there is a significant difference in London rates of pay compared to other regions of the UK. Many employees in the London area will be commuting in from other areas, losing personal time and incurring substantial costs on that commute. London employers are likely to be aware of that, and its contribution to the flight risk potential of key employees.?

Any move towards full-time office attendance, then, requires a careful look at what your employees are gaining compared to what they are giving up, and equally what you are gaining compared to potentially giving up if you get it wrong. If you really want your employees in full-time, consider the actual impact on them, and make them part of the conversation. You will need employee buy-in if you want to keep your best people.?

Reward is never just about basic salary. When someone chooses to work for you, or to stay with you, they will consider many factors. If?you are focused only on basic pay, you only consider a part of their picture. We think work location is part of the Total Reward picture. When you understand your people and what they need and value, including where they work and how, you can establish a fair compensation offer which makes them feel valued in turn.???????

Reward Heads work with organisations on Total Reward to help them get and keep the best people, and to make employment rewarding for both sides. We also offer coaching modules in Total Reward and Reward Strategy. ?

If you would like to talk to us about how Reward Heads can support you with looking at your Total Reward offering, or any other Reward issue, then please reach out to us at [email protected]??