“If you want to get paid New York rates, you work in New York … none of this, ‘I’m in Colorado … and getting paid like I’m sitting in New York City.’ Sorry. That doesn't work.”
This comment from Morgan Stanley CEO James Gorman during a recent investing conference created quite a commotion in the Twittersphere. And it’s likely that many Chief People Officers winced when they first heard it.
Is this evidence of a CEO who is insensitive to the reality of post-pandemic workplace dynamics?
Gorman continued: “Make no mistake about it. We do our work inside Morgan Stanley offices, and that’s where we teach, that’s where our interns learn, that’s how we develop people.”
So, was this actually an insight into the mind of a CEO who had assessed how best to meet the needs of his customers and organize work accordingly?
Either way, Gorman has highlighted that most organizations are going to be forced to re-evaluate how best to organize how work is performed, where it is performed, and who should perform it.
His comments also illustrated that most compensation structures are woefully out of date: why shouldn’t someone sitting in Colorado be paid as if they are sitting in New York? They’re doing the same work after all.
A recent study by Monster.com found that 95% of people are considering changing jobs following the pandemic – and according to the US Department of Labor a record 4-million people quit their jobs in April alone. A significant portion of employees also considering “fractional” employment where they work for more than one employer.
The pandemic is also forcing employers to re-think their real estate footprint, with a recent McKinsey survey showing that 9 out of 10 organizations are planning to combine remote and on-site working.
All of this will all lead to a different kind of workforce, delivering work in different ways, from different locations.
So, does it make sense to keep the traditional “one size fits all” approach to job structures and the associated pay?
Most of today’s compensation systems are focused on rewards for doing a specific job in a specific geography. And many of the job evaluation systems that help level and price these jobs are based on evaluation methodologies that are decades old and an assessment of values that are based on outdated workplace dynamics.
Now is, therefore, a perfect time to step back and reassess what is important to an organization, how best to structure the business to deliver the work, where talent should be located, and then – and only then – how best to reward that talent.
All too often in the past, compensation systems have been disconnected from the overall human capital strategy. Chief People Officers now have a unique opportunity to take a deeper, more strategic look at how you staff, who you staff – and how you keep them.