Extra cash for in-office work? HR should think more broadly about pay, experts say

Employers may consider paying workers who work on-site or in an office more than those who work at least part of the time remotely, but other factors are typically prioritized over work location, sources told HR Dive.

HR association WorldatWork generally has not seen employers offering higher base pay for on-site workers — at least, not solely because employees work in an office rather than from home, said Marta Turba, VP, content strategy. The reality, she said, is much more complex.

“It’s more common for compensation philosophies to be based off of geography,” Turba continued. For example, a technology company with offices in cities with a higher cost of living might adjust pay for workers who move away from those areas to work remotely. Employers also may consider stipends for employees who work in-office to help with costs related to commuting, food, transportation and caregiving.

Reports of organizations offering higher pay for in-office work have been sporadic in recent years. A March 2022 BBC report cited Stanford University economist Nicholas Bloom, who told the outlet that employees who returned to offices could receive pay increases of between 5% and 10%. Some employers incentivized return-to-office strategies in other ways; CoStar Group, a real estate information firm, offered a new car and all-expenses-paid vacations to entice employees, The Wall Street Journal reported in 2021.

But work contribution, not work location, is often a more significant factor in compensation plans, according to Turba. “Employers should be thinking of compensating their workforce in a fair and equitable way, and usually that comes down to what somebody’s contributing rather than the work structures around it,” Turba said.

A 2023 Payscale report found that 72% of organizations factored performance into pay increase decisions in 2023, with 67% saying they accounted for market adjustments and competition for talent and 54% citing inflation and cost of living as considerations.

Perceptions of on-site work influential

Still, there are several perceived advantages to on-site attendance in research. For example, a 2021 Gartner survey — the results of which were shared in an email with HR Dive — found that 68% of leaders said they believed on-site workers outperformed remote workers, while 80% of executives and managers said they believed that in-office workers were more likely to be promoted than remote workers.

Employees may feel similarly about on-site work. More than half of U.S. respondents to a 2022 American Staffing Association survey said they believed that employees who worked exclusively in-office had a competitive advantage over fully remote workers in areas such as bonuses, raises and promotions.

But such perceptions may not prove accurate when examining actual worker performance. Over the last couple of years, Gartner data “has really shown that people can be just as productive in a hybrid setup if not more so,” said Caitlin Duffy, research director for the firm’s HR practice.

“Employees thrive in different environments and settings,” Duffy added. “By allowing people to choose what setting they’re working in, you can unlock the potential and personality of people with different workstyles to do their best work.”

Similarly, a 2024 Mercer report found that, among organizations that have embraced fully flexible work policies, increased productivity was a “main driver” in those decisions. Mercer also found that 64% of workers said they were more productive when they worked remotely.