How Has Hybrid Work Changed Employee Total Rewards?

November 15, 2021
November 7, 2023
Jennifer Ernst Beaudry 
Lattice Team

As companies begin to emerge from the uncertainty that characterized much of the COVID-19 pandemic, firms across the country are starting to reckon with a radically transformed workplace. Human Resource departments that found themselves scrambling to oversee a rapid transformation of many workplaces from fully in-person to fully virtual (with all of the technical, IT, and logistical challenges that required) have been working hard ever since, as it has become clear to many companies that the old way of doing in-person work has been permanently altered.

But the growing consensus that hybrid workplaces are here to stay has galvanized change in another area of Human Resources: compensation and employee total rewards. As both current employees and prospective candidates are taking a hard look at what employers offer, firms that want to stay ahead in the most competitive job market in years are reevaluating which benefits and perks attract and keep top employees — and which ones have lost their luster.

Below, we take a closer look at what’s out, what’s in, and what’s still under review when it comes to the perks and benefits that really matter to workers today.

What’s Out

It comes as no surprise that the benefits flagged as being irrelevant are the ones most directly tied to onsite work and office spaces themselves. “In a hybrid or remote environment, benefits like a weekly catered lunch in the office aren’t going to be as attractive as [they were] in an all in-person environment,” said Sara Bandurian, Operations Coordinator for New Orleans-based digital marketing firm Online Optimism. “While we still have plenty of employees [who] come into the office to enjoy free lunch on Fridays, there are some for whom the benefit is inconsequential.”

Add that to the list of what’s out, along with reimbursements for commuting costs or parking, onsite gyms, free office snacks or game rooms (sorry, startups), and anything else that directly ties a reward to the work location itself.

“Any [benefits] aimed at commuters or in-office perks can be a problem for hybrid workplaces because they can only be claimed by a portion of the workforce, and this could lead to resentment or disparities in engagement between remote and in-office workers,” cautioned Matt Erhard, Managing Partner of Canada-based recruiting firm Summit Search Group.

What’s In

Conversely, while the improvements and benefits tied to office work no longer move the needle, benefits that help remote employees create workspaces of their own have strong appeal for workers who need a home office some or all of the time.

“Companies need to ensure that the employee has the right equipment to work from home [and]/or in the office comfortably,” said Paola Accettola, Principal and CEO of HR services firm True North HR. “This means supplying them with a high-quality laptop, a monitor, keyboard, mouse, headset, ergonomic chairs, desks, [and any other necessary office equipment].”

Other benefits that mimic, but don’t outright copy, more traditional onsite benefits can have appeal, too, experts said. Dan Bladen, CEO and founder of scheduling software firm Kadence, cited events that bolster team-building, like online team wine tastings or monthly get-togethers, or even “allowing employees to expense their [home] cleaners or regularly get food delivered on behalf of the company” as benefits that can get people’s attention. 

Also a top perk: support for physical and mental health, and benefits that prioritize overall employee well-being. Robust health insurance options continue to be attractive, experts said, but coverage for wellness programs and mental healthcare like therapy and out-patient treatment, is something candidates are looking for, too.

“We’re witnessing a shift in what benefits employees value in the workplace, and this shift comes as a result of innumerable quality-of-life decreases caused by the pandemic,” said Tina Hawk, SVP of Human Resources at GoodHire, an employment background check platform.

But what many experts agreed was essential to employee engagement and recruiting for a hybrid work environment was building into the company culture the flexibility and workday control workers said the past year has opened up for them. Offering remote options and flexibility are beyond benefits, at this point, some argued — they’re dealbreakers. Matthew McSpadden, cofounder of IT recruiting firm Weld Recruiting, said a recent job his team looked to fill was asking for one to two days in the office — but 11 of the 16 top candidates said they wouldn’t consider the job if it wasn’t full-time remote.

Letting employees pick when and how they work has incredibly broad appeal and can help mitigate burnout, experts said. It’s attractive to parents needing childcare, anyone doing caregiving of any kind, and employees trying to strike a better work-life balance in general. 

“One could argue that flexibility is no longer simply a job perk, but rather an expectation that the majority of workers now have,” Hawk said.

What’s Under Review (It May Surprise You)

Of course, some elements aren’t so cut and dried. In fact, the jury is still out on how newly remote workers regard two of most companies’ capstone benefits: paid time off (PTO) and monetary compensation.

Paid time off
— and specifically, unlimited paid time off — is a benefit on which experts were divided. Some experts said that schedule flexibility and freedom to take time off for not just vacation but mental health days, appointments, caregiving, or any other reason were table stakes for employers. But Accettola said that in her experience, workers and candidates are suspicious of “unlimited” PTO, seeing it as a bait-and-switch. “Many employees, especially younger [ones], are more hesitant to fully take advantage of the unlimited PTO policy because of the high workload and limited staff,” she said.

Meanwhile, some experts say a permanent change to the employee experience that makes more time off the norm could drive retention. “I believe the majority of companies will shift to a four-day workweek in the next 5-10 years,” said Trevor Larson, CEO of employee recognition software firm Nectar HR. “Not only will this help them attract the best talent, it also allows people to unplug more so they don't burn out and can be more creative.”

Even compensation, and the role it has in driving employee satisfaction in the new normal, is subject to debate. To some observers, the devastating toll the pandemic took on the financial health of some workers and families, coupled with rising costs, means that money talks — and competitive compensation in the form of salary and bonuses is the difference-maker.

“Financial incentives are the most crucial part of any rewards system, particularly after such a rough couple of years,” said Zoë Morris, President of Salesforce recruitment firm Mason Frank. "You can put as much emphasis as you like on mental health days, but if you’re not paying your staff properly, their standard of living will significantly slip and they will struggle.”

On the other hand, said Hawk, companies that are offering top dollar but haven’t evolved their pre-pandemic company culture to account for a changed workforce are in for a rude awakening — employees have the power now, and they’re using it to demand a change from the old way of doing things.

“Benefits that used to make an impact, such as a higher salary, paid time off, and other monetary incentives, simply don't engage the workforce of today like they used to,” Hawk said. “After all, if the pandemic taught us anything, it's that we're not promised tomorrow.”

Benefits packages and total employee rewards have always been a critical way to ensure your company is an attractive place to be for the candidates you want to find and retain — and that’s as true with a hybrid workplace as it always has been, experts said. What’s changed for the future of work, they said, is what workers value, and how empowered they feel to ask for it.

“Workers need to feel fulfilled in the present to see value in the work that they do — it comes as no surprise that the benefits taking precedence are remote work and flexibility,” Hawk said. And while there’s no one-size-fits-all approach to crafting an employee total rewards package that best fits your firm, experts agreed that recognizing the shift — and reacting — will be essential.

The bottom line: ”Smart companies will embrace, and cater to, these preferences,” McSpadden said.