Would you return to the office for a £17,000 pay rise?

Could you be bribed back to the office? From Dell refusing to promote remote workers, and Amazon announcing it will fire them, organisations are doing everything they can to get workers back behind the desk – including offering a pay rise.

A new report from BBC Worklife has found that, across the pond, companies have begun to offer around £64,562 for fully in-person roles by March 2024 – an increase of more than 33% compared to the same time last year. 

The decision means that US in-office roles are being paid around £17,000 more than hybrid roles (£47,211), and raises questions about whether a similar practice might soon be employed by organisations in the UK.

The in-person premium

Old habits die hard. Decades of full-time office work has taught us that the daily grind is the best way to conduct business activities; an idea that many UK companies have bought into.

Despite a shift to home working during COVID, a survey from Virgin Media O2 Business finds that 40% of UK firms have returned to the office full-time. They include big names like Boots, which has declared that its teams must work in-office five days a week, up from three.

So far, full-time office work remains in the minority. But the decision to bankroll a return to office (RTO) could skew the scales in the employer’s favour.

ZipRecruiter, the company behind the BBC data, found that workers who switched from a fully remote role to working fully in-office in 2023 received a 29.2% pay reward. An uplift of this scale is hard for employees to dismiss – particularly as the cost of living crisis continues.

Interestingly, the BBC report finds that fully-remote roles are paid similarly to office roles at £64,320 in the US. This is due to the high number of tech professionals who currently work fully from home or abroad as a digital nomad.

Digital skills shortages in today’s jobs market mean that tech workers have become a hot commodity, with one survey estimating their annual salary to be $182,000 (£143,000).

How much would you pay to work from home?

For many of today’s workers – notably parents and caregivers – the work-life balance benefits achieved from flexible working would outweigh any cash prize.

Having a home office also means saving money by avoiding costly commutes or extortionate supermarket meal deals. This is likely why one survey finds 94% of workers would prioritise home working over a pay rise.

The RTO debate must also contend with the demand for flexible working, which has been gathering momentum for the past few years.

In 2023, we surveyed 546 businesses about their current workplace model. The results show that 66% plan to offer more flexible work options this year, including 14% which plan to increase the number of days staff can work from home. 

Remote staff cheaper to employ

While staff might feel ambivalent towards smaller bonuses, the promise of a substantial uplift to pay could convert even the most ardent WFH supporters to a full-time office return. But this is not necessarily a positive for UK SMEs.

Record pay rises have been making staffing costs a headache for businesses. The Startups research shows 82% of firms are already planning to raise worker salaries this year as a way to hold onto talent. Adding an RTO incentive could be the nail in the coffin for SME budgets.

More research is also needed before SMEs can judge whether common suppositions about home working (it causes staff to slack, it fosters bad working relationships) are accurate.

Studies have so far shown no negative relationship between hybrid work and productivity. In fact, in a study by McKinsey 87% of employees surveyed thought they were less productive  if they had to work at the office five days per week.

Without a persuasive reason for why staff need to be back in the office, employers might find that a cash injection is only a short-term fix to buy their full-time attendance.

The business case

There is a logic behind the decision to raise salaries. But given the current economic troubles facing SMEs, it could equally prove disastrous for cash flow and recruitment.

We previously reported that fully in-office firms are most at risk of making layoffs to cut down spending. 38% of firms with full-time office attendance made job cuts last year, compared to 16% of remote teams, due to office rental fees climbing as quickly as payroll.

As the US experiments with high salaries to trigger an RTO, the UK market should consider before it joins suit. Committing to full-time office work with hiked wages could unlock a Pandora’s Box of financial and HR issues that, once opened, will be difficult to contain.