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VMware Cuts pays for remote workers fleeing Silicon Valley

(Bloomberg) – VMware Inc. employees who accept the company’s offer to become permanent remote workers will receive a pay cut if they move from Silicon Valley, one of the country’s most expensive areas to live, to a cheaper city .

The software maker has joined technology companies such as Facebook Inc. and Twitter Inc., allowing some of its employees to choose to work permanently from home due to the coronavirus pandemic. But employees who worked at VMware’s headquarters in Palo Alto, California and went to Denver, for example, must accept an 18 percent pay cut, insiders said. Leaving Silicon Valley for Los Angeles or San Diego means giving up 8% of their annual salary, said people who asked not to be identified when discussing domestic policies.

Facebook and Twitter are among other technology companies that have introduced or are considering similar pay policies. A Twitter spokesman said the company had a “competitive” approach to locating compensation, while Facebook publicly said it could reduce employees’ salaries depending on where they chose to move.

VMware’s senior vice president of human resources, Rich Lang, said the company adjusts wages based on “labor costs” in different regional areas and compares wage variations among companies competing for their workers. While some employees will see pay cuts, Lang said others could receive an increase if they decide to move to a larger or more expensive city.

The coronavirus pandemic has disrupted US life, forcing millions to work from home. Some Americans have moved closer to their families and loved ones or to more accessible areas than the capital’s expensive coastal centers. In the midst of a recession with high unemployment, many technology workers have more flexibility than ever to decide where and how they want to work after a pandemic. But efforts by some companies to recoup some compensation when workers leave Silicon Valley, one of the most expensive places to live in America, show that leaving can have its costs.

Cloud software maker ServiceNow Inc. is considering changing the pay of Gulf workers who are leaving starting in 2021, according to CEO Bill McDermott.

“I don’t believe we need to have an environment where management is not committed to these decisions, because what you could get into here is a situation where employees then become decision-makers at work literally everywhere, and you would they had a hard time organizing and maintaining culture, if that’s the case, “McDermott said in an interview Friday.

McDermott said no final decision had been made and the Santa Clara, California-based company would try to form a formal policy. He said ServiceNow is likely to have a hybrid workforce in the future, with employees in offices, on the road and at home.

“Will we adjust their pay when they are in the mountains of Colorado for a few months, where they feel more secure?” Probably not, “he added.

The San Francisco Bay Area had the highest prices for goods and services, including rent, among the country’s major metropolitan areas by 2018, according to the U.S. Bureau of Economic Analysis. New York City Center was in second place. Among areas of all sizes, the California cities of San Jose, Sunnyvale, and Santa Clara, in the heart of Silicon Valley, had the highest rents in the United States.

As corporate campuses in the Gulf region remain closed due to local coronavirus regulations, technology companies, which have long been accustomed to treating their office workers well to increase retention, have set remote work as another advantage, but employees will have to decide if leaving Northern California is worth a lost salary. For pay and tax reasons, these companies need to know where employees reside, but the decision on pay fluctuations is at their discretion. Vangware’s Lang said the company has tried to be transparent with employees about how the move would affect their compensation so they can make an informed decision.

“We ask employees to be honest in advance, because that’s what VMware expects, but governments also require you to pay your taxes depending on where you work,” Lang said, acknowledging that there will be some workers who continue to ask for an address. in California even to move elsewhere. If the workers temporarily move to be married or for another short-term reason, their pay will not be affected.

Apart from pay policies, Twitter provided all employees with a one-time homework bonus of $ 1,000, regardless of their location and additional vacation days. VMware also gave all employees a two-week break at their discretion so they could recharge.

Facebook told employees in May that the company would soon move more permanently to remote work, even after Covid-19 faded away. Employees who leave expensive areas such as San Francisco or New York will have to cut their salaries, depending on where they live from January 1, 2021. CEO Mark Zuckerberg said he expects up to 50% of Facebook’s global workforce to be removed in the next five to 10 years.

Dell Technologies Inc., a personal computer maker that owns 81 percent of VMware, asked volunteers to work from home as much as they wanted, one to five days a week after a pandemic, as long as they had manager approval. Texas-based Round Rock, Texas, said it was not making any adjustments to compensation “at this point in time” and would give remote workers a one-time $ 400 scholarship for home office equipment.

(Updates with comments from the CEO in the seventh paragraph.)

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