Covid-19 is not only a pandemic with extensive impact, it is shifting the way we view and approach diverse aspects of our lives, businesses, and financial demand. In the area of the employer-employee relationship, we are seeing variations in compensation and benefits practices typically targeted at confirming business steadiness. Stimulatingly, the changes are diverse and extraordinary. The changes depend on the type of business, industry, nation, the extent of Covid-19 spread, and disruption.
One thing that is clear is that there are changing preferences and there is an emerging new normal. One major issue that businesses have been addressing is liquidity, given that they still need to incur significant expenses even though there is little cash. Therefore, that some businesses are already laying off employees or paying their reduced salaries.
We analyze some of the changes to employee rewards, which represent companies’ continuous efforts in balancing business continuity and providing the support that employees need at this challenging time.
This is part of the emerging new normal. Before Covid-19, many organizations viewed with skepticism the idea of remote working. Unfortunately, the virus, leaving no one with time to prepare, has thrown organizations into the deep, where they must swim or sink, in terms of making remote working work.
Companies are learning quickly the tools and support that employees require to be effective.
- Power Supply – This depends on the employee’s location. Employees are incurring considerable costs in providing alternative power supplies to facilitate work. Companies may need to consider whether they need to provide support in this regard. Such support may include reimbursements or cash allowances. However, it is important that every business considers the impact of any support on its ability to survive, especially given the impact on liquidity. Where any business decides to provide such support, it must also consider the tax implications.
- Data & Connectivity – This is also largely a function of the employee’s location. Connectivity and network quality may be better in some locations than others. So, a one-size-fits-all approach may not be effective. Companies may need to consider how to provide support to their employees to enable them to deliver work seamlessly.
- Measuring Work – Companies need to figure out how to evaluate the value of work done and how to reward for that. This raises the question of Managers’ readiness and ability to measure output rather than physical presence.
- Considerations for Staff Cost Containment – many companies adopted recruitment freeze, down-/right-sizing, salary freeze, etc. For managing people cost.
How organizations responded to tough economic conditions We are seeing some similarities in the decisions being taken to respond to Covid-19, which is much more disruptive:
- Leave for Staff – some companies have advised employees whose work cannot be performed remotely or who are jobless to proceed on leave (paid or unpaid). This is to make sure that, when normalcy is restored, enough hands are available to pursue recovery. This will also avoid a situation where companies are carrying more costs than necessary to support a lean operation.
- Temporary Pay Cuts at Executive and Senior Management levels–These adjustments will set the tone at the top and send a strong message to the entire workforce on the severity of the virus’s impact.
- Revision of Variable Pay Schemes –As it is harder to form useful projections, companies may think about using relative targets, instead of absolute ones. Also, for future incentives, it’s going to be useful to extend vesting periods to supply longer to realize targets. Cancellation of already-existing awards will cause accelerated costs within the books, so this might not be advisable at this point.
- Rotation of Staff – Even in teams, were working from home is possible, the workload may have reduced, due to the slow-down. Rather than retain the entire team, work-sharing may be adopted such that employees work the week on a rotational basis. Such reduced hours may afford employees the flexibility to deal with the disruption to their lives and livelihoods.
- Hazard Pay – For front-line employees and those performing essential services that cannot be done remotely, companies need to consider an incentive as a reward for the sensitive exposure.
- Measuring Performance – How is work done remotely going to be measured? Does the team lead equipped to pre-determine the time expected to be spent on tasks regarding the standard of output expected? How capable are performance measurement systems in assessing employee contributions and ensuring appropriate rewards?
- Engaging the Union – As employee representatives, it’s important that the Union is carried along, the maximum amount as possible, in deciding and changes being implemented. When should the Union be told of key decisions? What should be the engagement strategy and what level of detail should be shared? Transparency is key to building trust.
- Legal Considerations – companies need to watch out to avoid breaking any laws or regulations that may lead to future exposures.
- Communication –Communication needs to be transparent, regular, and empathic. As much as possible, individual (one-on-one) conversations should be held in situations of employment termination. Frequently Asked Questions and relevant responses should be prepared and accessible to employees. Companies should specialize in inspiring employees to support ongoing reforms and recovery plans, post-Covid-19. Communications must address employees’ concerns about the health and safety of family members, friends, and loved ones.
As businesses specialize in surviving through and thriving post-COVID-19 pandemic, rewards professionals got to contribute strategically to cost containment and business sustainability. Companies also got to demonstrate resilience and empathy in decision-making, as their actions today will define employees and the public perception of the business. COVID-19 Pandemic has revolutionized the way we expect about working consequently, our approach to rewards must be redefined in line with the emerging new normal.