The global pandemic has had a profound impact on our collective health, most notably our physical, psychological and financial well-being. The pandemic has also triggered a global recession, and company leaders are minding the health of our businesses, workplaces and workforces.
This recession has affected businesses across all sectors and sizes, and under the weight of an uncertain future, leaders are focusing on the fundamentals of managing their companies, starting with cash flow. By and large, technology companies continue to grow, albeit at a much slower rate than in prior years. Companies that offer consumer-business essentials have fared well, whereas those linked closely with consumer spending and disrupted sectors have struggled the most.
Companies that had developed a scenario for business contraction that included how to manage their total rewards are now carefully reviewing and deploying the plans. Elements of total rewards under consideration are listed below.
If you do not have an element of performance-based pay, this may be the time to introduce it. This will require you to evaluate the pay mix between base salary (fixed cost) and incentive plan (variable costs). The intent is to rebalance cash compensation—hold steady on base salaries and increase the variable pay to reward contribution and company performance. If you do not have a variable pay plan or have a variable for specific roles (for example, sales or client success), it’s now time to think about this lever. Be sure to establish performance measures, goals and rewards that are motivating and increase the likelihood of retaining your highest-performing talent.
It is common during the fall for companies to review their base salaries and present budget recommendations related to compensation. As mentioned, base salary is a fixed cost, so be prudent with any increases. Make use of reliable and valid market data to evaluate pay of key roles and talent.
If you choose to make reductions to base salaries (temporary or otherwise), consider this option carefully so as not to alienate highly skilled employees that occupy roles critical to the business success, as the cost of turnover may be higher than the savings.
Net-net, be sure to make fair pay decisions for employees you want to keep, especially those who will give you their best during this demanding stretch. Note that how you treat your employees during the crisis reinforces or detracts from your employer brand and will affect your ability to attract and retain talent in the future.
We have seen an increase in the adoption, inclusion and use of health and wellness offerings, such as telemedicine (virtual healthcare). Employees are likely working longer hours to help the company survive or thrive, so be sure to care for their well-being. Consider redirecting funds from underutilized or unused benefits (and perquisites) to fund your employee health and well-being efforts. To accomplish this, you may be required to make trade-offs.
Those companies looking to foster and nurture their culture virtually should continue hosting huddles and consider injecting some team-based activities that are appropriate for extroverts and introverts.
It is also essential to ramp up employee recognition and take advantage of the spectrum of media available. For example, when was the last time you sent or received a thoughtful handwritten thank-you note in the mail? During these difficult times, express gratitude to your employees for their contributions, and exemplary behaviours and attitudes. Regular feedback, encouragement and acknowledgement are some of the best non-monetary (and often overlooked) elements of total rewards.
To help bring small teams together, whether to collaborate on a specific topic or celebrate a milestone, some companies have decided to rent meeting rooms (adhering to provincial requirements and physical-distancing norms) at flexible office spaces.
Many companies offer their employees long-term rewards, commonly in the form of stock options. Prior to the recession, companies struggled with communicating the grant process and value of options.
And as there are currently no clear signs of an economic recovery and fewer liquidity events, stock options may be more precarious than ever before. We recommend companies help employees understand the value of their options, especially if options make up a significant part of the total rewards package.
There is much to be said about the networking opportunities and learnings that come from attending a conference, but when physical distancing and cost management are paramount, consider the vast (and free) offerings from Massive Open Online Courses and cost-effective MasterClass sessions.
Topics that have grown in popularity since March include managing virtual teams, resilience and growth mindset.
As you make decisions to change or alter elements of your total rewards, develop a sound communication plan.
Here are some practices to ponder:
Manage communication in such a way that it helps employees understand what is required to manage through the pandemic and come out stronger than before.
And of course, spend more time talking rather than emailing or using messaging platforms.
Be sure to find ways to listen to your employees. Pay close attention to employee morale and engagement—consider pulse surveys and leader-lead panels to glean insights about employee sentiment.
Paul Romer, a Stanford economist, was quoted as saying, “A crisis is a terrible thing to waste.” Be positive and resourceful. Actively lead your company and employees to weather this ambiguous stretch, and be certain to use your total rewards wisely to help you move forward.