The COVID-19 pandemic has provided stark examples of how a crisis can force organizations to take difficult actions around compensation and workforce strategies, often unheard of during business-as-usual circumstances. Here are seven lessons we learned during the pandemic.
01
In the early days of the pandemic, organizations took swift and decisive cost-saving actions to prioritize job security for employees.
Actions taken to contain costs quickly1
When/in cases where businesses have reopened , organizations are exploring a variety of new initiatives, from technologies that support remote work to programs that improve engagement and wellbeing. Many are also reviewing their rewards and reskilling programs for the “new normal.”
02
Organizations provided cash allowances as a primary reward for essential workers. They also explored other rewards such as non-cash meal benefits, shorter or flexible working hours and enhanced benefits for illness or disability.
03
Approximately 20% of organizations globally cut executive pay by June 2020, but these changes were temporary and expected to last only between three to six months for most organizations.1,2
A small percentage of organizations also restructured their executive total compensation program, for example, delaying goal setting for annual incentive plans and adjusting long-term incentive plans. The majority of organizations, however, adopted more of a “wait and see” approach and did not make any changes, opting instead to observe how the situation continues to evolve over time.
Changes implemented on long-term incentive plans1
04
When organizations moved most of their workforce to remote, non-office-based locations during the crisis, and are now potentially extending and/or expanding remote working well beyond it, a heightened need to strengthen the security and reliability of digital infrastructures emerged. This, in turn, led to a more focused hunt globally for digital talent skilled in high demand areas such as cryptography, AI and machine learning and cloud engineering.4
While many organizations expect to bring a large percentage of their workforce back onsite post-crisis, certain roles will remain remote. To enable longer-term remote working, organizations are looking at tools and resources needed to support their remote workforce.
05
Organizations prioritized transparent and timely communication on compensation, including changes to pay such as reductions and freezes. This ensured employees viewed any compensation decisions as fair and equitable, and enabled them to manage their finances and salary expectations through uncertain times.
06
Even before the pandemic hit, organizations around the world had already begun incorporating ESG metrics into executive incentive plans, as part of a push towards developing a greater sense of corporate purpose and responsibility. COVID-19 helped accelerate those actions.
ESG-related emphasis in total compensation framework post-COVID1
In fact, in our recent survey1 on post-COVID actions, organizations indicated human capital-related goals were among the top areas of emphasis in the total compensation framework for executives. These include a greater focus on employee wellbeing, corporate culture, job redesign and employee reskilling.
07
Organizations should continually reference market intelligence to determine measured responses to crucial work and rewards questions. Here are five examples of where market intelligence could support compensation decisions in uncertain times.
1 2020 COVID-19 Actions to Restore Stability Survey – North America
2 2020 Salary Budget Planning Survey – Global
3 2020 Artificial Intelligence and Digital Talent Survey Report
