Article: COVID-19: Shaping rewards in a volatile world

Benefits & Rewards

COVID-19: Shaping rewards in a volatile world

As the new working model forces organizations to rethink rewards and well-being of employees, here are 5 guiding principles to help you frame agile reward strategies in the new normal.
COVID-19: Shaping rewards in a volatile world

“The secret of change is to focus all of your energy, not on fighting the old, but on building the new” -  Socrates

A year ago, “Future of work” felt almost like science fiction, something we were gradually pacing towards. However, COVID-19 has accelerated the pace of change to a great extent. The future of work is here, the future of work is NOW.. The crisis has tested the acumen of leaders and the agility with which organizations have been adapting to the change. All organizations will have to undergo some restructuring to navigate  the crisis. 

With increasing layoffs in many firms’ and loss of business opportunities it becomes difficult to envision the post crisis situation, especially when survival is the key goal. However, organizations that want to accelerate through the crisis are already planning on how to transform themselves with the norms of the new normal. A study by Mercer reveals that 99% of companies are embarking on a transformation. The top challenges are workforce capability, ability to finance change and understanding the need for transformation. 

A reality check on challenges

Rewards and well-being programs have always been significant to the relationship between employers and employees as well as critical to employee motivation, and account for a significant organizational expense.

Rewards and benefits in the transformational journey play an important role. It is imperative that a close check is kept on compensation spend against the business performance.

However, there are various challenges that are bound to arise from the situation:

  • Structuring compensation and benefits for quarantined workers
  • The need to pay premium or hazard pays for frontline workers
  • Taking into consideration potential furloughs, salary freezes, partial salary pay and other cost saving methods
  • Need to provide accessible mental and emotional well-being support to employees
  • Considering the need for programs such as childcare or dependent care

Ways to approach the issue at hand

As the new working model forces organizations to rethink rewards and well-being of employees, here are 5 guiding principles to help you frame agile reward strategies in the new normal.

  • Relief Team: A review of the organizational rewards strategy is necessary. It should involve leaders from across various cross-functional teams - forming a relief team/committee and work on establishing an approach to ensure a safe working environment for workers and customers. The aim should be to develop a plan which holistically overlooks the situation and leads to agility in solving business problems. Organizations may or may not have the need to restructure their entire plan, but in the short-term - adjusting targets, pay-outs and specially funds for crisis becomes more important than ever. This is a time when organizations should recognize and focus reward transitions on critical talent. These include retention benefits for business-critical employees or spot rewards for frontline workers. Establishing a practice of recognizing the heroes of today is imperative in building engagement and harnessing a sense of energy to move people forward in the future.
  • Focus on health: In this state of virus crisis, the primary focus of leaders across businesses is the well-being of their employees. According to a recent post-COVID survey, it was found that employers were using technology to optimize costs for employee well-being before the pandemic had arrived.

Telemedicine and Telehealth has seen a growth of 10% year on year, with 72% of employers having offered these benefits in 2019.

However, since the pandemic, 86% of employers are encouraging their employees to use these services. The survey also showed that nearly 10% of the employers are paying a premium to their employees in order to maintain sufficient workforce while around 15% employers have added an Employee Assistance Program to their benefits.  Vijay Kumar Jamwal, Director Human Resource at ClearTrail Technologies shared with People Matters that they have been regularly updating the employees about existing benefits such as insurance as well as information on hospitals and investigation labs that can be approached in their locality. He further added “We have also recognized the need to focus on mental and emotional well being of employees and apart from employee wellness webinars we have also focused on helping employees with taking care of the elderly at home and their children.”

  • Revisiting salary structure: The incentive plans (long term and short term) for 2020 stand void as they were framed before the pandemic and most likely do not account for the present work circumstances.There needs to be a transition from a climate of command and control, to more fluid talent models. Shorter incentive plan or measurement periods can be considered (semi-annual, quarterly) which would help improve the ‘line of sight’ of performance goals for industries that are the worst hit.

For the short term, incentives adjusted financial goals can also be made to try to curb the impact of the current crisis. In the medium to long - term, companies should focus on restoring stability and returning their business back to normal.

Restructuring should focus on a few key things, such as continued pay for workers impacted by closure of factory or work units, providing pay and benefits to employees diagnosed with the virus, extending additional pay/stipend to support work from home arrangement(internet facility, infrastructure, increased mobile bills). 

  • Recognition of critical talent: A report by Korn Ferry suggests that job roles are changing and this is the time to focus on internal equity and make sure that job grades truly reflect what the organization is asking them to do. Organizations should consider base pay as an integral part of the compensation. People need stability in pay and it is the core of the reward mix people count on to make their ends meet. This is also the time to step back and revisit reward strategies whenever there is a change in the business and talent strategy of the organization. There is a need to closely look at the performance equation, that is how performance is defined and tied to pay.

A Mercer study shows that new rewarding strategies that would emerge from this new normal are going to be focused on skill-based rather than the traditional performance based. 

Meaningful reward strategies are bound to build momentum and encourage agility in the organization.

  • Clear Communication on new and revised policies: A clear, consistent communication should be delivered in a simple and transparent manner on decisions being made and guiding the employees about resources available to support them. Informing about sick leave policies for the infected, quarantined and workers that need to care for elderly or children, insurance cover, WFH policies and compensation plans among other things should be done from time to time. Apart from the benefits the focus should be on direct communication from leaders urging employees to stay calm and deal with the situation in a smart manner. Talking to People Matters about how clear communication is the key intervention right now, Vijay Jamwal said, “We made sure that employees who are stuck in guest houses/hotels due to work trips are provided with all necessary infrastructure.” He also added that they have had leaders engaging with the employees in a continuous dialogue to set work expectations.

These are unprecedented times, with an end point that cannot be determined. However, leaders can prepare and be ready when it does come to a halt. Now is the time to learn from the changes, implement with care, empathy and consideration but also with agility, and transform purposefully.

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Topics: Benefits & Rewards, #ResetWork, #TheNewNormal, #COVID-19

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