Resetting the north star for your rewards strategy
Half a year has passed and we are still managing our anxiety accelerated by the fear of catching the virus, maintaining social distancing, social isolation, working at home while juggling family responsibilities, and so much more.
The situation can pretty much be summed up into three phrases:
- A pandemic.
- A Social unrest.
- A sudden recession.
Millions of jobs lost. Massive pay cuts. Working at home while juggling family responsibilities. So, how do you keep up the motivation levels of your talent when nothing is going right? More importantly, the new normal of work requires new ways of working, developing new skills, and ability to go beyond and rethink business continuity and models. Is your workforce ready to put in efforts after being continuously being in a state of uncertainty, fear and not being rewarded with what they deserve?
Organizations need to consider how to develop differentiated reward offerings that engage employees with authenticity, empathy, and collective purpose.
In August’ theme, People Matters Editorial brings to you this special series #RethinkingPerformance&Rewards, where we will find answers to how should businesses go about streamlining the new performance and reward framework, as the pandemic slows down. In this article we explore insights and views of industry leaders, Zubin Zack, Managing Director O.C. Tanner – IMEA and Anurag Aman, Partner at KPMG India as organizations reset the north star for their rewards strategy.
Here are some of the top performance management and rewards trends:
Shift in performance management practices and rewards strategies across organizations
As the organizations adopt a new way of working required in the new reality ahead, the definition and measurement of performance is witnessing a significant shift as well. Some of the shifts that are becoming prominent includes:
- Organizations are rethinking about their current frameworks and transforming the goal setting to a more dynamic, outcome and milestone based process.
- Continuous and frequent check ins were becoming the order of the day for ensuring ‘line of sight’, and also to guide the performance of the team in time, especially for the virtual roles.
- Organizations are also looking for data driven tools and digital systems that support remote working and track real time performance in absence of face time.
- Possibility of a high “Burn out” due to multitasking with other responsibilities by being at home also automatically pushed the leaders to understand their employees and consider the emotional side to them which otherwise did not see priority as much as we may have wanted. This was again something that allowed employees to gain trust increasing trust and transparency scores.
- Gen Z employees preferring short term projects, contract employees, or job rotations as preferred to a long-term career.
With the pandemic, the market has turned to be an employer’s market and the variation and choice of opportunities are limited however many companies have taken this opportunity to showcase the culture and a strategy of employee concern. Depending on the positioning and employee proposition the company chooses this choice of direction could play a major role in how everything else shapes up.
Zubin shares, “Earlier recognition was more of a personal celebratory event but now it’s more of a digital experience.”
Reward strategies to help employees navigate these challenging times
The “New Normal” has ushered in the need to optimize the rewards bucket, balancing both the financial stability and employee focus. The clear focus has been to enable remote work for employees who don’t have access to laptops and connectivity. Organizations need to anchor employee centric reward strategies aimed at enhancing well-being as well as motivation. Apart from EAPs, careful crafting of allowances and benefits would enable us to achieve the same – medical benefits, dependent care, ergonomics, connectivity, for instance. Several organizations are accommodating paid leave of absence for sick or virus contracted employees or their family members, providing enhanced coverage for mobile/internet expenses and extending benefits of ergonomic tools, child care etc. while working remotely. Many organizations are actively investing in psychological and other wellness programs as well.
Each company and each industry have different experiences. However, at any time and any economic trend companies need to be wise with their cash flow. "I think this financial burden is one more reason for the below to be accelerated," shares Zubin. Employees need to invest in themselves, stay relevant, understand their role, and fitment on how they contribute to the company’s larger objectives in the new environment. Below are some of the action steps that employers can take to help employees navigate through these challenging times with their last impact on their salaries or jobs.
- Short term assignments or projects over long terms commitments.
- Outsource initiatives and work or even contract staffing rather than full-time employees.
- Higher variable, lock in bonuses, and expectation of a low increase year on year.
- Focus on low cost or no cost benefits like WFH, mandatory leaves, paternity/maternity leaves, etc.
- Reduce employee expenses on travel allowances, cafeteria, and other benefits within office premises and move to hot-desking or WFH options.
- Investment in microlearning, short term certifications versus long term executive management or other programs in L & D.
- Cut out annual retreats, strategy meets, etc, and go digital. (Needless to say, some of them are compelled to be a part of our strategy and not feasible in the given pandemic scenario.)
What if an organization is unable to bounce back to previous pay levels
With the current situation, organizations are forced to reorient their rewards strategy towards resilience and agility, focusing on making short term right term choices that enable long term sustenance. Anurag shares, “One of the options is to remodel their current operating and workforce structure which allows flexibility and scalability.” He further shares, “Optimization of workforce segments with the overall contribution-cost is another key factor to managing rewards in these times. There has always been immense focus on revenue enhancement with little attention being spared on modelling employee costs. There is a need for organizations to identify their high priority/business impact areas and align their reward structures to skill criticality. Leaders need to develop command centers that involve cross functional stakeholders to run cost benefit analysis and undertake suitable cost correction measures, eventually.”
According to Zubin, organizations should invest only in talent who have an impact that can be quantified and needed here and now. That way organizations will have a staff who delivers and generates the expected returns making all compensation affordable and needed. If this is done and the business seems viable then organization can sail through. The difficulty comes when one needs to take risks with the returns expected in the long run and it can be done only when there are funds to make those bets. “If you cannot deliver in the short term and don’t have funds to stay invested in the long run, then it is not much an HR or people issue but a business issue,” shares Zubin.
Blurring work-life boundaries and employees’ compensation
Despite no bonus, no appraisals, and significant cuts in annual compensation, expected work and hours have not been toned down, rather we see a greater blurring of work-life boundaries. Organizations have begun to explore alternative ways to compensate employees or consider reducing workload through shorter workweeks or adjusted hours.
Anurag shares, “Leaders need to be thoughtful and goal focused, yet appreciative of constraints that employees operate under. Work hours have gone up, a lot also goes in just coordination and calls that otherwise would have taken a passing conversation in office. At present, the norms are not set, organizations may look at outcome based compensation more closely.”
The current situation demands more work and compensating employees financially for putting extra hours might not be something that organizations can do given the turbulent economy and uncertain times ahead. However, there are a number of ways by which companies can help maintain a good well-being for their employees:
- Ask employees to take time off: Workers’ reluctance to fear surrounding COVID-19 and worries that, if they take time off now, their job may be gone when they come back. There’s a real risk of workers working straight for too long, especially since millions of people have seen their professional lives blur into their personal time by working from home for months. All of this can lead to employees burning out, which can dent engagement, productivity, and performance, especially mental acuity.
- Celebrate small victories: When employees go above and beyond at work, they want to feel some appreciation for it. A company-wide email is a nice option, but its effects can be short-lived. Take the opportunity to celebrate by having a team virtual get-together that champions everyone’s successes?
- Check In and Catch Up that connects your team: Take the time to talk to your remote employees, find out what makes them tick and feel valued!? It could be they’d like something as simple as a little gadget that will help them out at home, or possibly some yoga equipment to enhance their health and well-being. You may be surprised what they come up with. Gallup’s report into employee recognition found the most memorable recognition is from an employee’s manager, and that’s even the same for staff who aren’t office based.
Further, “Most companies are working on providing a fun environment and a good work culture. It engages employees towards a larger impact, shared purpose, and continues to develop employees towards their aspiration or new knowledge or skill set. Like I said above innovative and personalized compensation strategies can work for certain job roles and employee expectations. They should be considered to make up for additional work or vice versa in case shorter weekdays are necessary,” shares Zubin.
Structuring reward programs during these uncertain times
As we navigate through these unprecedented times, it is critical to remember that the current challenges may be temporary, a people first approach is critical for sustainability. Organizations with foresight, should focus on developing:
- A holistic rewards program that caters to employee needs, continuously.
- The need to balance empathy with financial prudence will be the heart of the rewards design.
- The refreshed reward strategy should fulcrum on readjusting financial goals, shifting some of the direct pay outs with the more relevant benefits and allowances, that offer employees the required immediate care and support and build a sense of belongingness.
- It also becomes important to factor in specialty/crisis funds needed. For example - supporting premiums or “hazard pay” for frontline workers.
With new found digital proficiency, investment in learning for future can be a win-win. “Organizations should also think about newer practices of rewarding and recognizing outstanding contribution by individuals and teams, with remote working and availability of some powerful intuitive digital recognition platform, this could be the differentiator in this “distant” work environment,” shares Anurag.
The fixed components should be the bare minimum and yet fair to each employee. The notice period, encashment of unused leaves, and other additional unnoticeable costs to the company should be avoided, benefits like tuition reimbursements, exec MBA programs being supported, or reworking on the Mediclaim program to cut down frills or unused benefits, etc should be cut out. “It would also be wise to continue feedback and seek what components of the compensation are most appreciated by employees. However, it is not always about cutting compensation but investing where it matters,” shares Zubin.
Pillars of performance that organizations should focus on
Given the uncertainty ahead, the existing performance pillars need to be continuously re-evaluated to assess relevance. Agility, Accountability and Autonomy are the new design principles that need to be incorporated in the performance management strategy, systems and most important, organization culture.
Anurag shares, “Companies today would need to invest a bit more extra effort and energy in understanding their unique situation, look at the most appropriate approach, flexible technology support and powerful analytics that drive talent decisions.”
However, as organizations decide to rethink their performance management practices, Zubin shares, “One should not let go of basics.”
“I think there are components which are basic etiquettes to be a good resource/ employee/ team member. Things like discipline, integrity, behavioural norms, etc. The second one is subject matter expertise and delivering on your expectations. The first one is hygiene; it is a no brainer and expected and does not expect a review or measure. Without the basics, I would not expect people to get hired. The second measure of performance for your expertise or expectation can be measured and needs to be reviewed via counsel, mentorship, and personal development. The last one is beyond your expected behaviour, integrity, or even being a great performer. It is what’s next? Where do you stand on the leadership competencies the company expects out of a company representative? Where do you stand on the next possible opportunity for you? Are you teachable, a go-getter, ambitious, a hard worker, etc? Do your values and aspirations align with those of the company?”