Responsibility takes on a whole new meaning as organizations try to balance the welfare of their people with keeping their businesses afloat. Overwhelmingly we are seeing leaders putting their people first, and exhausting all other cost-savings options in order to retain their talent while staying solvent. A crisis like this is temporary, and those organizations that put people first now will keep their support in the future, as well as be prepared for the rebound when it happens. But this means taking a creative and agile approach to managing reward.
Only 15% of HR professionals say they're currently considering a reduction in benefits.
Every day, COVID-19 is raising new and complex questions for leaders and organizations to answer. Korn Ferry’s Don Lowman shares his perspective and advice.
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As the economic and social impacts of the crisis affect organizations, adjustments need to be considered for executive remuneration arrangements – including possible adjustments to base salaries, modifications of annual incentive plans or payout opportunities, and compensation tied to longer-term organization performance. Working with executives, HR, shareholders and shareholder representative bodies, we support organizations swiftly and effectively to adjust to “now” and develop the right programs for the future.
We support organizations to adjust to “now” and develop the right programs for the future.
Total cost optimization
In crisis situations companies run the risk of focusing on short-term headcount reductions. But, removing the wrong roles or people or cutting too deeply into areas that drive value, will damage employee productivity and may have a negative impact on future growth. Our approach to total cost optimization looks at organizational inefficiencies while ensuring that critical value drivers are maintained. We identify roles with the strongest impact on executing strategy and realign talent to the future of work, before identifying ways to reduce human capital costs. And we assess reward programs using our online tools and analytics to ensure maximum value is gained from the total rewards spend, embedding a change management discipline into all work activities from the start.
Reward effectiveness audit
We help organizations understand how they can improve the overall effectiveness of their reward programs, while balancing fiscal, strategic, employee relations and litigation concerns, evaluating quality, competitiveness and robustness of reward programs, and alignment to new short-term and future business objectives.
We look at organizational inefficiencies while ensuring that critical value drivers are maintained.
We are helping organizations build and adapt sales compensation plans that motivate and rewards sales resources to meet and achieve revenue and profit goals during abnormal (and normal) economic times. Our analytical diagnostic and qualitative assessment capability allow organizations to understand overall sales impacts and design programs that link changing business priorities with salesforce goals in real time as the situation changes.
We work with organizations to review and restructure their current sales organization to better align with changing business plans and evolving sales talent strategy needs. We work with sales leaders to drive the overall efficiency and productivity of the salesforce and improve the cost effectiveness of selling efforts in both strong economic times and times of hardship.
We design programs that link changing business priorities with salesforce goals in real time as the situation changes.
We are tracking globally the actions companies are disclosing as they adjust reward amounts and practices in the current environment. Leveraging our global COVID-19 Pulse Surveys on Rewards Actions and Workforce Changes we’re using our consulting experience to offer clients a real time, detailed summary of trends and practices. Data is available by sector, geography, and employee level as well as tailored to reflect the considerations of local geographies and country rewards practices and local governmental actions to support businesses across all aspects of the workforce.
We’re offering clients a real time, detailed summary of trends and practices.
In our hands it’s more than just data. We use it to build the DNA of outstanding leaders, effective organizations, high performance cultures and game-changing reward programs. In your hands it can continue to inform smarter decisions backed by more than 4 billion data points, including:
– Over 69 million assessment results
– 8 million employee engagement survey responses
– Rewards data for 20 million employees across 25,000 organizations and 150+ countries
Few, if any, employers anticipated that they would face a pandemic in 2020. Even fewer contemplated how it might affect their employee reward and benefits strategies. And the situation is changing so rapidly that, unless companies have agile reward strategies in place, they’re writing their compensation playbook as they go.
Based on our analysis of the situation and our experience in handling pay and rewards during crises like COVID-19, we suggest that organizations follow six guidelines as they figure out how to optimize their coronavirus pay and rewards strategy.
Korn Ferry is tracking the latest coronavirus pay and rewards trends and practices and advising companies on what their peers are doing by role, industry, and region.
A recent USA Today survey found that, despite the risks of the coronavirus, three times more Americans are worried about their finances than their health. Most American workers (80%, based on research from CareerBuilder) live from paycheck to paycheck, and the majority of the working population have saved less than $1,000 (60%, according to Yahoo! Finance). These numbers are even lower in many global markets.
Organizations are starting to build a set of agile reward strategies as part of a more comprehensive coronavirus pay and rewards program. Here is a partial list of the changes that employers are making to optimize reward spend, optimize benefit costs, and address these concerns:
The longer the coronavirus pandemic lasts, the more concerned employees—and their employers—will become for their financial viability.
There is no end in sight to the uncertainty caused by the coronavirus. For organizations struggling to contain their labor costs, we suggest a four-phase approach.
These four phases will guide organizations as they focus on optimizing benefit costs and implementing a new reward and benefits strategy during the COVID-19 outbreak.
Many companies are taking a wait-and-see approach before they adjust their executive compensation. But the appropriate level of response depends on the industry and whether the organization has already released its plans for compensation.
Remuneration and compensation committees need to take proactive steps to address pay and rewards as they consider their benefits strategy during the coronavirus pandemic. If plans for 2020 compensation have been implemented or shared, then the committee may still make adjustments. If the compensation plan has not yet been disclosed, then it may be prudent to eliminate salary increases for the executive team.
For industries where the impact on employees or the business is high, in the short-term, organizations may want to adjust salary temporarily and suspend incentives that may be unattainable. In most other situations, organizations should monitor the situation and be prepared to make changes in line with their circumstances for 2021 to optimize benefit costs.
Other changes may be warranted to short-term and long-term incentives. Here are some options to manage the uncertainty as you adjust your benefits strategy during the coronavirus:
Korn Ferry has helped countless organizations optimize reward spend; our experts will guide your organization as you consider your coronavirus pay and rewards strategies.
Most organizations expect a slowdown in sales productivity as a result of the coronavirus pandemic—but the extent of the slowdown is, as yet, unknown. Organizations should take action now to protect employees and their bottom line, but that doesn’t mean that furloughs and layoffs are inevitable. Cautiously consider what moves to make, as losing sales team members may make it difficult to meet pent-up demand during the recovery and exacerbate the effects of the slowdown.
In reviewing your sales compensation strategies, consider whether you can incentivize sellers to keep working toward more realistic goals. We advise organizations to take three steps as they review sales compensation and benefits during the coronavirus outbreak:
Whatever approach you choose, there are three keys to success in your relief efforts. First, establish a timeline for measurement. Second, set clear expectations for performance. Finally, only offer these incentives to employees in good standing.
Organizations should focus on leading from the top, ensuring they have implemented sound reward policies that will motivate current employees, and making the adjustments necessary to prepare for a return to normalcy and rebounding into the future.
Contact us for assistance in crafting compensation policies and benefits strategies for the coronavirus that will carry your organization through the pandemic and into recovery.