Strategic Planning: Post-Pandemic Compensation

Strategic Planning: Post-Pandemic Compensation

Samantha Badr

Another day, another COVID blog. Although we can start to see the light at the end of the pandemic tunnel, there is still so much work to be done. Sorry folks but looks like we’ll be discussing COVID-19 for a little while longer. This time, *Compensation* is the star of the show – because we all need to get paid right?

It’s no secret that the pandemic has impacted the U.S. economy in more ways than one. According to the Bureau of Labor Statistics, the unemployment rate was a whopping 14.7% by April 2020. Many organizations have been financially impacted – resulting in employees having their salaries cut or being laid off/furloughed. In some cases, businesses had to apply for state aid just to stay afloat.

Businesses with 500 or fewer employees received federal economic recovery funds under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program. PPP loans were provided to small businesses for payroll and other costs for up to eight weeks. However, PPP and EIDL loans were limited, and organizations could not use these loans to pay bonuses or any other incentives for employees with annual salaries/wages above $100,000.

Last year, many employers took the “wait-and-see approach” in regard to compensation practices. Based on a survey conducted in May 2020 by consulting firm Mercer – 94% of employers went ahead with planned 2020 pay increases, but only 24% of employers were working on compensation plans for 2021. As organizations begin compensation planning for the rest of the year and into 2022, it’s essential to look beyond pay levels and focus heavily on what their employees value since the pandemic.

It’s a good time to reconsider whether the traditional approach to compensation is still sustainable. Organizations are considering skills-based pay as a way to reward employees with additional pay in exchange for formal certification of skills, knowledge, and/or competencies. Companies like Facebook are planning to offer localized compensation as an incentive for remote employees not living in the same area as their employer.

As employees start heading back to the office, employers are realizing that they may need to offer new types of benefits. Some organizations are renewing their paid sick leave policies so that infected and quarantined employees, as well as those who stay at home to care for sick family members, will receive sick pay. The Employee Assistance Program (EAP) can be offered to help employees deal with COVID-related stress and mental health issues. Employers are also updating their disability benefits as well as work from home (WFH) policies. Working remotely has presented its challenges but many employees are opting for a schedule with flexibility to manage childcare, doctors’ appointments, etc.

Even if an organization updates their compensation/benefits packages, the economy will keep changing. The best practice is to communicate with employees and prepare them for any changes in the future. Whether it’s a cut in wages or reducing benefits, it’s important to always be honest and up front, because employees are physically and emotionally exhausted. Adjustments to salaries or benefits do not need to be permanent – and as the economy recovers, so will organizations.

I know it’s been daunting, but we’re almost there. Have some hope and stay safe.