Written by
Ruth Thomas
Senior Consultant and Co-Founder, CURO
LinkedIn

06 August 2020

The underlying issues of today’s economic inequality will deepen and extend the current Coronavirus recession. Based on past global events, high wage disparity has distilled most economic resources to those at the top of income and wealth ladders, leading to little protection for the economic security of workers and their families. With the majority of the world now working from home, wage disparity persists and will likely worsen due to the COVID-19 crisis.

This is part two of our “Reshaping Employee Reward In A World of Uncertainty” series and is a continuation of our panel discussion on actions and adjustments that our reward experts panel are putting in place for their own team’s reward programs.

Read part one on their Reward and Engagement Strategies for Addressing COVID-19 Challenges here.


Meet the rewards panel

John Grover, Chief People Officer and Co-Founder at Endsight (as well as a CURO client) is based in California. John co-founded Endsight and is responsible for talent acquisition, employee engagement, performance, and traditional HR responsibilities such as benefits and payroll.

Evan Davidge, The Wellbeing Leader, is based in the UK. Evan is an experienced workplace wellbeing practitioner and leader with his own advisory practice. Evan offers strategic advice, as well as practitioner training and resources focused on total reward and workplace wellbeing. In the past, Evan was a CURO client when he led reward at Arup Ove.

Angela Williams, Chief People Officer for Crossrail and Chairman at CURO, is also based in the UK. Angela has extensive experience in partnering with CEOs and Boards, global change and transformation, as well as leadership and membership of remuneration, audit and nominations committees.

How can employers address the wage disparity that has been highlighted as a result of the pandemic?

Depending on where businesses are located in the world, we’ve seen increased legislation for companies to report on their pay equity practices and numbers. Regardless of reporting laws being put into place, companies are being put to the test by the consciousness of their own employees, bringing up thoughts and concerns about their standing and where the company is positioned on the pay equity topic. Pay equity analysis is rapidly becoming top of mind for HR teams to analyze pay gaps across departments, pay bands, and individual roles.  

Another way to address the wage disparity, on a budget, is to identify structure and principles around rewarding based on the right behaviours and performance - taking into consideration remote work conduct.

Poll #3: How are you addressing wage disparity?

wage-disparity-3-graph 

At 43%, our audience said doing pay gap analysis and addressing pay equity issues in the talent pipeline is how their organization will address wage disparity. Following at 36%, respondents said undertaking a proactive pay equity audit. 30% said only addressing wage disparity where mandatorily required. 26% said focusing on minimum wage employees. And 11% said looking at high versus low income earners.

New call-to-action

How do you balance financial pressures and best handle annual rewards that cover performance before, during, and after the Coronavirus pandemic?

Defining performance

To balance financial pressures and stay competitive on pay and benefits comes down to defining performance, and having honest conversations about workforce performance and productivity - on an individual basis. If team members are delivering on objectives and completing their tasks, they should be rewarded for it - and acknowledged that they are making an effective positive impact on the business with their outputs. Rewards should be contribution-related.  

Realigning forecasts

However, the economic reality is that many companies have had to realign forecasts that render existing performance goals, in incentive schemes, as impossible to attain. Then there are two options - abandoning rewards programs or adjusting previous programs. Typical adjustments include: lowering targets, reducing the number of metrics, and shortening the measurement period. But you then have to figure out how to apply discretion – which can make company shareholders nervous.

Recognizing positive actions to reshape rewards programs 

With this in mind, many teams are considering discretionary overrides to recognize  actions demonstrated by employees such as behavior in regard to things like: safety adherence, the demonstration of company values while under new pressures, or the ability to acquire new skills under changing circumstances that have brought true value to organizations throughout this uncertain time.

Answering key questions like “how is our organization performing during this time?” are reshaping programs to be focused on longer term rewards that recognize achievements and segment “packets of work”. For example, if the packets of work include meeting minimal work objectives, the employee may receive a non-monetary incentive of flexible work hours versus packets of work including projects bringing in lots of revenue and value-add to the firm. Those employees or teams may receive flexible work hours on top of financial compensation for making a larger impact on the organization during the crisis.

The temptation to fall back to a “safe”, across the board approach but it shouldn’t be - now is the time to be agile and get creative in building rewards programs.

Any predictions on the UK overall pay inflation given the pandemic in light of the government giving over inflation rises to civil servants? 

Inevitably, we will see a fall in wage inflation. With excess labor supply in many sectors and organizations hampered by cost constraints.  It’s worth remembering that real wages had only recovered at the end of last year from the previous recession. From April to June, both the UK Office for National Statistics and US Bureau of Labor Statistics show wages and real wages have dropped. 

The recently announced UK civil service pay awards are inevitably a political reaction to the income inequality highlighted for key workers during the COVID-19 crisis. However it is worth noting the Treasury announced in the UK it has launched a comprehensive spending review (CSR) for this fall, warning that “we must exercise restraint in future public sector pay awards”.  So the indications are these awards are a one-off.


Uncover and resolve wage disparity in your own team

With all of the answers to your questions on how you can move forward with pay equity and tackling wage disparity, why not use this as an opportunity to differentiate your own organization? Learn how CURO’s Pay Equity software solution can help you analyze and resolve pay gaps within your organization - prove your commitment to fair pay.

analyzing-data-no-money

Want to try CURO Pay Equity analysis software for free?

Sign up for a 14-day free trial today