You know times are strange when “unprecedented” becomes an overused word. In a matter of weeks workplaces have transformed and prioritizing people before profit has become a business prerogative.
From a reward perspective, prior to the COVID-19 crisis we had emerged from a decade of lost wage growth. Real salaries had finally recovered from the 2008 recession. And, leading organizations were focused on managing employee compensation as an investment rather a cost.
But, fast forward a few weeks and coronavirus has reversed the progress we made in reward. Employers have been propelled back to managing reward as a cost. Some companies are even deploying negative pay adjustments, while also focusing on how to get pay into the hands of employees who need it the most right now.
We’ve also had to react at pace. With the impact of COVID-19 on compensation, we've enacted policy changes and had to get to grips with newly emerging government schemes in these past few weeks. All while considering the impact on employee relations, engagement and trust.
Against this backdrop we understand that buying compensation management technology has not been your priority. But now that the initial dust is starting to settle, companies need to move past the reactive stage of the crisis and start planning for the phase beyond crisis. A phase being called “the new normal”.
In this blog, we discuss six reward challenges we think will emerge in “the new normal” and how compensation management technology can help you overcome these challenges.
Reward challenge #1: Doing more with less
The inevitable economic downturn means budgets will be cut and we will all have to do more with less.
Josh Bersin recently said, “Almost every HR department I have talked to is in the process of transforming. Now is the time to ‘get on with it – and fast’. We have to shed our administrative history; automate ourselves faster; reskill our own internal teams; and reorganize ourselves into an agile set of experts.”
But when it comes to automating reward, compensation is the talent management process with the lowest technology adoption rates.
This is often because compensation is complex and integrated talent management technology vendors do not have the configuration capability to prevent inefficient manual or spreadsheet workarounds.
So, when you’re looking at places you can automate and do more faster - reward is a great place to start. Now is the time to embrace the opportunity to digitally transform your compensation management with a best of breed solution that won’t require you to compromise on your requirements. And when you can streamline and automate these processes, you’ll have more time to do more in the new normal.
Reward challenge #2: Retaining key talent with reduced pay budgets
Reduced pay budgets make managing pay differentiation and retaining key talent hard. The last recession saw many employers slip into a “peanut butter approach” to pay allocation, meaning they spread compensation money evenly across all employees. But if you want to retain key talent, you should avoid the peanut butter approach.
Compensation technology can help you get the best ROI for your compensation budgets by supporting manager-decision making during the pay review process. Technology provides managers with multiple guideline recommendations and presents different award allocation scenarios, allowing them to calibrate talent against market and internal benchmarks.
Then, reviewers can see the impact of their pay allocation on real-time dashboards and make the appropriate adjustments before submission - preventing extensive moderation in the post review phase.
Reward challenge #3: Enforcing strong governance over compensation allocation
Working in an environment of cost containment requires strong governance. Without it, you’re at risk of non-compliance with compensation principles and budget overspend.
Compensation management solutions enforce reward principles and budgets much better than spreadsheets. Building in rules, constraints and alerts allows users to work within your guidelines and budgets. This empowers managers to make sound compensation decisions, and lets you feel confident that you are maintaining strong governance with your reward strategy.
Reward challenge #4: Regaining employee trust in reward fairness and equity
The last recession had a corrosive impact on employee perceptions of reward fairness and equity. Pay freezes, redundancies and disclosures about bankers and executive pay all had a negative impact on employee trust. The same will apply this time around, and employers will have to work hard to regain employee trust and confidence.
In the new normal, we will be back to an environment where employers will have to communicate more openly how limited pay budgets are distributed in order to retain key talent. That can only happen when managers have the right information at hand.
A great compensation solution delivers an embedded user interface that ensures pay decisions are fair and equitable - and can easily be easily communicated to employees.
Reward challenge #5: Calculating prorated salaries and bonuses
When we look back on this calendar year there will be employees who were on various types of leave or reduced pay arrangements. Some employers are putting staff on unpaid leave, some are taking advantage of their Government's Job Retention Scheme, and some are furloughing staff on reduced pay. Others companies are encouraging employees to take sabbaticals, or parental leave.
All of this will have an impact on compensation plan calculations.
Selecting a compensation management platform with a proration engine will allow you to account for all types of absence and define how to treat compensation calculations. This level of accuracy can deliver up to 10% of compensation budget savings.
Reward challenge #6: Data security with a remote workforce
Remote working has already become part of the new normal, and experts say it’s here to stay beyond the crisis. But, remote work can pose a risk to data security.
Distributed spreadsheets can expose organizations to the risk of major data breaches – a problem that has been magnified by remote working.
Moving from spreadsheets to a secure, cloud-based compensation management solution will protect your data and ensure full GDPR compliance. Features such as role- and permission-based access provide complete control over who can see sensitive compensation and employee data.
Protecting confidential compensation data has always been important, but there’s no better time to prioritize it.
There are a number of Coronavirus compensation challenges that reward professionals will encounter throughout this crisis and beyond. Setting yourself up for success in the new normal now will prepare you to overcome these challenges as they arise.
By switching from spreadsheets to a compensation management solution, you’ll remove the administrative strain of your reward processes and get more detailed insights that drive better decisions.
Remember the words of Josh Bersin, we must: “automate ourselves faster; reskill our own internal teams; and reorganize ourselves into an agile set of experts.”
Ready to take on compensation in the new normal?
Get in touch to schedule a demo of CURO Compensation Management software.