It has been more than two years since the start of the pandemic that turned business models on their heads. While it’s currently in a relative lull, it continues to linger, and organizations continue to try to adjust.
Part of adapting has meant adjusting pay levels, particularly for talent that organizations hope to keep in this shaky business environment that now includes an inflationary economy — AND low unemployment. The ability to recruit and retain the people you need right now is crucial.
With that said, here’s what you need to know about COVID-19 and employee compensation.
The Issue
Even though the nation has been dealing with the pandemic for nearly three years, the outcome going forward is all but clear. That renders it significantly difficult for organizations to plan, especially regarding compensation.
Early on in the pandemic, some agile employers were able to swiftly shift gears. Many of those who weren’t, or simply chose not to, are flailing. Others didn’t survive. Still others are mulling what the viral outbreak, and unstable economy, means for incentive plan costs.
Holding Onto the People You Need
It’s not easy, balancing the need to offer top talent generous pay packages with the reality of an unsteady and uncertain economy. How each organization handles this dilemma hinges on a myriad of variables, including short- and long-term goals.
When it comes to employee compensation, some benefits experts suggest ranking your people according to their abilities and potential future value. Then after that, raising the pay of the top 25% so that competitors don’t lure them away. To pull this off, you’ll need to develop a database that includes employee capabilities in addition to organizational needs. This can have the added benefit of saving you cash on recruitment efforts.
What Organizations are Doing
While some companies are calling employees back into offices, others have settled on a hybrid environment made up of both remote and in-house employees. Many organizations now have a 100% remote workforce .
In any case, organizational leaders are generally intent on determining what areas need more support and what type of talent is needed. For this, you may need help from a benefits consultant such as Mercer. After all, on the lip of a possible recession, there may be less resources for salary raises, except for top performers. Employers simply must be really smart about employee pay and where to give pay hikes.
Note, too, that the preponderance of remote work has emphasized the value of information technology people who can enhance the company’s digital platform.
The Importance of Agility
The affect of the pandemic has been so transformative that the year 2020 will forever be associated with widespread business upheaval that continues to this day. Prior to the outbreak, employees were compensated as they have through the decades, and that’s according to their job description.
These days, however, how people are paid has become a much cloudier. After all, there’s much more flex work, there are more contributions to team projects, and more people are answering to multiple managers. There’s more of a focus now on capabilities, rather than on job titles.
In the end, regarding COVID-19 and employee compensation, what’s crucial is that you’re agile. The fact is that the full fallout from the pandemic remains to be seen and will likely reverberate for years.
You must made wise decisions, since in the balance is nothing short of your ability to recruit and retain the talent needed in this hyper-competitive environment. If you need assistance, and you likely do, we recommend leading global benefits consultant Mercer for its experience, credibility, and overall effectiveness.
