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Five reasons you need market data to address the impacts of COVID-19 

Future of Work|Total Rewards
Beyond Data

By Hatti Johansson | July 3, 2020

The COVID-19 crisis forced organizations around the world to reevaluate work and rewards strategies, including implementing quick decisions to contain costs and manage cash. 

At the same time, organizations needed to engage critical talent and essential workers, while ensuring appropriate pay premiums for high-risk work. As these organizations move towards restoring stability, robust market data can support a measured response to the continuously evolving and uncertain circumstances and serve as the foundation for crucial workforce decisions

There are five key areas where organizations should focus for market data.

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  1. Evaluate temporary actions versus permanent changes to compensation

    The COVID-19 pandemic has disrupted the typical annual compensation cycle – at present, it remains uncertain whether organization actions represent a permanent ‘new normal’ or were just temporary to conserve cash during the crisis.

    For instance, 73% of survey respondents to our COVID-19 pulse surveys in April planned to apply salary reductions on broad-based salaried employees. In May however, only 24% had imposed salary reductions. Additionally, while the target median reduction was 12% in April, the actual reduction reported in May was closer to 10%.1 2

    Staying up to date with market data amidst continuously evolving circumstances enables organizations to discern which measures are extraordinary, and likely temporary, versus permanent adjustments to meet new market realities. Leveraging the research to proactively make fair and competitive pay decisions can also help prevent actions that may unintentionally damage employee morale and employer reputation in the long run.

  2. Review market pay data to competitively reward essential/critical talent
  3. The pandemic redefined the value of ‘mission-critical’ and ‘essential’ roles, prompting many governments and organizations to review and provide regulations for hazard pay and other types of appreciation bonuses or allowances.

    In our April survey, less than 20% of organizations created targeted rewards for essential workers3, but by May this number doubled.1 Of those respondents, 15% introduced a temporary pay premium1 and many provided this premium at 10% above base pay.2 But beyond pay and incentives, a larger percentage of organizations focused the value proposition for essential workers around improving safety, communications and health and benefits.1

  4. Review rewards and retention programs for roles critical to the digital journey
  5. Digital transformation is accelerating as organizations move to restoring stability. Globally, 18% of survey respondents increased the use of automation during the early stages of the crisis. This is anticipated to increase to 23% post-crisis.1 The competition for digital workers will likely intensify as organizations act faster to secure critical talent, forcing many to clarify their digital transformation goals and identify the ‘hot skills’ they need to get work done. Additionally, organizations found themselves evaluating their existing talent pool and leveraging opportunities to upskill/reskill effectively and compensate fairly for those skills.

    Securing digital talent is more than a numbers game though. Accessing market intelligence on digital talent enables organizations to formulate appropriate strategies key to competing effectively for each phase of their digital journey.

  6. Ensure compensation plans are aligned with business strategy
  7. As employees return to the workplace, many organizations are emphasizing employee safety and new work arrangements, including making remote work part of their ‘new normal’.1 Organizations are even looking at the possibility of increased remote work, which could enable them to hire beyond their current geographies and time zones.

    To ensure that such policies remain fair and competitive, compensation professionals could leverage digital solutions – using market pay data from a vast database of vetted sources – to model redesigned salary structures and ensure alignment to business strategy.

  8. Use market insights and workforce analytics to optimize compensation and benefits spend
  9. As organizations navigate through the crisis, we have been getting many requests from them to revisit their operations, structure, size, leveling and jobs to restore stability and prepare for the future. Responding to and recovering from the crisis in an informed way is crucial. Competitive analysis of peer organizations and industries is critical to building a work and reward strategy for the future. Organizations are using benchmark data to make intelligent design decisions on, to name a few:

    • Rightsizing the overall management and corporate function structure
    • Eliminating redundant, misplaced, duplicated or shadow roles, ensuring that managerial spans of control reflect the changing nature of the work being managed
    • Streamlining reporting layers and decision-making processes
    • Clarifying roles and responsibilities of managers and individual contributors

What do rewards specialists need to do?

Four actions to keep in mind:

  • Stay attuned to rapidly changing market trends in work and rewards
  • Use market data to understand the practices that drive employee engagement, optimize rewards spend in a given country and anticipate emerging research findings and trends
  • Participate in compensation, HR practices and benefit design practices surveys to ensure continuity in the data and stability in the year over year results
  • Habitually turn to market data for those crucial moments when you need to understand market best practice
Author

Hatti Johansson
Global Innovation and Product Development Leader

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