Introduction
Except that the impact of COVID-19 is very different. Who could have foreseen a time where most organisations are impacted, not just in one country, but globally? And even if we had, how could we have planned for it?
Planning is a key element of any business, and most organisations will have its own cyclical calendar for reviewing its short and long term plans to position it for the coming months and years. For many organisations, approaching the mid-year point is when they turn their attention to what they plan to do next year and beyond, with Reward and HR professionals working through the checklist to ensure that business cases and budget requests are put in motion:
- Pay Review
- Bonus
- Sales Incentive
- Long term incentive
- Wellbeing
Many of us jog our memories about what we did last year, pulling out documents submitted for approval for both cyclical and developmental activities with the intention of updating them with what we need for next year. It’s what we’ve always done. The scope of change may vary, the challenges might be different, but broadly speaking we’ve used a constant checklist. But planning for the Reward agenda for 2021 will be very different.
Pay Reviews
With the most recent pay inflation figures showing a significant drop due to the impact of the Coronavirus on the UK economy and with predicted unemployment rates likely to surge, reviewing pay levels in 2021 will present a dilemma for many organisations. Things to consider will be how to interpret the external context with the standard economic indices we usually use providing an unreliable measure of where we might be in 12 months’ time. The normal sources for benchmark data may be impacted due to reduced participation on account of limited funds or resource. Your workforce will also certainly look very different by then. The usual threshold for pay reviews of ‘affordability’ will no doubt create much discussion around Board tables, balancing the books against what is the right approach to acknowledge the pressure on employee incomes.
Bonus
Many bonus plans have already been abandoned for 2020, as survival is the key for many organisations in sectors that have received a devastating blow; travel, retail, pubs and restaurants.
Do bonuses even have a place in such times? Should the focus be on basic pay only? Aren’t bonus plans only appropriate in good times? How do you recognise the contribution that employees have made during difficult time? There are so many questions and no set answers as every business will have had its own unique challenges and opportunities. It will be important to align bonus plans to the reshaped business plan for 2021, with a focus on recovery and adaptation to a world post COVID-19.
Sales Incentive Plans
It is clear that this pandemic will have a significant impact on 2020 revenue targets for the majority of organisations. Proactive organisations are already rethinking their Sales Incentive Plans to ensure they are relevant and fit-for-purpose in our new future by;
- Engaging their teams: Clearly communicating to their sales workforce that they are reviewing current plans, thinking through potential change impacts and that they are there to support them in the current environment
- Using innovative levers: They’re introducing creative levers to engage and excite their sales workforce in a different way by redirecting their activities to drive pipeline momentum and ultimately deliver value for their organisations
- Taking a long-term view: They’re being authentic in their dialogue – adjustments/ relief will be considered in hindsight once they have a better understanding of cause and effect between sales and COVID-19 so for now, it’s all about maintaining a business as usual approach.
Adapting Sales Plans to flex to the ‘new normal’ in order to maintain momentum and drive growth for 2020 is key for many businesses right now.
Long Term Incentive Plans (LTIP)
As we grapple with the more immediate demands, what about the longer term view? Is this the time to consider what the future might look like, or at least acknowledge that our normal way of developing our longer term plans has been disrupted to such an extent as a consequence of COVID-19 to offer no or little value to the process? How do we ensure that we are as well-positioned as we can be? How do we lock in the talent we need in an affordable way and against appropriate metrics? Long term incentive plans, a common element of executive pay, will prove a useful communication tool in giving that longer term perspective to other key employees to drive the recovery process.
How we can help?
We can support you in reviewing and adapting your total reward agenda in light of COVID-19 taking account of base pay and short and long term incentives. We also understand the importance of employee wellbeing, and can offer support in adapting benefit programmes, rolling out mental health + financial education initiatives.
