COVID-19 pandemic created such a situation for us to face that requires a short decision, where individuals have been influenced in various parts of our everyday lives. The estimation of human capital has never been as significant as it is today.
In times of crisis, such as the one we are experiencing due to the pandemic caused by COVID-19, it is a challenge for the company to communicate to its collaborators those actions and practices, both reactive and proactive, related to compensation management.
Compensations are made up of fixed, variable, or short-term incentives, long-term incentives, and benefits, which together form what we call total compensation. At Great Place to Work, we strive to emphasize to clients the importance of employees being clear about the components of full compensation. In this way, the collaborators will not see the fixed and variable salary as the only source of compensation in the company, but rather the benefits and Human Management programs, as well as the emotional salary, will become more relevant.
Strategies Of Compensation In Pandemic COVID-19
In the context of the COVID-19 crisis, companies will have to make decisions regarding expenses, where a very important part corresponds to payroll spending. Given this, some temporary measures must be taken and, once the crisis has passed, the compensation in pandemic strategy can be rethought to adapt it to reality.
When we talk about remuneration, its 3 major components have been affected which are discussed below:
- Fixed Compensation
- Variable Compensation
- Emotional Compensation
1. Fixed Compensation in Pandemic:
Because of the surprisingly decrease in economic exercises, soon, a log jam in wage development could have existed, because of policies of no expansion, abatement or suspension of promotions, just as a decreasing in the demand for the workforce, factors that straightforwardly influence the conduct of wages in the market.
Acclimation’s to pay policies are predicted corresponding to the comparison percentile, which makes it increasingly critical to have inside value and an away from of compensation levels, just as refreshing or planning a pay scale, all so as to extend colleagues a domain of equity and pay transparency, as per the response and new business strategies against COVID-19.
2. Variable Compensation in Pandemic:
The huge short term impact is seen in the business power and in those places that have a blended compensation bundle, in which some sort of all the remunerations compares to commissions. These individuals are legitimately influenced by their salary, so an alternate study must be finished with them than should be possible for the remaining staff.
Concerning variable incentives allowed on a quarterly or semi-yearly basis, the study ought to be planned for looking into the reason for the incentive (for which it was made) and deciding if it applies in the present circumstance of the company, as per the degree of effect in light of the pandemic. Concerning, the objectives must be checked on and reclassified, just as the period to be contemplated, adjusting them to the new truth of the company.
3. Emotional Compensation in Pandemic:
It will be progressively difficult to make sure about a Good pay job and overall professional development. This is because here emotional compensation plays a major role. The experience they are giving ought to be thought of and if that experience is reliable with the offer to individuals, fortifying, or in any event, securing the business brand.
In this study, what is looked for is to guide the companies to propose complete reward methodologies, working broadly on natural rewards, for example, wellbeing, customer satisfaction, and workplace in the midst of a pandemic?
The work experience of individuals inside the company turns into the foundation of reliability. The view of pay bad form is one of the most delicate issues in associations, subsequently, having clear, straightforward, and convenient correspondence methodologies can balance an impression of lack of engagement or inconsideration with respect to the company when it requires settling on choices that will legitimately influence the teammate.
What Should Companies Do to Compensate?
- Pandemic Aftermath
- Immediate Actions in greater need
- Effective Communication and Emotional bonding
After the Pandemic crisis, when work is reactivated more normally, companies will probably be forced to rethink the compensation in pandemic strategy. As part of this process, they must adapt it to the new post-crisis market: reviewing the benchmark with companies in their select market, the percentile comparison, variable compensation plans, bandwidths, as well as the criteria for the payment of the bonus for performance, the granting of the salary increase for annual review, among other important points of compensation management. It is important to seek to maintain competitiveness, without neglecting control of spending.
Immediate Actions in Greater Need-
The employer who cannot implement remote work or apply a leave with enjoyment -because of the business or economic issues- can temporarily suspend the provision of services of the collaborator, without the corresponding payment of salaries.
In addition to what is stipulated in the emergency decree, another action that can be taken is the reduction of salary, temporarily. This can only be applied with an objective and reasonable justification, with the prior agreement of both parties. It should be noted that this action is very delicate, which is why – if carried out – it must be communicated with great care to the collaborator, with the subsequent signing of an agreement, specifying its timing.
It can also be agreed to reduce the workday and, as a consequence, to pay the remuneration proportionally. As in all cases, it is important that the objective cause exists, which response to the economic situation of the company. Likewise, there must be an agreement between both parties, specifying that the measure is temporary.
Effective Communication and Emotional Bonding-
It is also important to inform employees about the programs that the company makes available to them at this time, reinforcing those that already exist and implementing temporary or emergency programs. It is also an opportunity to help employees cope with these moments of uncertainty and tension through programs that can be applied to everyone, such as virtual psychological help, support for families affected by the virus, entertainment content for employees and their families, among others.
Without a doubt, it is a key moment in which the leaders must be close to the collaborators, answering doubts, providing personal support, talking with the collaborators about the necessary work that they must carry out as a team to overcome the crisis. In short, build and maintain trust in leader-employee relationships.
From our approach to strengthening trust, Giving Gifts, and Rewards are a good way to practice. all the practices applied at this time must be communicated and designed with the intention of giving a “gift” to the collaborator, that is, offering an experience that transmits respect and cares towards them. It is important that everything that is done is not seen as merely transactional practices, but as a genuine concern for the collaborators.
Although emotional wages have been mentioned and discussed a lot in the past, only in times of crisis or great need can we see how important it is to consider and communicate this as part of the total employee compensation package?
We know that managing compensation in pandemic will be quite a challenge, but through a communication-based approach, with respect and trust, it can be done in the best way. Today is the time to work collaboratively and be “that team” that is always mentioned in everyday politics and conversations. Let’s be a great place to work, both good and bad. Let us remember that human capital is the most important asset that a company has to face any challenge.