By John Bonoff
As we approach a new compensation cycle, and the finish line of a year that has been tumultuous to say the least, leaders now share a daunting task: translating the impacts of COVID-19 into equitable compensation. For some organizations, rewarding employees for going above and beyond, and guiding the business through a crisis can be at odds with each other. For managers tasked with communicating this balance, it will be their toughest pay cycle yet. Even for senior managers, this will be a tall order, and support from above will be crucial. Use the following strategies to help your managers find success in keeping employees together and guiding the business through a challenging compensation cycle.
Connect managers to the right resources
For an experienced manager leading their team through an unprecedented global event, some things will come naturally, and some might require additional training and education. To make sure managers are not only well-equipped but on the same page as you and other leaders, consider establishing a repository of tips and resources around things like how to communicate with a diverse workforce, or how to articulate compensation changes. Ensure managers are experts on compensation and total rewards, should any specific questions come up. In addition to a bank of helpful information, consider engaging managers in ongoing education, whether through traditional channels or internal communication software, to give structure to training and enablement in the long term. Additional resources and support will give managers the confidence they need to navigate this compensation cycle effectively.
Supplement compensation with employee support
Before managers dial in for compensation discussions, there’s quite a bit leaders can do to make life easier for managers and employees. Since the pandemic began, nearly half of employers have increased their wellbeing benefits to supplement compensation and account for employee health. New perks and programs won’t replace compensation, especially in times of financial insecurity, but they can still communicate the care and responsibility you have for your employees’ wellbeing. Consider add-ons like wellness benefits, care packages, tolerance of negative time-off balances, and commuter or parking benefits to keep employees off public transport. Employees should understand that any changes in compensation are not indicative of a change in their value to the company.
Recalibrate performance management
With so many new variables for employee compensation and an uncertain future, the traditional approach to pay and performance management will have to be adjusted. Over half of companies have already revised their performance metrics in an attempt to keep up with changing times. Managers should have the freedom to adapt performance incentives and other aspects of pay, to move their team forward. Frequent, informal check-ins, along with flexible performance goals have emerged as common themes, but keep in mind that being specific and clear about performance incentives to the greatest extent possible is still critical. To continue retaining and attracting top talent, performance-based compensation for every employee should be on par with industry standards, even if it means creating entirely different plans for different employees. Each individual should be on a path of continued growth, especially during times when the path is subject to change. Now is a good time to re-evaluate pay to create and refine your compensation strategy. Once your organization establishes an approach to pay and performance, ensure that managers take steps to communicate the changes effectively.
Establish a code of transparency
When it comes to entrusting managers with the challenge and responsibility of an unprecedented compensation cycle, consider the advice of Amy Edmonson—the Novartis Professor of Leadership and Management at Harvard Business School: “Task one is transparency… here’s what we do know, here’s what we don’t know, and this is what we are doing to close that gap.” The second task, she says, is to “…articulate a sense of possibility and hope.” If there’s one thing employees are sure of, it’s that their managers and leaders do not have all the answers about COVID-19 and its potential impacts. Managers need to be honest about the situation, while promoting a positive outlook and remaining conscious of employee concerns.
No one really knows how industries will be affected, how severely companies will need to be restructured, and least of all, when our world will start to open up again. Managers must appeal to the human side of their direct reports during pay conversations, including the fears and frustration that tend to accompany uncertainty. Acknowledging uncertainty builds trust. This means being honest as well as hopeful; being transparent about challenges and their gravity, with a focus on a brighter future. Whether managers are relaying good or bad news during this year’s compensation cycle, either case will be an opportunity for them to establish trust with employees and translate large-scale business changes to each individual they affect.