The world of employee rewards was changing before COVID-19 hit, but the pandemic heightened the need for agile management of rewards, in order to adapt to change, control costs, and remain competitive as a company. Those capabilities provide a strategic advantage in any environment.
Our conversation with Laine Conway, Total Rewards Product Leader for human capital transformation experts Alight Solutions, a beqom strategic consulting partner, revealed five mantras to follow to ensure that your rewards systems support the agility you need to succeed in good times or bad.
1) Are your compensation processes resilient?
Agile HR mantra number 1 should go without saying: have systems that can withstand disruption. Your compensation management technology should allow continued smooth operations no matter what. That means that employees should have secure remote access to the system, anytime from anywhere. Administrators should likewise be able to manage the system remotely. Managers should have remote access but also should be able to delegate tasks within the system, such as pay recommendations or approvals, so that no one person is a critical point of failure and processes can continue even if key personnel are temporarily unavailable.
2) How can you predict the results of a new rewards strategy?
Our second Agile HR mantra is to model new strategies in advance to fully understand the variables and impacts. This can be a complex exercise when your strategy includes localized pay models, but modeling at that level of detail is important since locally adapted pay structures can optimize compensation costs and value, which in turn can save big money and help you win the battle for talent in each market.
In pandemic times, the ability to roll out new rewards programs is critical. Conway suggests gearing rewards programs towards what employees need now. This may mean programs that support remote work and caretaking, with the ability to leverage local differences. See beqom’s 2022 Compensation and Culture Report, which uncovered how the changing workplace has altered employee perceptions around total rewards, benefits, transparency, and pay equity in the last year.
To understand the feasibility and impact of reward program changes, in terms of cost and distribution, you need to be able to simulate the proposed changes. This requires a rewards platform that supports detailed modeling, simulation, and analysis. Analysis is important in helping you ensure that pay is aligned with what you need to achieve—cost control, margin, employee retention, customer satisfaction—whatever your corporate priorities are.
3) Beware of agility roadblocks
Before you can become truly agile, you may need to overcome roadblocks that can result from an overreliance on simplistic approaches to cost cutting, such as the across-the-board cut. While cutting 20% in all pay or headcount might achieve a cost control target, it also may be counterproductive. That is, such blind cutting may not get the right result or may disproportionately affect certain groups. Some strategic (and temporary) cuts to comp plans might save headcount, which will be expensive to replace once you are rebounding.
Better to be surgical, granular, strategic, and cut where it makes sense. You need the ability to (1) analyze compensation effectiveness, (2) set the right pay scales, and (3) model plans and cost projections. This is where the right compensation management software can make all the difference.
4) Use data to score quick wins
A fourth mantra is to use data to optimize costs in a smart way. Use demographic data and employee surveys to understand the need and what people are dealing with, then adjust rewards packages, even if only short-term. You can find quick wins by mining your data, without necessarily making permanent changes. For example, as Conway suggests, if you want to help working parents, you may want to look at your programs for things like leave and time off, caregiver support, learning, and childcare programs, or well-being (in a recent Alight survey, 92% of employees thought the biggest impact of the pandemic was on mental health and stress).
5) Agile strategy requires agile systems
The bottom line is that it pays to manage comp strategically to optimize spending and to support and motivate your people. To do that in today’s world, and the world of the future, requires HR and systems agility.
Take our quick Compensation Readiness Assessment to evaluate your company's readiness in adapting compensation and rewards to today's job market.