If necessity is the mother of invention, then COVID-19 may well be the mother of innovation in workforce management, and that includes finding ways to optimize spending.
In a previous blog we looked at how you can adapt your total rewards to fit a remote workforce. But what about the cost side? Budgets are tighter than ever. Controlling costs is always an issue in any business, but the pandemic has challenged companies to find new ways to survive and thrive in difficult times. What impact does a remote workforce have on your rewards budget? Can your rewards platform help you to optimize compensation spending?
Optimize compensation spending
Compensation is often a company’s largest expense—and a necessary one—but it can be difficult to ensure that you are using that spend most effectively. Cutting costs by indiscriminately cutting everything by 20% may be counterproductive. Intelligent, data-driven adjustments to comp plans could save headcount. You need the ability to analyze compensation effectiveness, set the right pay scales, and model the cost projections of proposed plans.
Having a compensation platform that lets you analyze total rewards spending in a granular way can yield insights regarding compensation effectiveness and could literally save you millions. Are you using consistent pay scales across regions? Are your pay scales out of line with some of your local markets? Are your variable pay programs producing the expected results? Are sales commissions being calculated correctly? Does compensation spending correlate with performance? Data analytics can help to optimize your total rewards spending. This is true in good times or bad, but tough times can be the impetus to put in the controls and analytics that will help in both the short and long term.
Tailor your rewards
Global management firm Deloitte has identified personalized rewards as a key element of the rewards strategy of the future. The main rationale behind personalized rewards is to motivate the workforce of the future, which has needs and preferences that differ from Baby Boomers to Gen X to Millennials to Gen Z. But tailoring rewards also has the effect of eliminating wasted incentives, and so can help with cost optimization. There is no sense in providing perks that employees don’t care about or that don’t move the needle, but that can vary from person to person. Keep your finger on the pulse of the evolving workforce and consider a personalized rewards strategy.
Pay competitively and optimally
You want to pay competitively, but not more than needed. Pay benchmarking at a granular level will ensure you can attract and keep top talent at an appropriate compensation level, matched to your local markets, roles, job grades, and experience levels. Be sure that your compensation management platform can not only handle the benchmarking analysis, but can also simulate the costs of implementing matrixed pay scales and manage those localized, optimized pay strategies, taking into account the remote workforce which may be dispersed differently than an office-centric one.
Save on costs across the board
With budgets tighter than ever, companies need to find ways to optimize cost. Remote work has some inherent benefits in that regard, offering the possibility of lower overhead costs, along with other benefits that tend to lower cost, such as higher employee productivity, lower environmental impact, increased employee engagement, and lower turnover.
A March 2020 Gartner survey of CFO and Finance leaders revealed that 74% will move at least some of their workforce to remote positions post-COVID 19, creating an opportunity for HR and management to optimize costs by proactively designing remote work strategies that yield cost-saving benefits, such as optimizing space by implementing shared workspaces and the accompanying remote work scheduling.
Take advantage of technology
A digital rewards platform is the key enabling technology that can support you in optimizing compensation spending through visibility, analysis, benchmarking, and tailored rewards, while ensuring that compensation processes can run smoothly even when workers and administrators are remote.
Digital transformation of rewards management can yield huge benefits in employee engagement, talent utilization, and cost savings. Watch our free on-demand webinar Post-Pandemic Mantras for Agile Total Rewards with beqom and Alight Solutions, to learn how to adapt your rewards strategies and digitize your processes to succeed in the post-pandemic world.