How remuneration Might Look after COVID-19


Event Africa Contributor 24/06/2020 Industry Association News

Authored by: Muhammed Goolab, Exco Member at the South African Reward Association (SARA)

Right now, organisations are focusing on streamlining their businesses, lowering costs, becoming more agile and responsive, and offering the same or better quality of service in a post-COVID-19 world. So we will find that the way companies and employees engage will change, as will the value proposition offered to the latter.

A changing approach to employment

Many employers have already determined that they can function with large complements of their staff working from home, and employees are gaining increasing independence over how and where they work.

COVID-19 has forced many organisations to focus on core operations in the short term, and they will inevitably turn to streamlining structures and processes. In the longer term, we may find that they prefer to employ more generalist skills inside the organisation while outsourcing specialist skills.

Depending on their needs, however, they might take the opposite stance. They could increasingly tap into the gig economy as a cost-effective way of providing goods and services in instances where work is seasonal, that is, there are peaks and troughs in demand. Although giggers may have to work on multiple projects to maximise their income, the result would be a reduced permanent cost to employers.

Managing organisational culture

Organisations would also need to grapple with managing organisational culture in what will become an increasingly flexible working environment. Organisational culture determines what the acceptable standards are and is the glue that binds the way people function and their expected behaviour within their organisation. In a sense, culture is about the experience of working in an organisation.

So the challenge going forward will be how to develop, manage and maintain an organisational culture where large numbers of employees are working from home or under other flexible arrangements that minimise daily personal contact in a common physical environment.

Rethinking pay

How employees are rewarded will play a significant role within this new paradigm.

The current imperatives for companies are cost reduction and job preservation. Many are cutting back on salaries and benefits by either enforcing reductions or freezing increases or bonuses. Employees may be affected for an extended period before their pay returns to pre-COVID-19 levels.

Such pay interventions will also drive deeper discussions around issues of a living wage and pay equity.  An unusual response may be that some employees realise that they can manage on a lower salary, and could even consider adjusting their work week to 4 days to free up 1 day for other commitments and initiatives.

Remuneration policies will therefore be revised to support business recovery as the COVID crisis winds down. They will emphasise variable pay elements, both to manage costs and as a tool to increase productivity that is aligned to the organisation’s objectives.

As the structures of companies evolve with the changing ways of working and possible technology solutions, many lower skilled jobs will start to fall away and those employees will need to repurpose themselves. This will lead to organisations embarking on a reskilling drive to better position themselves for a post COVID-19 economy.

In summary

Employees will increasingly seek longevity and sustainability in their employers, and companies will need to review and adjust their employee value proposition. This includes reevaluating traditional benefits and implementing those more easily adapted to a flexible working world.

What has become apparent in the short term is that employees are looking for greater holistic health benefits that focus both on their physical and mental wellbeing. These will, however, evolve into lifestyle benefits that support flexible working.