Strategic planning is essential now more than ever, and leaders across the world are re-examining their business practices in order to ascertain what is essential, and what needs to be adapted to match the evolving times. A successful roadmap should be steadfast in its vision of the future but flexible in its handling of the day to day.
A key component of these discussions will therefore center around compensation and benefit strategies and their potential impact on employee engagement and happiness.
Reliable and stable strategic plans require a reliable and stable workforce to enact those plans.
A study conducted by the American Marketing Association (AMA) on 2021 U.S. compensation trends showed that:
60% of employees are more motivated to work at a company they feel values them during ‘unpredictable times’.
Businesses hoping to boost productivity and output this year will therefore have to prioritize employee satisfaction to prevent burnout and reduce attrition risk.
Compensating staff without salary raises
With employees experiencing increasing levels of stress and uncertainty in the workplace and home, it is perhaps important now more than ever to keep them happy and motivated within their roles. Traditionally, much of this recognition and reward system is meted out in the form of pay raises and annual bonuses.
Within industries that have been unaffected by the pandemic, employees are likely to receive their expected pay rises and bonuses, with little to no change. In fact, certain job roles that are deemed to be highly specialized or niche by their employers – like software engineers, and data scientists – are expected to receive higher bonuses and pay increases in 2021, as a measure by companies to retain their in-house talent.
Similar trends are likely to be seen in industries currently in high demand due to the pandemic – such as tech, healthcare, pharmaceuticals and e-commerce.
However, this data is specific to industries thriving during the pandemic. Current studies show that most other businesses are likely to remain cautious and gravitate towards continued austerity measures and hiring freezes in their 2021 strategic roadmaps.
The question of employee compensation and retention, then becomes a more complex one.
What to do when there are budgetary constraints and these cash-based incentive plans are no longer a viable option? Employers will have to find a way to strike a balance between protecting their business interests and maintaining employee satisfaction.
Let’s explore some other possible forms of non-monetary compensation (or fringe benefits) that businesses should invest in to ensure their employees are recognized for their contributions, but without breaking the bank.
8 Non-monetary compensation, benefits and incentives for employees
- Mental health programs
- Childcare support
- Paid sick leave and PTO
- Remote and flexible work options
- Wellbeing initiatives
- Financial counseling
- Training and development
The aforementioned AMA study found that among all common benefit offerings, employees rated health insurance as the most wanted.
With the pandemic still impacting millions of people around the world, access to healthcare is important now more than ever. Businesses looking to transition away from individualized pay rises may find it more affordable to invest into improving offered group health insurance benefits. This investment will pay off not only as a means of employee recognition, but also in the form of tax breaks for the businesses themselves.
With remote working set ups, national lockdowns and social distancing protocols still relevant across the world, many employers are also making telehealth and virtual appointment services available to their employees, for non-emergency care.
The exponential increase in environmental stressors in 2020 have taken a toll on most people. A study by the CDC in the United States has shown that people have been reporting increases in anxiety and depression since April.
Businesses looking to support their staff in this difficult time should consider incorporating mental health benefits into their existing health plans. According to an open enrollment for 2021, there has been a boost of interest in Employee Assistance Programs (EAPs) focused on mental health and counseling.
With continued stay at home mandates and government lockdowns, working parents now have the added concern of contending with the day-to-day logistics of childcare in addition to working from home. Many childcare centers are shut down and schools are turning to virtual options in the face of the pandemic.
Employers looking to further smooth the transition to remote working should consider providing childcare options to working parents. A lot of businesses are providing options such as onsite daycare within the workplace or flexible spending accounts (FSAs) to pay for such day care.
Other companies like Twitter are also providing additional resources such as online tutoring sessions and virtual day camps to help keep the kids occupied or to help them with their schoolwork.
One way to counteract thwarted expectations of pay rises and bonuses, is to increase the hours of paid sick leave and Paid Time Off (PTO) available to employees.
Not only is the option to take paid time off essential in a world of regular mandated quarantines and perpetual health scares, but it can also set the stage for sustained improvements to what is a flawed system in several parts of the world.
In the past, many businesses chose to have a single combined bank of time-off hours as opposed to a split between PTO and sick days. This has resulted in trends where employees choose to report to work rather than call in sick in order to ‘save’ their vacation days. Needless to say that while this trait is potentially deadly in a pandemic, it is also counterproductive when the workplace returns to ‘normal’.
As a result more employers are seriously considering offering unlimited paid time off instead of caps or carryover.
By increasing time-off options you are also likely to contribute to alleviating stress or anxiety that permeates into the workplace, thereby resulting in an overall positive work culture.
Most businesses that don’t have workers who need to be on site have now transitioned to some form of flexible, hybrid or remote working model. A lot of businesses are now offering a permanent work from home option and are providing support by investing in home office setups for their employees.
In fact, over 60% of the employees included in the AMA 2021 Compensation Survey stated that transitioning to a remote set up improved their work-life balance due to the lack of a commute.
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In addition to providing access to healthcare, a lot of employers looking to invest directly into their teams’ wellbeing are now implementing wellness initiatives within their business.
These could include group virtual yoga sessions, or reimbursement for fitness and nutrition based programs. You could also use similar group initiatives as team building activities, which allow workers to build and maintain the social interactions and interpersonal relationships that many are now missing out on.
The pandemic and resulting economic upheaval has had a lot of people worried about their finances. People are struggling to contend with increased job insecurity, unstable income, and threats to long term savings, which unsurprisingly increases stress and anxiety.
In addition to benefits like health or life insurance, you can also look to provide education and training resources to your employees to help them improve their financial well-being. Why not offer complimentary sessions with financial advisors to help your people learn how to best manage their finances? Education on topics such as investment, debt reduction or loan management can be hugely beneficial to employees.
Business leaders should be careful when building their long term strategy plans during a hiring freeze to ensure they are not accidentally creating a skills gap within the organization.
Hiring freezes provide employers the opportunity to upskill and reskill their staff, and ensure that they have all the necessary in-house talent to produce the desired outcomes charted in their strategic roadmaps. By investing in the professional training and development of staff, you also boost retention rates, as employees directly benefit from staying within an organization with provided upward mobility.
Training programs can include everything from assigned stipends for professional training programs, to ongoing feedback and development strategies provided by supervisors and managers.
A success story close to home is a number of intelliHR’s clients in the charity space. Many organizations in the not-for-profit sector don’t have the resources to compete with corporations in remuneration and salary increases or compensation plans.
At the same time, retention of key staff is essential to the success of a charity organization.
Through intelliHR’s training analytics, our clients have discovered that by investing in their staff’s professional development and training, they boost their retention rates. The analytics also show employees the investment made by the organization into their own personal development, boosting the general trust and employee satisfaction.
While salary raises and bonus payouts remain an important part of employee compensation discussions, studies conducted by Glassdoor back in 2015 have demonstrated that nearly 4 in 5 employees (79%) prefer added fringe benefits, like those mentioned above, compared to pay increases. In fact, over 89% of the current millennial workforce, would prefer increased perks to pay rises.
The unique circumstances of 2020 therefore provide industries an opportunity to re-think existing practices of employee recognition and reward, and invest in measures that will further boost satisfaction in the long term with far better returns on investment.