The new year often means the time for organizations to evaluate their compensation and benefits plans. With so much upheaval and uncertainty in 2020, it’s not only organizations that need to reassess their costs but also employees themselves, who are most likely dealing with a new personal financial landscape. However, employers can explore options and take the necessary steps to support their employees by ensuring that compensation packages are up to par, and what additional perks are available that can serve their teams.
Salary Raises, But Not By Much
Organizations of all sizes have enjoyed access to all types of data related to industry, seniority, title, skills, location and other factors in order to properly set salaries. Unfortunately, under the pandemic, much of this has been thrown out the window. With employees working from home, and some moving to lower-cost regions while still keeping their jobs, several organizations have been re-evaluating their compensation plans. In fact, as many as one-third of remote workers who move to a cheaper place to live during the pandemic could end up getting a pay cut, according to Bloomberg.
For some time, employers felt justified paying higher salaries for workers in high-cost cities: it served as a way to attract the best and the brightest. However, without the need to have those employees report to work at a high-rise office building in Manhattan or San Francisco, those salaries might not be necessary. Not all companies are planning on pay cuts, of course. Some are planning on pay raises — but not by much. According to XpertHR’s 2021 Salary Budget Survey, the median projected percentage change for total salary budgets from 2020 to 2021 is an increase of 3.0%.
Increase in Benefits and Well-being Programs
So what can beleaguered organizations do to not only retain talent but ensure that employees are performing their best?
Nearly half of employers surveyed by HR and compensation consulting firm Willis Towers Watson indicated that they’re enhancing healthcare benefits and broadening well-being programs as a result of the pandemic. Protecting the health and well-being of employees is critical during this time. While this is obvious for frontline essential workers — whose employers have had to modify existing workspaces and invest in additional measures to ensure workplace safety — other employers are also investing in processes and programs that support workers and promote health even if those workers are remote.
“The pandemic has led to high levels of employee anxiety and stress, so employers are making it easier for employees to get help across all aspects of the wellbeing spectrum,” notes Regina Ihrke, senior director and well-being leader at Willis Towers Watson.
The survey discovered that nearly half of the 817 employers surveyed (47%) are enhancing healthcare benefits, 45% are broadening well-being programs and 33% plan to make changes to paid time off or vacation programs. Some companies, such as Ally Financial, CVS Health and Target, are offering employees childcare support and caregiving leave to help family members who are sick with the virus.
Financial Wellness as a Benefit
Financial wellness programs are another benefit companies are increasingly offering their employees. Financially “healthy” employees tend to be less stressed and have a much better understanding of their total compensation and benefits, including 401(k) plans, health and disability benefits, tuition reimbursement and profit-sharing plans.
One of the biggest indicators of financial literacy is the ability to manage credit. Consider providing your employees with access to a research and education tool, such as ScoreMaster, that provides simulations of credit scores based on hypothetical payments and spending decisions. A tool like ScoreMaster can help employees understand the dynamics of credit and the impact of large purchasing decisions, which are more important than ever under the pandemic.
Companies need to consider these investments in non-financial compensation and benefits for the long-term view. Positive actions around health and wellness during this critical time — putting people first — are an investment in employees that will engender loyalty and productivity, both now and in the future.