North American companies making total rewards cuts as pandemic extends: survey
North American employers are attempting to strike a balance between supporting employees and reducing costs during the coronavirus pandemic, according to a new survey by Aon.
The survey, which polled more than 1,400 North American companies, found 70 per cent said they’re giving their working parents additional flexibility around their schedules, while 57 per cent said they’re giving employees as-needed payments for equipment purchases to help with new work-from-home arrangements.
As well, 42 per cent of respondents said they’ve provided temporary increases to sick leave entitlements and 38 per cent said they’re allowing staff to use their sick leave for coronavirus-related quarantines, in addition to what’s required by law. A quarter (26 per cent) of companies said they’re allowing employees to use sick leave to care for children who are off from school.
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However, companies have also moved to contain the costs of their total rewards programs. Between Aon’s March and April pulse surveys — a span of three weeks — the firm found the percentage of North American companies delaying or cancelling salary increases for employees grew from 14 per cent to 39 per cent.
Seven per cent of companies also asked employees to take reduced salaries on a voluntary basis and 10 per cent implemented involuntary pay cuts. While Aon noted executive officers were most likely to be covered by these actions, 40 per cent of employers that had implemented pay reduction measures did so for their entire workforce. Some companies also reported a mixture of voluntary and involuntary actions.
Nearly four in 10 (39 per cent) employers said they’ve reduced or eliminated their spending on contractors or consultants and 34 per cent said they’ve postponed employee training programs. Some 28 per cent said they’re leveraging applicable government subsidies and programs.
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However, three-quarters (76 per cent) of survey respondents said they haven’t made adjustments to their health and benefits plans. Just two per cent said they’ve reduced some or all of their paid leave benefits, where allowed by law, and four per cent said they’ve cancelled some or all of their wellness rewards.
On the retirement side, 86 per cent employers said they haven’t made any changes, though five per cent said they’ve suspended employer match, profit sharing or other non-elective employer contributions for their defined contribution plan. One per cent said they’ve reduced the employer match or contributions for a DC plan and two per cent said they’ve delayed it.
“We know companies have a strong desire to help their people as much as possible, yet many firms also face very difficult economic conditions,” said Alex Cwirko-Godycki, chief strategy officer for Aon’s rewards practice, in a press release. “The actions cited throughout our study reflect this dichotomy: efforts to manage costs are accelerating and, at the same time, companies are also taking significant steps to support employees working in new or more difficult environments.”
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The survey also found employers’ approaches to compensation are different depending on whether they were identified as essential or non-essential companies in the context of lockdown regulations. Of the 18 per cent of survey respondents that said they’re offering special pay arrangement to employees in high-risk roles, almost all (93 per cent) identified as essential companies. Eight in 1o (80 per cent) of those employers added the additional pay as a flat amount, such as an extra weekly or hourly amount.
Of the companies that said their hiring practices are normal (18 per cent) or have increased (three per cent), 77 per cent identified as essential employers. Half (47 per cent) of employers said they’re cautiously or selectively hiring for key hires and replacements only, while about a quarter (23 per cent) said they’ve implemented a hiring freeze.
Read: Employers using hiring, wage freezes to combat effects of coronavirus: survey