HR teams focusing on total rewards, not just salary, for 2021
Many human resources teams that are planning 2021 salary adjustments and possible changes to total rewards programs need to focus on immediate ways to keep employee morale up as the coronavirus pandemic rages on, while also focusing on the longer term retention and attraction of top talent.
The ongoing economic uncertainty wrought by the pandemic means many Canadian employers are unsure whether they’ll be increasing or freezing salaries next year. While annual salary increases are usually a key way that employers reward employees, HR departments should be looking at other ways to acknowledge their employees this year, according to Gordon Frost, partner and market leader for Mercer Canada, during a webinar on 2021 rewards strategies on Monday.
Read: Third of employers froze salaries in 2020, compared to projection of 2%, finds survey
“2020 has been an unprecedented year for us all, the economic situation we’ve all been working through has created exceptional challenges for all aspects of our businesses. We really believe [employers] need to balance the health and resilience of their businesses with the health and resilience of their people. . . . This combination of empathy and economics, which integrates their business needs with their workforce needs is what we believe will help differentiate the most successful organizations of the future.”
Whether a company has to continue to freeze salaries for next year or reduce expected yearly salary increases, Nicole Stewart, a senior associate at Mercer Canada, suggested employers still have an annual performance review with all employees and be as honest and direct as possible.
Read: How to make performance reviews more effective
“Employees in a struggling organization right now have probably seen some of their colleagues let go, so we don’t think they’re anticipating big salary increases this year, but they should still be recognized for their contribution, even it’s non-monetary. That annual salary discussion meeting is still a really important touchpoint with employees, so it’s still really important that employers have that discussion with employees.”
Some low-cost ways to acknowledge employees include using recognition, such as mentioning outstanding accomplishments in a virtual town hall, said Stewart, noting employees may also appreciate being offered mentorship and learning opportunities, as well as the chance to work on a high-profile project next year. Frost added that offering up small perks, such as additional days off or paying for a home office chair, are low-cost ways to acknowledge loyal employees.
Communicating compensation package benefits besides salary, such as health coverage and retirement plans, is another strategy for rewarding employees without adding to the bottom line, said Stewart. And offering more flexibility for employees when it comes to savings and retirement plans may help those employees dealing with increased financial stress these days, added Brett Jennings, principal and senior defined contribution consultant at Mercer Canada.
Read: Most Canadians would choose greater retirement security over more money now: survey
“Creating flexible retirement and savings plans recognizes some may need [access to cash] for another purpose right now,” he said. “Taking the pandemic into consideration many employees may be facing some degree of financial hardship, so introducing flexibility is important to support employee financial well-being.”
Since money worries can impact mental health, offering more flexible options also supports good mental health and ultimately employee engagement and productivity, he added.
Employers are also dealing with the stress of volatile stock markets and dropping budgets, said Stewart, noting leaders should embrace this uncertainty as a time to make changes that will help companies hit the ground running once the pandemic has eased.
“We recommend designing your total rewards program for future sustainability and growth and taking this opportunity to rethink your incentives . . . plans are not likely going to perform well this year and this is the time to make changes.”
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