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Leveraging Data Solutions to Adapt an Evolving Rewards Strategy

HR departments have been at the forefront of the pandemic transition, compelled to manage workforces through unprecedented change and uncertainty.


Seven months into COVID, we’re beyond working only within this crisis mode, and the new question becomes how do we pivot into the new normal without real knowledge about what our businesses or economies will look like in a year, a month or even a week? While HR teams are still focused on cultivating employee productivity and engagement, they are also faced with how to manage total rewards through this transition. For many companies, this means looking at programs and benefits that have not always been at the top of the to-do list, such as child care, hazard pay, mental health, well-being and work-life balance.

According to Alight Solutions’ “2020 Employee Well-Being Mindset Study,” which surveyed employees in July about their experiences and expectations in areas of engagement, rewards and technology, less than half (49%) of employees have a good understanding of their total rewards and just 55% feel their total rewards meet their overall needs. Changes to rewards have been accelerated due to the pandemic and rewards now have an even more dynamic role in how organizations retain and attract employees. We’re quickly moving away from the rigid structure of how companies define rewards and into a new future that’s more personalized and data-driven.

To prepare, HR teams must balance addressing short-term problems employees are facing now while developing a more agile organization and implementing a strong long-term strategy. Let’s explore five ways that HR teams can adapt and manage compensation and benefits:

1. Implement Systems That Can Withstand Disruptions

Almost overnight, many companies had to transition to remote work—as of June, 42% of the U.S. workforce was working remotely full-time. For HR teams, this quickly led to the realization that cloud-based HR solutions accessible from anywhere were vital to doing their jobs and keeping compensation and rewards running smoothly without security risk. This remote-first system is not only critical during the pandemic, but will enable swift change management in the future with more flexibility and fewer disruptions.

While the systems organizations deploy are critical, transparency and overcommunication with employees as plans change are equally important. Individuals must understand how they will personally be impacted by system changes to manage expectations and reduce potential turnover. As we move forward to an agile, personalized rewards system, plans will become more dynamic, and HR teams should provide this visibility. For example, giving employees total access to view compensation plans, performance results, total rewards statements, commission statements, etc., can help make employees confident that their total rewards structure is fair. 

Additionally, to mitigate disruptions to HR systems, it’s vital that responsibility is split among multiple people on the team. One person’s absence should not be the critical point of failure for items such as payroll or commission processing. There should always be a team member available who understands and can implement HR processes in the case someone is on vacation, sic, or attending to personal responsibilities. Systems should allow an easy alternate or replacement of approval roles.

2. Tools to Model, Plan and Execute New Strategies

Agile HR not only relies on having the right systems in place, but also the right tools to make the best decisions for the organization and its employees. Many organizations are under immense pressure to reduce costs. Compensation is historically one of the first areas where companies look to cut back. From a high level, cutting compensation spend (i.e., eliminating positions) may be the fast and easy decision for the organization to meet bottom-line goals, but it can do more harm than good to the business for the future and can disproportionately impact certain groups. In fact, during the first wave of the pandemic, 60% of the jobs eliminated were held by women.

Instead, before making the decision to cut compensation, HR teams can use tools to model a variety of potential scenarios and the organizational outcomes before implementation. For example, they should look at what changes are happening within the organization (headcount changes for each department, early retirement, changes in benefit plans, etc.) and think about how the outcome will impact total rewards across the entire organization, rather than for one department or one individual. 

Another consideration is how compensation translates locally. Rewards more than compensation are often defined and valued on a local level. Benefits in one location may be more important than in other locations, especially when companies are evaluating total rewards on a global level. Leveraging these local differences can optimize compensation costs by prioritizing benefits with most value to the individual. These determinations help to win back compensation spend without employees bearing the negative impact.

3. Utilize Data to Optimize Compensation Spending

While compensation plan adjustments can often save headcount, how can employers handle those adjustments fairly? Rich data related to different locations and demographics is key for organizations to understand a holistic picture of compensation, uncover pay gaps and identify drivers of these gaps.

Looking at factors such as inflation or cost of living adjustments are vital in creating fair compensation. After evaluating data and pay gap drivers, organizations can optimize spending and adjust rewards packages based on their employee data, analyze the effectiveness of their current model, set new pay scales and model cost projections. These adjustments can include short-term investments to create quick wins for employees without committing to benefits for the long term. For example, providing a one-time remote work stipend for employees no longer coming into the office.

4. Employ Tools to Retain and Motivate Your Best Performers

It’s more important now more than ever to retain the top performers whom organizations have invested in to keep the business afloat. However, despite the economic uncertainty and high unemployment rate, 85% of currently employed individuals are still considering looking for a new job.

Through the past six months, organizations have had to make difficult decisions and there are inevitably more to come. To retain employees through these changes, it’s important to identify top performers, understand how they might be affected and communicate what the company is doing to try to mitigate potential negative effects. Moving forward, as changes in rewards and compensation continue, keep staff aligned with changing strategy as part of ongoing communication — transparency is key through both positive changes and difficult decisions. 

Adjusting performance expectations to reflect the current workforce landscape is also important to retention. Organizations will need to consider a much broader range of attributes for advancement than before the pandemic. For example, having a positive impact on the company, promoting collaboration or achieving business results may now have higher value than the hours worked. This is especially important when we think about how to retain working parents, particularly working mothers, who have taken on the brunt of the pandemic child-care burden.

5. Ensure the Ability to Adapt

There’s no going back to life before the pandemic, so putting your organization in position to adapt to changes is the best way to ensure future success. The way HR teams have been functioning for years, and even at the beginning of 2020, is not the same way we need to execute and prioritize for the future. For example, sales quotas from Q1 may not be realistically achievable in Q4, so adjustments should be made to reflect the reality of the current business environment; bonus management processes may take into account different factors or metrics; and special circumstances may need to be taken into account in employees’ performance.

Moving forward, the ability to adapt quickly will be critical to success. Businesses can leverage data-driven compensation, one of the greatest organizational spends, to become more agile and adjust more efficiently than in the past.

About the Author  

Tanya Jansen Bio Image

Tanya Jansen is the co-founder and CMO of beqom, a cloud-based provider of total compensation management software.  

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