In this new era of work, we are faced with new challenges in managing and rewarding talent. As the COVID-19 pandemic took hold over the last few months, many organizations made changes to help them manage through the crisis. Actions included layoffs, furloughs, worker redeployments, and premium pay (for high-need/high-risk jobs).
These actions and others represented speedy responses to a highly uncertain, volatile, and evolving situation. While they may have created a level of stabilization in the near-term, now is the perfect time to prepare for what is next.
The following are some steps you can take to fully understand the effects of the decisions you made, as well as prepare a strategy for the future.
What Did You Do?
Take some time to ensure you have captured how decisions were made and their effects. Key questions to address include:
- What strategy did you use to determine which employees would be targeted for the tactics used? For example, what were the guidelines for distinguishing “essential” from “non-essential” work? Were layoffs determined based on role, tenure, performance, location?
- How did you notify employees (e.g., individually via email/certified mail?) Was the process uniformly applied and centrally governed, or was there any discretion for leaders in specific locations or parts of the business?
- Who was ultimately affected? What were their roles, genders, race/ethnicities, levels of earnings, ages? Do those most greatly impacted correlate with any demographics?
- What contact have you had with people after you took action? For example, have you tracked whether recently separated workers secured other employment (did you help them)? Are furloughed employees receiving regular communications? If you’re posting information to websites, do you know who is accessing that information?
Once you’ve captured what you’ve done, assess your current state to inform your strategy for moving forward (whether that means restoring your operation or making changes to your operating model).
This includes considering the current state of legal risk. Engage counsel to help you look at how decisions were made from a legal point of view. Employers are required to ensure that their processes are based on legitimate, non-discriminatory factors. It’s therefore wise to conduct an adverse impact analysis to test whether reductions in force or other decisions disproportionately impacted employees in a protected category (gender, race, etc). The EEOC offers some guidance for how to do this.
Meanwhile, over half of employers anticipate that it will take anywhere from two to six months for most employees to return to work 100% of the time. So if restoring from furloughs in a staggered fashion, once again, consider how your actions will impact certain demographics. Is there a business reason for any unevenness (e.g., these 20 stores in these specific locations are being re-opened and they have less diverse staff)? If not, can you change plans to ensure selection is more even?
If rehiring, assess representation across the skill sets you need and consider different ways of sourcing and building talent. For example:
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- If fewer women are available due to lack of childcare support, can you implement flexible work schedules to encourage a broader talent pool?
- Can you hire a contractor to do the work and train current employees in hard-to-find skills?
- Can responsibilities be broken apart and shared?
- Is there an opportunity to share talent with another organization temporarily?
It’s critical to build a plan, outlining your rationale in the context of your assessment of recent actions and in consideration of creative ways to rebuild toward a more even distribution of talent.
Also be mindful of the effects of pay actions. If transitioning from temporary pay reductions or premiums, consider:
- How many workers have been impacted?
- How affordable is a continuation of the premiums? Do they create other inequities in the operation?
- How did you communicate the administration of reductions or premiums in the context of the crisis? Do employees know if the pay reductions are temporary? Do they understand why they were administered?
- Have you thanked people for their contributions or considered administering a one-time bonus or other recognition prior to pulling back on premiums to express your appreciation?
- Are you providing notice of pulling back the premium far enough in advance so people know to no longer count on that pay?
Additionally, consider the effects of furloughs, pay reductions, and pay premiums on longer-term compensation decisions. Take this time to review base salaries and incentive compensation and examine the possible effects of total cash compensation in consideration of second-quarter performance and salary actions.
To that end, it’s helpful to uncover the effects of pay changes and pay restoration possibilities. Include analytics such as representation and median pay by role, level, and/or function. You can also do multiple regression analyses across job groups, analyzing total annualized compensation.
Performing all the above will go a long way toward informing your strategy moving forward. It will also help to ensure that your actions communicate your intentions. Furthermore, a plan for periodic review of pay actions as part of your strategy will continue to help you avoid unnecessary risk and ensure your plan is executed as you’ve intended. This will set you up for near-term and long-term success as we collectively adapt and adjust to our ever-evolving concept of work in a post- COVID world.