A new world of work and rewards

1 July 2020 - Rosanna Stofberg, Chartered Reward Specialist with the South African Reward Association (SARA)

Economists project that post COVID-19, the world will descend into recession and most business will be severely impacted. Even now, organisations face liquidity problems; they’re not earning enough but still have to cover their fixed costs. So, above all, they need to free up or raise cash.

This will inevitably affect their ability to support a full workforce or pay them at previous market rates. At the same time, many employers don’t want to slash their staff complement unnecessarily.

So how can they strike a balance between minimizing their biggest cost - labour - and saving jobs?

Reprioritising reward

Even in the midst of the pandemic, some sectors are doing well, like tech and pharmaceuticals. Others may face low profitability for years to come. Each sector and industry will be affected differently and has to make cost cutting decisions against its particular situation.

Yet, when it comes to rewards, the model for compensation is fundamentally the same. At the core are basic salary or wages, and variable pay, like sales commission. Next there are standard and fringe benefits, like pension and medical aid, paid leave, sick leave, exclusive discount programmes, or car allowance. On top of this are incentives, like shares or stock options, and performance bonuses.

Then there are the soft rewards. These may include a pleasant work environment, subsidised meals, on-premises childcare, the obligatory free coffee, a comfortable desk and chair, or in-house wellness counsellors. There are also functional and incidental costs, like a company laptop, tablet and smartphone; job and team training; travel allowance; or meals and accommodation claims.

One can see how the total cost to company of even one employee can mount. At the same time, there is a noticeable quantity of non-essential fat that can be cut away to help preserve core income.

New models of reward

If organisations can indeed keep employees by focusing on total cost reduction, they will have to find new ways to keep them motivated.

With their focus on survival, there isn’t much time for companies to ask what a future rewards model should look like. Whatever it is, it needs to acknowledge the new set of needs and concerns employees now face.

While many are working from home, a greater number are forced to return to their place of work, a once hospitable environment now fraught with danger and stringent controls. To be productive, they need to feel safe and protected. This means employers must provide PPE and properly disinfect their workstations at a minimum. Both those at work and those working from home will also benefit more than ever from emotional and mental health support.

Even if companies cannot offer better benefits right now, employees will respond favourably to those who take care of their basic health and safety needs.

It is time for organisations to freely experiment with new reward initiatives and get feedback on their effectiveness. For example, could they implement a work-from-anywhere policy whereby an employee could move to and work from a cottage by the sea now instead of waiting for retirement?

Such flexibility and sense of control has been proven to improve worker motivation and commitment.

First things first

It’s almost certain that both during and after COVID-19, companies will be forced to reduce their human capital investment.

First, they should step back and take a hard look at how they could reduce employee cost to company, both in terms of non-core remuneration and workplace comforts. Workers may miss subsidised meals, coffee in the break room or gym membership. However, they will be grateful to a loyal employer who does everything in their power to maintain their employment.

From there, organisations should experiment with rewards that align to a new set of employee needs and values.


MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.zawww.atthatpoint.co.za 

For more information on SARA please visit:

Website: www.sara.co.za 

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