Human Capital Management during COVID-19: Eight Compensation & Benefits Strategies to Help Employees Navigate the New Challenges

To help workers navigate the new challenges, The Conference Board provides the following eight recommendations for compensation and benefits practitioners to consider:

1. Expand paid time off (PTO) to prioritize employee health. Many organizations are responding to the pandemic by expanding PTO. For example, JPMorgan is offering five extra paid leave days and an extended carryover period of unused vacation days from the previous year.¹ This is especially important given the nature of the health crisis; PTO allows employees to put themselves and others at less risk. To keep track of these changes, some organizations are creating a new time code for COVID-19-related time off. A sporting goods retailer created a “quarantine sick leave” policy, offering employees under quarantine or those who cannot work from home an extra two weeks of sick leave. Others in the US are creating a disaster pay policy. For example, Starbucks will pay employees for up to 14 days if they have been diagnosed with COVID-19 or exposed to confirmed cases.² Employees showing symptoms are asked to stay home; the company’s “catastrophe pay” will cover any of their scheduled shifts for three days to allow for time to get tested.
2. Redefine health benefits to offer more flexibility. The stay-at-home guidelines create obstacles for patients to seek in-person consultation or treatment in already strained brick-and-mortar health facilities such as clinics, urgent care centers, and hospitals. Partnering with health insurance companies, many organizations are offering employees telehealth services as an alternative; several insurance providers have also waived copays for virtual visits for any services during this time. Telemedicine is not a new concept, but it has become much more prevalent during the COVID-19 pandemic by providing an option for employees to receive diagnosis and treatment (both physical and mental) through video chat and text without leaving their home.
3. Provide backup dependent care to reduce employee stress. Some organizations are providing backup dependent care, a solution that offers workers peace of mind if normal arrangements for child or elderly family care can’t be made. For example, Target is offering each team member 25 days of care per dependent. CVS is covering an additional 25 days of childcare through its backup-care vendor Bright Horizons.³ An increasing number of companies are considering similar benefits as more school districts close.
4. Provide additional salary and/or bonus to motivate and reward essential workers who are required to work on-site. Retail, service, and banks are considered essential industries during the pandemic. In the US, roughly 70 percent of workers cannot telecommute, including bank tellers, factory workers, heath care workers, and those in the grocery industry.⁴ To recognize these essential employees for embracing challenges to ensure business continuity, multiple companies elect to provide employees with extra pay. These approaches are increasingly varied due to the unstable nature of the pandemic and in response to the circumstances arising almost daily—strategies range from increasing hourly wages to simply adding a weekly bonus on top of workers’ current pay. A US-based multinational food company is implementing a $2-per-hour premium for hourly employees in production facilities for a five-week period. At Bank of America, eligible branch staff will receive a $200 supplement on a biweekly basis.⁵ However, several HR leaders told The Conference Board they were concerned about the long-term impact on employee motivation and morale once the premiums are removed. To prevent this issue, organizations should make it clear in pay-raise announcements that these premiums are temporary. Some organizations have thus opted for one-time cash bonuses as “recognition pay.” This term has gained popularity as it better acknowledges the various needs, such as dependent care and transportation issues, that the extra pay provides for. A US-based global technology firm is providing free meals to factory workers as a way of rewarding hard work during this challenging time.
5. Launch/expand a PTO donation program or encourage voluntary part-time work to share resources. In the wake of the COVID-19 pandemic, a large North American information consultant company has expanded its PTO donation program across the entire organization when previously it was limited to direct team members. As a growing number of employees need more PTO during the crisis, the company now allows all workers to donate their unused or unwanted PTO to their fellow employees. Several large US-based research organizations now allow workers to switch to part-time work during the pandemic while maintaining full benefits to both offer more time for childcare and ease financial stress on the company.
6. Leverage employee assistance programs (EAPs) and other existing resources to promote well-being. Companies can look toward retooling EAPs and other programs to redress the growing emotional, physical, and financial well-being challenges employees face. Adobe, for example, has an interactive web portal that offers employees and their family members unlimited access to a wide range of online information, tools, and other resources related to health and wellness.⁶ Short-term counseling with experts can help alleviate anxiety, depression, stress, conflicts, and other emotional concerns. Offer free consultations to assist employees with financial issues such as insurance, mortgages, taxes, and more. As teleworking becomes the new norm, organizations need to rethink how to include workers (who are now working virtually full time) in wellness programs during the crisis. For years, the US-based global human performance company EXOS has been providing remote employees with wellness tips as screensavers and offering one-on-one virtual consultations with dietitians and coaches that allow employees to participate in digital movement sessions, meditation, and stretch breaks from home.⁷
7. Reassess performance targets (and adjust if necessary) to protect employee compensation. Across industries, most HR leaders feel that “it’s too early to talk about performance-based pay or annual incentives.”⁸ However, many organizations have emphasized to employees that their goals might shift throughout the year and asked them to revisit those with their managers over time. In heavily affected industries, dramatic changes to the business have rendered previous sales goals less feasible and required adjusting targets. Some organizations are considering setting very short-term sales goals or paying sellers temporary nonrecoverable draws. Some companies are encouraging stores/regions to lower their sales quotas and reset the range of the sales floor. When it comes to executive compensation and adjusting performance targets for equity awards, organizations should consider multiple factors such as SEC disclosure requirements, investor reactions, employee morale, impact on the next say-on-pay vote, and accounting guidelines, suggests one leading law firm.⁹
8. Be creative in policy design and implementation within the legal/regulatory framework and prepare for long-term impacts. A US multinational clothing company is looking to extend pay continuation to not only employees but also site contractors affected by facility closures. To support the entire country combating COVID-19, a US-based pharmaceutical company grants employees who join as temporary frontline volunteers three months of paid leave. A US-based global chemical company decided to go off script for short-term disability benefits after realizing one manufacturing plant has a large aging workforce with underlying health conditions. Normally this type of benefit requires approval from third-party vendors; during the COVID-19 outbreak, the company elects to provide its employees with such benefits through its own payroll. Although most organizations are still focusing on addressing the immediate needs of employees, it’s critical for compensation and benefits leaders to look forward with an open mindset, leverage crucial information from scenario planning, and prepare for the longer-term impacts of COVID-19 by developing creative solutions.