Impact of COVID on Total Rewards in 2021 and beyond


  • “COVID highlighted the impact of collaboration, communication and cooperation on company success. We will see more group incentives rather than just purely individual incentives.
  • Are you wondering how Total Rewards will change in the coming years ? In this episode, discover the trends that will shape the Performance & Reward projects you will soon be working on.
  • “Automation and the focus on tasks will lead to more companies adopting pay-for-skills”
  • If you’re ready to upgrade your total rewards approaches for this brave new world, it’s time to identify which areas to focus on first !
  • Watch the video to get the full training !

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Full transcript

Note : this transcript has been edited for clarity.

Today I would like to discuss about some elements of how organizations are going to behave and the impact COVID is going to have on Compensation and Benefits / Performance and Rewards in 2021 and beyond.

The redefinition of who is really essential for business will have consequences on job evaluations and the pay gap between Executives and staff

I think that post-virus, organizations will have to build some form of job redundancy in their workforce. Job redundancy is having multiple people being capable of handling a swath of different tasks or processes, besides the main job owner. Just like in IT, redundancy decreases the risk of failure along the critical missions of the organization.

Imagine some of your essential employees, even in senior management, not being able to work. Organizations are going to have to find ways to have employees who can do two jobs or replace a colleague if the person is not there. They will have to train their employees. Or they will have to create a pool of freelancers maybe. They will have to think about an organizational approach that allows them to have some backup of their essential workers.

Talking of essential workers, I think COVID has also made us realize what we do consider to truly be strategic positions and who truly are essential workers.

We will surely se a shift in how we value work, and that will have, in the coming years, an impact on job evaluation criteria and maybe even on the pay differentials between the top of the hierarchy and frontline employees.

Hopefully we’ll come to the acknowledgement of some of society’s issues that we have witnessed. Business titans literally made billions of dollars while hundreds of millions of people across the world were losing their jobs and facing financial destitution.

Obviously I’m not saying everybody should be paid the same across all jobs and so on, but as HR, we have a role to play in trying to make sure that we don’t forget some parts of the organization : just because we need to focus on executives, doesn’t necessarily mean that we need to forget essential workers.

Rise of the non-employees

Another thing which is going to emerge as organizations try to continue to manage their costs : they will try to find alternative ways than to just have direct employees.

We will have to figure out how we can engage and pay, reward and motivate people who are at the fringe of the organization, such as freelancers, outsourced people, contractors and so on.

They are technically not our employees, but as an organization, we still want them to adhere to the values, adhere to the vision and support what the organization is trying to do.

As C&B professionals, we will have to find ways to better serve that population, who is still very often feeling undervalued and is not necessarily being treated in a manner is as respectful as for the rest of the organization.

Automation and the focus on tasks will lead to more companies adopting pay-for-skills

As many people have rightfully argued, COVID has accelerated some trends that were already taking place and that we see through automation, digitization, the application of artificial intelligence and machine learning in organizations. 

Jobs will be profoundly impacted in how they’re structured. Are we going to look at jobs as we do nowadays, or will we have to think more about tasks ? There will be 2 main types of tasks : tasks that are human-centered and tasks that are process/automation-centered, with the latter more likely to being taken over by a robot or algorithm.

This new focus on tasks will also drive a new way to determine how we set pay. Pay-for-skill will start with technical skills because they’re the easiest to define and to evaluate. You can also assign them some financial value, using analytics and big data in salary surveys combining with talent data.

Everything that has to do with “soft” skills, or let’s say behavioral skills, is currently more difficult to evaluate, so it’s going to be take a little bit more time to implement pay related to these skills.

However soft skills make a huge difference in the success of the organization. They are also not as easy to automate. This is where human work, and value-add, will eventually migrate, so we’re definitely heading in a direction where organizations are going to consider paying for those demonstrated skills.

Beyond pay : peer-to-peer recognition, mental health and financial wellbeing

Another thing that will emerge more strongly in 2021 is the focus on employee recognition and especially peer-to-peer recognition. We move into a work organization which is less siloed, less vertical, and where, especially in a remote environment, people will have to establish those relationships with others outside of their direct organization in order to be able to do their job properly.

Being able to recognise the support that one has received from their colleagues will sustain the organizational culture and help maintain employee engagement.

Obviously, we’ve also all heard a great lot of talk about better focus in 2021 on employee wellbeing, and especially about mental health and financial well-being, which are going to be very important in the future.

It’s a massive shift in some parts of the world where mental health has not yet been a very easy topic to tackle. But we will not be able to close our eyes and pretend that those issues do not exist, and like it or not, companies will have to get ready for that.

Performance management and incentive design will incorporate more team elements

Performance management will also change, because we will have to rely less on just the evaluation of a line manager at the end of the year. Companies will continue to move towards a culture of performance coaching and constant feedback.

As work is evolving and becoming more project-oriented and teams are more agile and so on, performance will also be more and more evaluated based on team criteria.

This will have an impact on incentive design. COVID made more visible that collaboration, communication, cooperation are crucial behaviors that really have an impact on the organization, rather than simply relying on one’s own capacity and ability to work. Teamwork brings success to the organization, and incentives will value that more and more.

This concludes my trends for 2021 in terms of Compensation and Benefits. I look forward to your comments ! Please post below your ideas on what the future of the function is going to look like. I’m very interested to read about that. Thank you very much, and see you next week.

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