Compensations & Benefits Employees will Receive in 2021

January 13, 20212:05 pm1038 views
Compensations & Benefits Employees will Receive in 2021
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Throughout 2020, COVID-19 pandemic has challenged every aspect of life and society. In the business world, the HR function has become pivotal in helping steer organisation’s response to the pandemic and contribute to a strategy for recovery in 2021. In the future to come, they will also help strengthen business resilience against similar disruptions. 

Not only does the pandemic affect health and wellbeing of people, the early days of the pandemic found compensation managers struggling to determine a measured response for managing costs and protecting employees at the same time. This circumstance highlighted the need for organisations to increase their agility and transparency with future-proofing compensation strategy. 

According to the nationwide Gallagher’s 2020/2021 Salary Planning Survey, salary increases were moving along as planned with 66 percent of employers already implementing pay raises. In March 2020, however, a sharp contraction in the economy was produced, forcing most organisations to halt further salary increases. Consequently, amidst an uncertain economy due to COVID-19 pandemic, nearly half of survey respondents (45 percent) indicated that they have taken a cautionary step back re-evaluate their salary increase plans for 2021. More than half of employers (51 percent) said they will rethink their budgets except to reduce salary increases next year, while 45 percent are moving to suspend them. 

The report also noted that for 2020, salary increase budgets end up rising 2.5 percent, down from earlier projections of a 2.8 percent average increase. While in 2021, Gallagher projects average salary budget increase of 2.1 percent, variations by employee group as well as by location industry. On a whole,  employers remain committed to providing performance incentives and short–term bonuses in 2021. 

Benefits and compensations to expect in 2021  

Like most surveys, Gallagher showed that among many benefits that are at the forefront of this pandemic is expanded health care coverage to include mental health coverage. Employers and employees alike are in uncharted territory to deal with the crisis. Many studies have also shown increased levels of depression, anxiety, and even substance abuse among workers, furloughed employees, and the unemployed. Hence, employers began looking towards expanding healthcare coverage with virtual care of “telehealth” service. 

Sick leave is also in focus for many employers. In some organisations, there are already requirements for paid sick or parental leave for full-time employees. In addition to regular leave standards, organisations are planning to extend the number of days employees can take in 2021. Moreover, as families begin to struggle financially with the costs of protective gear, coronavirus tests, medications, etc. employers are looking at ways in which they can support their workforce by reimbursing a percentage or all of the costs to alleviate the burden. Financial assistance is also among top choice to some organisations for retaining employees and attracting top talents. 

See also: Compensation Analytics: 7 Areas for HR to Focus

The reset process  

As COVID-19 disruption has changed the entire landscape for benefits, compensations, wellness, diversity and more, it is necessary to recalibrate how to serve employees and the entire workforce. A few points to make are as follows: 

1. Redesigning health plans and benefit programs 

The impact of the pandemic makes it key for employers to look further on their plans to make employees’ lives easier or better. Leveraging and harnessing the benefits of design strategy driven by employee insights, data analytics, and third-party data will allow employers to better understand their costs. The right strategy will also allow employers to move away from costly and less effective one-size-fits-all benefits. 

2. Building strategic mental and financial health

The second wave of coronavirus might have a worse impact on people, wrote the survey. It makes the case for managers to remember the importance of human connection as they step up their communications and work at being flexible and inclusive. Employees especially need this support as they adjust to working from home (or back to working from office). Starting with employee assistance programs, especially that offer virtual consultations, might be beneficial now and in the future to retain health and wellbeing programmes. 

3. Considering COVID vaccines  

As the COVID vaccines await a plan for distribution, no one’s expecting it to perform like a miracle and make the pandemic magically disappear. In the interim, employers are watching developments closely for the long-term impacts on their plans. This would require employers to assure that their health plans are intact and might perhaps be forced to cover the vaccine costs. 

4. Doing diversity, equity, and inclusion right 

Even before pandemic, diversity, equity, and inclusion remain critical in every workplace. In 2021, however, business leaders are expected to strive to weave tightly into these topics. Employers must hold steady with the drive to effect meaningful and lasting cultural change. The approach as suggested by Gallagher requires addressing important issues and executing changes with education, conversation and understanding. There is no quick solution, but those that keep at it will win. 

Take home note: The key to employee value proposition in 2021

Employee value proposition (EVP) is meant to treat employees for their contribution. It is what employees received in return for their skills, capabilities, and experience they bring to a company. In 2021, the strategy to consider should include the following: 

  • Compensations – a competitive salary and bonus scheme with a transparent and fair evaluation system is necessary. Additional benefits such as health care, paid leave, retirement, etc. are equally important to some than just a high-paying job. 
  • Work-life balance – flexibility is key to addressing individual employee needs, whether it comes in hours or time worked in a day to remote locations. 
  • Stability and growth opportunities – education or training systems and coaching or mentoring programs are attractive to the candidate and essential for the growth of the organisations. 
  • Purpose, respect, and autonomy – a positive company culture in which the organisation demonstrates its core values and beliefs facilitates a general amount of wellbeing, comradery, and respect. 

See also: HR Knowledge: Understanding Stakeholders Compensation Systems