Pandemic Reality: It’s Time to Realign Your Sales Organization

How effective were you in selling your products and services? How effective are you now in selling your products and services? The answer has probably changed – because the market most certainly has changed, too.

It has taken years of strategic and tactical work to cultivate an effective sales organization with a customer base that values your products and services. In the span of a few months, the pandemic has done more than simply threaten the viability of your sales function. For many sales organizations, it has triggered a tsunami-like setback that demands your attention.

Social Distancing = Customer Distancing

Selling products and interfacing with customers looks completely different than it did this time last year. It will look different going forward. Similar to “social distancing,” we have “customer distancing,” mandating a movement to a more “virtual” commercial organization. This economic disruption has particularly impacted outside sales organizations. You can no longer grab lunch with a client, readily schedule a visit with decision-makers, or conduct presentations in front of key team members.

You can still sell, but your approach needs to evolve.

Pandemic Reality: It’s Time to Realign Your Sales Organization

Seven Market Strategy Factors

Most organizations need to rethink the go-to-market pay strategy and commensurately align expectations to a wildly different set of market realities. 

This assessment needs to incorporate seven key areas. They include:

1. Understanding how existing customers and prospects have been impacted by the rapid market changes

Although more organizations will find that their businesses have been impacted negatively, some are experiencing positive impacts. In some industry segments (protection equipment, disinfectants, pharmaceuticals), sales could even become easier, albeit more competitive. Not all of your customers (or prospects) will have been impacted in the same way. 

You’ll need to consider the pandemic’s impacts on:

  • Revenue
  • Availability of capital
  • Production capability
  • Procurement
  • Supply chain
  • Shipping and logistics
  • Talent/labor

2. Identifying which customers use more than one product or service

You will need to adapt your sales strategy and approach to accommodate customers who are impacted positively in some areas of their business and negatively in others. One size will not fit all.

3. Rethinking the Customer Experience

Customer behavior patterns have changed. The decision-making and buying processes have transformed into a growing reliance on technology. Do you have digital content that provides the brand experience that you want your customers and prospects to have? Does it communicate the value of your products or services? Can you innovate your service delivery model to meet your clients’ needs – and stay competitive?

4. Determining how to personally engage customers in a meaningful way – at a distance

This is not an easy task for some outside salespeople who are not accustomed to a more impersonal and transactional sales process. Some are more accustomed to long-term relationship building and will be challenged by the new approach. It’s a lot easier to say “no” over the phone than it is in person. This will require establishing new processes and building new skills and competencies that will be necessary to be successful.

5. Re-examining what you’re measuring in your commercial function

Changing the selling approach necessitates a complete re-evaluation of the established measures within your commercial function. It’s time to revisit the old metrics and adapt the approach to managing performance in light of revised metrics.

6. Aligning the organizational structure to the new market realities

This inherently means adjusting all commercial roles, responsibilities, reporting relationships, and accountabilities to optimally support the customer and ultimately increase new client acquisition.

7. Adapting the sales incentive plan to align with new behaviors and expectations

This effort will focus on thoroughly linking sales behavior to incentives. How will you retain your top performers? Some organizations may not have done this prior to the pandemic; it’s an absolute necessity to evaluate it now.

Addressing these seven areas is the starting point for aligning your sales organization with the current situation. With the market shaken by the COVID-19 pandemic, it’s the right time to adjust your approach. You can’t stop the wave, but you can do more than just ride it – you can get ahead of it. 

Findley has structured an approach to facilitate a complimentary rapid assessment of your sales organization, and provide some deeper insight into the areas that you need to consider in refocusing your organization to succeed in today’s market realities. To learn more or to schedule a complimentary session to discuss your sales organization challenges, contact Dan Simovic with the form below.

Published June 9, 2020

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10 Steps to a Return-to-Work Preparedness Plan

Across the country, states are easing coronavirus-related restrictions, and now hosts of new workplace issues are emerging – along with the over-arching question of what the work environment will look like as businesses strive to protect the health of employees and customers. For several weeks, non-essential businesses and their employees have ridden out the “stay at home” mandates, but the next phase may not be so temporary. The path forward is uncharted and made even more challenging as the reopening guidance, which varies by state, evolves almost daily. Businesses need a return-to-work plan.

While many organizations have successfully equipped employees to work remotely during the COVID-19 pandemic, numerous others are unable to conduct business in a virtual atmosphere. They cannot provide their products or services through a remote work model. And to make matters worse, the economic crash has resulted in a devastating loss of customers. 

10 Steps to a Return-to-Work Preparedness Plan

Adapt to Reach “New Normal”

Edging back into a functioning physical work environment may feel like walking a tightrope: relying on a confidence that feels threatened; advancing with cautious, considered moves; and finding and maintaining a center of gravity because organizations are vulnerable to the unexpected.

The overwhelming considerations business face to protect the health of their employees and customers are strategic and tactical:

  • Leadership challenges
  • Re-engaging a potentially fragile workforce
  • Modifying workplace practices and the work environment to safeguard employees, customers and vendors 

Now is a good time to borrow and adapt strategies from the manufacturing industry’s playbook, where safety in the workplace has been front and center since the Occupational Health & Safety Administration (OSHA) was established in 1971.

With so much to consider, it’s important to take a structured approach to prepare a return to a business as (nowhere near) usual environment. Social distancing, virtual meetings, protective equipment and the need to avoid travel must be incorporated in the workplace.

Re-engaging employees is crucial: they need to feel motivated, valued and productive. But first things first: one of the basic needs that humans share is a need for safety and security. It’s unlikely that employees will feel motivated, valued and productive if they don’t feel safe. Now is the time to manage and mitigate the risk.

The best approach is a measured one, customized to accommodate the varying levels of health risk being faced and implementing practices that achieve a balance between acceptable levels of business performance and acceptable levels of relative risk.

Return-to-Work Plan: 10 Steps

It’s time to take action. Beyond requirements at the state level, every organization should have a preparedness plan based on an assessment of physical and operational risks specific to their organization – and in many cases, the plan will need to be customized to specific types of employees.

1. Create a committee of key stakeholders to ensure that there will be a dedicated focus to implementing and managing a safe space and safe practices. In addition to a committee head, include employees from all functional areas of the organization: operations/production, administration, and line staff. 

2. Identify external technical resources to assist with technical issues and risk management. In small organizations, or in organizations where staff is at capacity, engage third-party resources who can help. These could include human resources consultants, safety consultants, and legal experts.

3. Develop and document a communication plan which focuses on educating the workforce and regularly reporting results and critical issues. Consider the “Stop Start Continue” approach:

  • What do we need to start doing immediately? 
  • What do we need to stop doing? 
  • What current practices will continue to work well and how can we sustain them? 

This will be an iterative process, and its value hinges upon monitoring, reporting, learning from near misses and being agile enough to recalibrate as needed.

4. Understand the legal requirements specific to employment law, and be aware of what may not be required but may work well in your organization.

5. Assess the infrastructure to make sure that communications and technology platforms will meet increased demands.

6. Reconfigure workspaces or practices to keep employees at a safe physical distance from each other. If you have an open workspace, it may be difficult to keep employees six feet apart. Cubicle walls of an appropriate height can solve this problem. Evaluate operational ways of reducing the likelihood of exposure: staggering work shifts, downsizing operations to allow for appropriate social distancing, etc.

7. Identify potential sources of COVID-19 that employees may be exposed to through the nature of their work and also the current risk factors in the local community. The plan should clearly address your approach to minimizing the risk.

8. Determine the risk that travelers from other cities, states or countries have on your employees.

9. Implement precautions for employees with individual risk factors due to age, chronic medical conditions or other health issues that place them at risk; as well as for employees who have immediate family members who are at risk.

10. Establish strategies for conducting business with a reduced workforce due to staffing cuts and/or unexpected absenteeism (cross-training and skill development, leveraging digital learning where possible).

Assess Coronavirus Risk

An employer may have varying levels of risk to the novel coronavirus, based upon different types of jobs performed, geographic locations and the current physical work environment. Lower levels of coronavirus risk include jobs that have minimal occupational contact with other workers or the general public. 

Jobs in the medium health risk category typically require frequent and/or close contact with people who may have been infected but are not known or suspected patients. This could include frequent contact with the general public and/or frequent contact with travelers.

Jobs with high or very high potential for Coronavirus exposure include those delivering general healthcare, medical or mortuary services, and those performing specific types of medical and lab procedures.

Note that each state where you have business locations may have differing requirements. The matrix below illustrates a high-level overview of considerations applicable to all organizations, the potential health risk by job setting; and outlines important factors to consider before resuming operations.

Considerations

Job SettingRisk LevelAdministrativeWorkplace PracticesWorkplace Environment
AllVaries 
  • Document policies for reducing risk of exposure
  • Implement a communications plan
  • Train employees on new practices
  • Minimize contact among workers
    (remote working where practical, virtual meeting, restricted travel)
  • Provide hand sanitizers, tissues, no-touch trash bins; supplies for disinfecting workspaces
  • Post hand washing signs and instructions
  • Improve ventilation
  • Install high efficiency air filters
  • Ensure work environment is cleaned and sanitized

Specific Considerations

Job SettingRisk LevelAdministrativeWorkplace PracticesWorkplace Environment
Healthcare / MedicalVery High to High
  • Enhance monitoring of employees
  • Job-specific training
  • Make counseling available
  • PPE appropriate for the job (gloves, gown, shield, mask respirator)
  • Specialized ventilation
  • Isolation rooms where needed
Community Setting (general public schools, high density work places)Medium
  • Communicate availability of medical screening
  • Keep customers and vendors informed of safety practices
  • PPE appropriate to the risk level and job setting (mask, gloves)
  • Physical barriers where appropriate
    (drive through service for customers; shields/sneeze guards)
Production EnvironmentMedium
  • Consider staggering shifts
  • Modify staffing levels to maintain safe distancing
  • PPE appropriate to the risk level and job setting
  • Where appropriate, limit customers and the public’s access to the worksite
  • Physical barriers where appropriate
Field Service (non-medical, non-community setting)Medium to Low
  • Keep customers and vendors informed of safety practices
  • Determine if work can be performed during times where less interpersonal contact is likely
  • Use a face mask if required
  • Continue to use PPE that would normally be used for the job
 
Sales (outside / field sales)Medium to Low
  • Work remotely when possible
  • Conduct virtual meetings
  • Use a face mask if required
 
OfficeLow
  • Keep customers and vendors informed of safety practices
  • Ensure workspaces allow for appropriate distancing
  • Continue to allow staff to work remotely when feasible
  • Allow scheduling of hours that will reduce number of employees on site
  • Use a face mask if required
  • Where appropriate, limit customers and the public’s access to the worksite
  • Install physical barriers (cubicle walls) where appropriate distancing is not possible

Guide Employees through Change

These are monumental changes that pose logistical, financial, operational and cultural challenges. They require the formation – and consistent reinforcement – of different approaches and new habits and behaviors. Leadership and communication are more critical now than before the COVID-19 pandemic, as many employees will feel vulnerable for quite some time. 

Making changes to the physical environment and to workplace practices is part of the solution, organizations must also re-engage employees through sustained communication, a willingness by leadership and employees to adapt to these changes, and resources to ensure that employees know that their well-being is the first order of business.

For more information on return-to-work readiness, contact Sandy Turba at Sandy.Turba@findley.com or 216.875.1937 or Dan Simovic at dan.simovic@findley.com or 216.875.1917

Published May 18, 2020

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Managing your Sales Incentive Plans through a Global Crisis

The COVID-19 pandemic continues to severely impact the global economy as the world stays locked down. Countries are continuing to mandate quarantines and social distancing practices to contain the pandemic. The impact and magnitude of this crisis on the economy has created great uncertainty. A question many companies are struggling with today is how to handle their sales force, especially since the majority of these employees earn their living through incentives and commissions.

It is important to recognize that although we are weathering the same storm, not everyone is in the same boat. Sales team members who rely on face-to-face interaction and extensive travel had their world flipped upside down as it came to a startling halt. The ability to foster relationships, generate new leads, and demo products is limited to phone, emails, and video chats.  Other sales team members are falling into windfall situations selling products in high demand industries, such as sanitizers, cleaning equipment, and personal protection equipment. Both circumstances can cause the sales incentive plans to deliver pay at levels that were not planned and require a review of plan designs.

Manage your Sales Incentive Plans through a Global Crisis

Assets and Business Strategy

Before diving into revamping a sales incentive plan, it’s important to first think about the overall business strategy. How has the crisis impacted your company and is it time to re-pivot the strategy? In addition, it is important to check-in on the most important assets of any company, its people. Below are questions to consider:

  • How has demand for our products changed?
  • Do you have a pulse on your talent?
  • Is the company providing the right tools and technology to maximize employee potential?
  • Are we structured properly support the “new” environment?
  • How has the crisis impacted employees mentally?
  • Are channels of communication open and transparent?

Sales Incentive Plans

Once you review the business strategy and determined the “new normal”, it would then be an appropriate time to redesign or tweak the sales plan to ensure that it continues to align with the overall strategy. It is clear that in more cases than not, sales forces are taking financial hits. According to recently published surveys, it is expected that over 70% of companies expect COVID-19 to negatively impact on sellers’ pay by at least 5%. Companies need to determine how they want to intervene and adjust their employee’s potential earnings.

Some key avenues to explore are:

  • Paying draws to make sales employees “whole” or “partially whole” so they do not suffer from a financial hardship;
  • Using historical performance measures and results rather than current year sales;
  • Reducing quotas based on a revised business outlook;
  • Enhancing rewards through team goals rather than an individual focus;
  • Adding sales performance incentive funds (“SPIFs”) where possible;
  • Addressing windfall or bluebird situations, where the terms and provisions of incentive plans do not adequately reflect the possibility of unusual situations, such as the COVID19 pandemic, that may result in excessive and unwarranted payments due to sales team members;
  • Ensuring high performers have the opportunity to earn previous pay levels and provide retention elements into their pay mix as they may be poached by competitors; and
  • Pausing a sales plan completely and allow for discretionary payments based on business development activities.

We are living in a world where there is more uncertainty than ever, but we must hope that there is a turn around the corner. When the economy starts to come back, companies who are proactive at retaining their sales talent will come out of this stronger and on top.

Questions or need help evaluating your organization’s sales incentive plan options? Please contact Jen Givens or Tom Hurley by filling out the contact form below.

Published May 15, 2020

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When Duty Calls Your Employees: USERRA and COVID-19

As companies across the country continue to adapt their operations to respond to the COVID-19 pandemic, nearly one million employees may be pulled from their employers to serve the federal government in its efforts to battle the disease. The recent “call up” authorization for up to one million reserve members to active duty is a good reason for businesses to review obligations of the Uniformed Services Employment and Reemployment Rights Act (USERRA).

In late March, President Donald Trump authorized a call up of “elected reserve and certain members of the individual ready reserve of the armed forces.” The call for service of reservists may be for a period of up to two years.

In 1994, USERRA was established to provide certain job protections for uniformed service members and impose employment-related obligations on their civilian employers. All private and public sector employers (including foreign employers doing business in the United States) are subject to USERRA — regardless of the employer’s size. Along with full-time employees, part-time and former employees are covered under USERRA. However, employees who are in positions not reasonably expected to continue indefinitely fall outside USERRA’s protections.

While the employer obligations and employee protections under USERRA have not changed, it’s important for employers to understand the compliance requirements and confirm that the necessary compliance documents and forms are in place. Organizations should also communicate with reserve employees in a responsive manner.

COVID-19 and USERRA

1. An employer cannot delay a service member’s reemployment solely out of concern that the service member’s service in a COVID-19 affected area may have exposed him or her to COVID-19.

In accordance with USERRA, an employer must reemploy Service members returning from service in the Uniformed Service ‘promptly’.  Title 20, Code of Federal Regulations (C.F.R.) 1002.181 states that ‘prompt’ typically means within two weeks of the employee’s application to return to work, unless unusual circumstances exist. In some cases, a reinstatement beyond the typical two-week period may be warranted due to the company’s policy regarding the COVID-19 health emergency as applicable to all employees.

Please also note that the company policy should be broad in scope and intended for all employees traveling to areas with a high risk for exposure to the Coronavirus. If an employer’s policy limiting return to work is focused only on service members, it could be viewed as discriminatory under USERRA. Please see 20 C.F.R. 1002.18 regarding discrimination.

The employer may want to consider “temporarily providing paid leave, remote work, or another position during a period of quarantine for an exposed reemployed service member or COVID-19 infected reemployed service member, before reemploying the individual into his or her proper reemployment position.”

2. An employee may still be laid off or furloughed upon return from their military (including National Guard) service if they would have been subject to that action unrelated to their service.

USERRA at a Glance

USERRA covers:

  • Pension plans covered by ERISA and certain pension plans not covered by ERISA, such as those sponsored by a State, government entity, or church for its employees. However, USERRA does not cover pension benefits under the Federal Thrift Savings Plan (which are covered under 5 U.S.C. 8432b).
  • Group health plans that are subject to ERISA and plans that are not subject to ERISA, such as those sponsored by State or local governments or religious organizations for their employees
  • Multiemployer plans maintained pursuant to one or more collective bargaining agreements between employers and employee organizations

The Protections and Obligations under USERRA are Extensive

Right to Timely Reemployment

When uniformed service members (with five years or less of cumulative uniformed service during the relevant employment period with the civilian employer) leave to perform uniformed service, they must be timely rehired upon their return, assuming “notice to employer” requirements had been met in advance (and no exceptions apply), and provided they were discharged under honorable conditions. It is important to note that notice is not required if “military necessity” prevents the giving of notice; or if the giving of notice is otherwise impossible or unreasonable. In addition, there are exceptions to the five-year requirement.

To qualify for USERRA’s protections, a service member must be available to return to work within certain time limits. These time limits for returning to work depend (with the exception of fitness-for-service examinations) on the duration of a person’s military service.

Right to be Restored

If uniformed service members are eligible to be reemployed, they must be restored to the job and benefits they would have attained had they not been absent due to military service or, in some cases, a comparable job.

Right to be Free from Discrimination and Retaliation

An employer may not discriminate (or retaliate) against a member of the uniformed services due to past, current, or future military obligations. The ban broadly extends to hiring, promotion, termination, and benefits. In addition, an employer may not retaliate against anyone assisting service members in asserting or seeking to enforce their USERRA rights, even if the person assisting them has no service connection.

Health Insurance Protections

If health plan coverage would terminate because of an absence due to military service, they must be allowed to continue their existing employer-based health plan coverage (including dependent coverage) for up to 24 months while in the military, and even if they elect not to continue coverage they must be allowed to reinstate their coverage upon return, and generally, without any waiting periods or exclusions (if one would not have been imposed had the person not been absent for military service) except for illnesses or injuries connected to their military service.

Note: If a service member is on active duty for more than 30 days, military health care is provided to the service member and their eligible dependents. In addition, service members cannot be required to pay more than 102 percent of the full premium for the coverage. If the military service was for 30 or fewer days, the person cannot be required to pay more than the normal employee share of any premium.

USERRA Notice/Poster

Employers, regardless of size, are required to provide to persons entitled to the rights and benefits under USERRA, a notice of their rights, benefits and obligations. Employers may provide the notice “Your Rights Under USERRA” by posting it where employee notices are customarily placed. Employers are also free to provide the notice to employees in other ways that will minimize costs while ensuring that the full text of the notice is provided (e.g., by handing or mailing out the notice, or distributing the notice by e-mail). The poster can be downloaded here from the Department of Labor website.

For a complete list of protections and obligations under USERRA, see A Guide to the Uniformed Services Employment and Reemployment Rights Act on the DOL website.

The DOL offers a USERRA checklist for employers.

To learn more, contact Scott Williamson at Scott.Williamson@findley.com or 615.665.5317 or John Lucas at  John.Lucas@findley.com or 615.429.3279

Published May 13, 2020

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Rethinking Human Capital Workforce Planning Post Pandemic

While business continuity is important, a company’s most vital resource is its people – and the right employees can carry an organization through difficult times. Even through the challenges wrought by the COVID-19 pandemic. But a business model only works if the right employees are executing the plan. Companies that have succeeded for decades, continually prevailing through recessions and economic hardships, have done so through workforce planning processes.

In this first half of 2020, the world has drastically changed for both companies and their employees. The U.S. economy went from record employment levels, record profits and the stock market reaching an all-time high to record unemployment levels and losses of sales and profits for nearly all companies. Organizations are looking forward to getting back to a level of normalcy as soon as possible. Any rebound to normalcy will be determined by how each company’s resources, specifically human resources, are deployed. 

Rethinking Human Capital Workforce Planning Post Pandemic

Workforce Planning Key to Recovery

As discussed in our previous article about Recalibrating Human Capital Strategy, workforce planning will be a critical area of concentration for businesses as employees return to work. However, workforce planning at this time likely will be different than in past periods of economic downturn as the current focus of the activity will be short-term. A return to normalcy is the name of the game and an effective short-term plan is critical to meet business needs. To use a sports analogy, businesses need to be prepared to immediately field the right players and put them in the right positions when the game action starts back up.

While there will be significant variation by industry segment and business type, most companies will grapple with radically changed market conditions. The biggest reality is that organizations will be adjusting their budgets to lower revenue expectations. That financial reality impacts previous assumptions related to, but not limited to, hiring, merit increases and retention. These factors will require a review of the organizational structure, roles, responsibilities, talent depth and projected talent gaps.

In addition, some market segments will recover at different intervals than others and companies need to react accordingly to this reality. Employees also need to adjust and take on different responsibilities during this period. The work world will certainly be different than before the COVID-19 pandemic.

Six Steps to Workforce Planning During Crisis

In order to weather the storm, organizations need to focus, more than ever, on retaining key talent and effectively filling open positions with the appropriate skill sets. Managing these areas significantly affects the company’s ability to return to the right levels of productivity and profitability. To ensure that an organization is prepared in the near term, leadership must implement a rigorous short-term workforce planning process.  

Every organization should address these six steps to workforce planning in a crisis:

1. Define the Strategy

  • Identify and prioritize the most critical needs
  • Prepare for potential future crisis, defining core team and role needs

2. Determine Interim Staffing Levels

  • Determine which roles and positions will not be refilled

3. Adapt Your Organization Structure

  • Redefine roles and reassign individuals to provide coverage until full staffing is achieved

4. Develop an Interim Talent Management and Acquisition Approach

  • Identify key talent depth, gaps and needs
  • Develop an aggressive recruiting strategy to address talent gaps
  • Dedicate resources to cross train employees to provide coverage where resources are short

5. Prioritize Employee Development

  • Manage frequent talent reviews to assess staffing levels and skills capability
  • Train supervisory and management team on the new realities of deploying their work teams

6. Communicate

  • Communicate workforce plan to all key stakeholders, including any changes made post-pandemic

Establish a Formal Process

While many companies utilize some aspects of this approach, it is essential that this effort becomes a formal process that is rigorously managed for the foreseeable future. Decisions and assumptions need to be documented and, most importantly, effectively communicated to all stakeholders. New thoughts and ideas on how to best deploy employees will need to be considered and implemented.

Workforce planning is key to businesses returning to normalcy. Organizations of all sizes need to devote an appropriate amount of time to this subject. As a new normal begins, a workforce planning initiative should be coupled with the other three critical areas we have identified. They include compensation/rewards strategy, employee communications/branding, and effectively managing/leading in a time of crisis. Focusing on these areas will determine how quickly and successfully businesses can rebound from the COVID-19 pandemic.

For more information about Workforce Planning strategies, contact Dan Simovic at dan.simovic@findley.com or 216.875.1917, or Sandy Turba at Sandy.Turba@findley.com or 216.875.1937

Published May 6, 2020

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Adapting Compensation Strategy in an Economic Crisis

And just like that, the Goldilocks Economy ended. GDP growth was a healthy 2.9% in 2019. The Dow Jones hit 29,000 in January, 2020, and a record high in February. The 3.5% unemployment rate was the lowest we had seen since 1969. In a few short weeks, that’s all changed.

Absent a magic bullet, the only solution is to adapt in an economic crisis. As we weather the impact to the global economy, significant disruption to business and weakening of many sectors, one thing is sure: businesses still need to retain key talent – not just the top performers, but workers who perform critical jobs. 

We recently posted an article outlining the importance of Recalibrating Human Capital Strategy and we identified four core areas to assess:

  • Strategic planning
  • Leading during a time of crisis
  • Employer branding and communications
  • Compensation and total rewards

Our focus in this article is compensation and total rewards.

adapting compensation strategy in the coronavirus economic crisis

Coronavirus Economy Impacts Variable Pay

The economic downturn – and possible recession – won’t impact all sectors to the same degree. In fact, growth is expected in retail grocery/non-durable essential goods, ecommerce, shipping-related subsectors in the transportation industry, and medical supply manufacturing. But many other organizations will have little option other than to reduce staff and the remaining staff will experience lower wage growth – if any at all. 

Let’s face it – base pay increases are already stagnant, having hovered between 2.9% and 3.1% annually since 2013. Regardless, there will always be a need to keep and attract strong talent. This is especially true for organizations poised to thrive in the Coronavirus Economy. There are strategies you can begin to employ to increase your opportunity to do so – as long as you remain focused on total rewards: the value of base pay, variable pay, and benefits and ancillary programs. 

Historically, non-fixed pay (variable pay) has provided an opportunity for an upside and has been an important tool for closing the gap between relatively flat growth in base wages and the need to achieve market-competitive total cash.

The majority of for-profit organizations – as many as 84%, according to WorldatWork – offer at least one kind of variable pay program and variable pay for salaried exempt employees has averaged 12%-13% of payroll over the past 10 years. Executives and senior leadership have the highest percentage of variable pay opportunities, followed by middle management and then professional exempt employees. Many organizations also provide variable pay to non-exempt employees.

Allocate Increase Dollars Where Needed Most

Because variable pay is, well, variable, most plans not only have targets, but also thresholds and maximums. Even in a year when overall performance doesn’t hit the target, many employees receive some payout. And in a great year, the payout will exceed the target percentage.

The beauty of variable pay is that it isn’t fixed. Unlike base pay adjustments, variable pay doesn’t increase the cost of base payroll year over year. Plan funding is directly tied to performance, so in a well-constructed plan, the payout occurs only if the performance goals are achieved. In short, the plan pays out if the organization can afford it.

For many companies, that won’t happen this year. 

If your organization has been providing the same percentage increase to all employees regardless of performance – independent of whether or not you have an incentive plan –you’re missing a critical opportunity to focus the increase dollars where they’re needed most. 

If you’ve managed a merit-based increase process, you understand the challenge of having a 3% budget and trying to adequately award increases that differentiate between a good performer and a great performer. The math isn’t difficult: You’ve got a good employee who meets expectations and you award them 3%. You give the top performing employee one and half times the 3% target. Assuming each of those employees earns $75,000 annually, that additional 1.5% merit increase means your top performing employee gets an extra $0.54 per hour.

What message does that send, especially when the opportunity for incentive pay disappears?

Compensation Hurdles to Overcome in Coronavirus Economy

Given the current economic crisis, there are a couple of key stumbling blocks on the compensation front:

  • Many businesses won’t hit the targets for incentive payouts this year – even if they’re able to recalibrate performance measures and goals. Without the incentives that previously boosted the market competitiveness of total cash, the focus will shift exclusively to base pay and benefits programs. If your base pay isn’t market competitive, you’ve lost use of an important tool for competing on the total cash front, and you’ve also lost one of the other advantages of variable pay: its ability to drive retention. Most variable pay plans require an employee to be actively employed to receive the year-end award.
  • Base pay increases plateaued and many employees became accustomed to receiving some level of variable pay. While we know employees shouldn’t expect receiving variable pay, they do and have factored that into their anticipated compensation. Even if those employees aren’t top performers, most are likely meeting job expectations and many may be performing jobs that are key to the operation of your business. If the base pay is competitive, it’s a little easier to manage employee expectations, engagement and morale. 

It’s time to do things differently – because the real danger would be doing things the same way.

Coronavirus Economy Calls for New Base Pay Strategies

It would be naïve to suggest that in the absence of a meaningful incentive opportunity the solution is to simply increase the funding of the base pay or merit increase pool. It won’t be that easy. And you won’t be able to make all of the fixes at once. But there are some actionable strategies organizations should take.

Six Strategies for Managing Compensation in a Business Downturn

  1. Evaluate the competitiveness of your current base pay structure
  2. Determine which jobs are more critical and warrant additional pay — even temporarily
  3. Identify key employees and assess the potential impact of not being able to retain them
  4. Analyze employee pay to determine risk (employees paid too low given their experience and performance; pay equity issues)
  5. Consider using your increase or merit pool differently in order to maximize the budget 
  6. Leverage other types of award, retention or recognition programs

There is no singular, easy fix to what’s ahead. It will take a multifaceted approach and healthy dose of tenacity and resilience. But as the old expression goes, adapting is a game of singles, not home runs.

Learn more about applying Strategic Compensation and Human Capital tactics that will help optimize and bring some flexibility in unpredictable economic times with the Findley Compensation Strategy Guide:

Guide to Adapting Compensation Strategy in an Economic Crisis

For more information about adapting compensation strategies, contact Dan Simovic at dan.simovic@findley.com or 216.875.1917 or Sandy Turba at Sandy.Turba@findley.com or 216.875.1937

Published April 30, 2020

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Four Keys to Recalibrating Human Capital Strategy

The impact of the COVID-19 pandemic continues to unfold, changing our approach to personal and work life now and likely for the remainder of 2020. The unexpected economic challenges brought on by the coronavirus pandemic have prompted companies to assess their financial forecasts and adjust as best they can. Beyond making appropriate financial adjustments, every organization should rethink their human capital strategy. And, they should do it now. Below are the four most critical areas of focus during these uncertain economic times.

Human Capital Strategic Planning

More than ever, every company needs to assess their short-term and long-term plans for retaining key employees and maintaining the necessary talent base to weather the crisis. This human capital assessment should be a formal structured activity that is consistently monitored and reported on until the business climate returns to a level of normalcy. Absent a strong human capital plan, companies will emerge from the crisis weaker than their competitors.

Four keys to recalibrating Human Capital Strategy

Leading From a Distance

During uncertain economic climates, like this Coronavirus Economy, leadership and management skills differentiate the winners and losers in businesses of all sizes and in all industries. At the heart of this challenge is how adept managers are at maintaining relationships with their employees. Do they know how to rigorously maintain communications, focus their employees, build trust and hope with a team that they may not physically interface with?  For many leaders, this is a new test of management skills. Driving employee engagement is now more demanding than ever before.

Compensation and Total Rewards

In the past decade, base compensation grew very modestly in most industries while incentive compensation became a significant portion of total target compensation. In addition, there has been an emphasis on total rewards beyond compensation, especially for the millennial workforce. Given the likelihood that most organizations will not be able to pay bonuses, it is critical that companies establish a new approach for rewarding workers and staying competitive in the marketplace. On top of that, health and welfare costs remain a central point of discussion at most organizations. At the onset, the pandemic’s economic impact shows new strategies for compensation and total rewards need to be addressed and implemented.

Employer Communications and Branding

Human capital decisions made during the COVID-19 pandemic will influence the employer’s brand in the future. Employees will remain loyal and support the organization as much as possible if the company is doing its utmost to take care of them. How the company communicates at all levels – from executives to salaried and hourly employees – is at the heart of employer branding. Everyone needs a transparent and consistent message, even if the news is not positive. Employees must be a top concern.

So, while these four human capital areas may seem elementary, a company’s key success will be how it tackles the unique strategic needs during this Coronavirus Economy. It is certain that new human capital strategies will need to be established in order to prevail through the current storm.

While this article is a call to action, in the upcoming weeks, Findley’s experts will offer best practices within these four core human capital areas during this time of economic uncertainty.

How has the economic downturn impacted compensation? Find out what additional strategies you can adopt, and your current options are for compensation and total rewards in the article below.

Article: Adapting Compensation Strategy in an Economic Crisis

For more information about recalibrating your human capital strategy, contact Dan Simovic at dan.simovic@findley.com or 216.875.1917, or Sandy Turba at Sandy.Turba@findley.com or 216.875.1937

Published April 30, 2020

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Filing Extensions to July 15th for Approaching Form 5500 and PBGC Deadlines

A pair of government releases provides Form 5500 filing deadline relief for employee benefit plans, and PBGC filing relief for pension plans.

On April 9th, the IRS released Notice 2020-23, in which the Secretary of the Treasury determined that any person required to perform a time-sensitive action between April 1, 2020 and July 15, 2020 is affected by the Coronavirus/COVID-19 emergency. That includes filing a Form 5500 for an employee benefit plan, among other things. Any filing that is due on or after April 1, 2020, and before July 15, 2020, is automatically postponed to July 15, 2020. This is true for original filing deadlines and those obtained via a previous filing for extension. It is also automatic, so there is no need to contact the IRS or file any extension forms.

Filing Extensions to July 15th for Approaching Form 5500 and PBGC Deadlines

On April 10th, in Press Release Number 20-02, the Pension Benefit Guaranty Corporation (PBGC) announced it is offering flexibility to pension plan sponsors in response to the Coronavirus/COVID-19 outbreak.  Any deadlines for upcoming premium payments, and for other filings that originally fell on or after April 1, and before July 15, 2020, have been extended to July 15, 2020. So this includes regular premium filings as well as 4010 filings, but there are exceptions for filings that the PBGC requires related to tracking possible high risk of harm to participants or the PBGC’s insurance program. Some examples of exceptions are notification of large missed contributions through Form 200 and advanced notice of reportable events through Form 10-Advance. For a list of filings not covered by disaster relief announcements, see the PBGC’s Exceptions List.

These two releases provide welcome news for benefit plan sponsors with original deadlines approaching very quickly. However, it does not address deadlines for sponsors of plans with calendar year measurement periods. As more unfolds about how and when the stay-at-home requirements begin to be lifted, we may see additional deadline relief from the IRS and PBGC. Findley will continue to monitor these events and keep you updated.

Questions? Contact the Findley consultant you normally work with, or contact Colleen Lowmiller at colleen.lowmiller@findley.com, 216.875.1913.

Published April 14, 2020

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Will the COVID-19 Pandemic Give Employee eLearning a Boost?

As organizations adjust to a new normal caused by the COVID-19 pandemic, a spotlight is shining on the benefits of eLearning and online training for employees. The practice of using learning management systems (LMS) to train employees has been gaining popularity in recent years, and the trend will likely gain even more momentum.

Better Results with eLearning

In 2017, research showed that nearly 77% of U.S. companies were incorporating some type of eLearning into their employee training programs. Elearning solutions offer consistency, scalability, and flexibility – no matter your location in the world – and companies save time and money training employees through eLearning.

Additionally, the Research Institute of America estimates employees who participate in online training will have a 60% increase in learning. The studies indicate eLearning participants can learn up to five times more material without increasing time spent in training.

The COVID-19 Pandemic may give Employee e-Learning a Boost

Using eLearning for Important HR Functions

Consider how eLearning can be used to increase the reach, scalability and success rate of your HR and benefits function. Take benefits enrollment, for example. Each year, companies that offer health care benefits go through the process of annual enrollment, communicating changes to employees and holding employee meetings. For those companies – especially those with multiple locations – these meetings require logistical planning. And after the meetings? Follow up questions flood the human resources and benefits teams. It’s a labor-intensive process, and an LMS may provide some relief.

Imagine instead that benefits enrollment information is presented through an online training module that includes content, quizzes and other features that reinforce employee education and understanding of the key messages. And, as long as employees can connect to the online training from home, they can share the presentations with their spouse or a family member who helps with benefits decision-making. They can revisit the training module as often as needed.

The opportunities for eLearning and online training within organizations are numerous: new hire onboarding, employee or manager training, sales training, etc. Elearning increases the breadth and reach of any HR and benefits function, without increasing staff.

Deliver Consistent Messages Across the Organization

One of the key advantages to eLearning is consistent messaging. Online training programs can be developed for specific groups of employees, allowing organizations to consistently deliver information based on an employee’s job, role, location, or other demographic. Trucking companies and retail corporations, for example, are seeing the benefits of eLearning. With access to the internet through a laptop or mobile device, employees can log in and connect to the information that traditionally would have been delivered through an onsite meeting, conference call, web conference, or printed piece. Employees can complete online training courses according to their schedules.

With the LMS tracking participation, the organization will be provided a list of employees who haven’t completed the training, so that reminders can be sent.

Secure and Flexible Administration

Users, roles, and permissions represent the most basic concepts in computer security. Nearly all LMS have these features, although to different degrees. “Users” is the term used for the group of people that should be able to access an online system. “Roles and permissions” refer to the various system administrator roles ranging from those with full access rights to other roles which may be limited by job, location or other demographic. Depending on the permissions granted to the user by the administrator, each user will have access only to the sections of the LMS that pertain to their particular job or situation. User logins are required to access the LMS and are typically managed by the corporate LMS administrator. Many LMS also have a single sign on (SSO) feature.

Regardless of whether employees are accessing the online LMS while at work or at home, the employees will be required to use their unique login. And, some organizations limit LMS access to be available only while in the work place.

Implementing an LMS

With all of the benefits that an LMS offers, why isn’t every organization taking advantage of eLearning and training? Some may not be aware of the availability of these training solutions, while others are skeptical of the costs involved and level of technical expertise required. And then there is the development of the content that makes up the learning module. Who is going to develop that?

These objections to moving to an LMS can be overcome. There are LMS configurations for nearly every budget, and a simple cost/benefit analysis can show an estimated return on investment. Cloud-based systems are relatively easy to implement and administer. And the content development and management of the system can be, and is often, outsourced.

For more information regarding selecting and using an LMS, or to get a better understanding of how to develop content, contact Nancy Pokorny at 216.875.1939 or Nancy.Pokorny@findley.com.

Published April 13, 2020

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