Reward management challenges HR will face post COVID19?

Reward management challenges HR will face post COVID19?

Reward management challenges HR will face post COVID19?

That the pandemic has had significant impacts on the 21st-century business environment is an accepted fact and one that organizations are still grappling with. At the onset of the pandemic, some businesses came to a halt while others revamped their processes and operations. Some of the changes that remain include an emphasis on remote working and contingent worker expansion. How these changes affect the approaches to reward management in a post-COVID-19 business environment is important.

The changes affecting businesses are industry and country-specific. Even so, organizations contend with the need to maximize outputs in line with fostering business continuity.

Reduced resources due to poor business performance

One of the major impacts of the pandemic is that economies are declining and businesses are suffering poor performance. The disease mitigation measures adopted include disruption in trade and travel and lockdowns that minimize movements. The resultant effect has been a significant reduction in business output as well as employee income. The interconnectedness of economies implies that countries cannot do much to cushion themselves against such effects. In essence, organizations have to deal with operations and processes in light of reduced resources.

How do reduced resources impact reward management? It is no secret that the reward management approaches in an organization are dependent on the availability of resources. Some of the tangible benefits extended to employees include higher pay, paid holidays, access to a company car, and other forms of allowances. Companies are already undertaking measures in cost containment. The figure below indicates some of the approaches taken to cut costs in the organization.

Figure 1: response by organizations to economic decline (KPMG, 2020)

As the figure indicates, companies are already dealing with budget freezes, salary freezes, and salary cuts. The financing of reward initiatives in a post-COVID-19 business environment will be a significant challenge for HR managers. Organizations may have to seek alternative approaches that require lesser resources while still motivating employees.

Measurement of performance and role relevance  

The current business environment involves a preference for remote working but this poses the challenge of performance measurement to inform rewards. In a poll conducted by Gartner, results indicate that 48% of employees would like to work remotely after the pandemic compared to 30% before COVID-19 (Baker, 2021). It is important to note that the shift towards remote working was unprecedented rather than planned. Prior to the pandemic, most organizations did not conceive the likelihood of pursuing remote working. The implication is that businesses have had minimal time to define goal setting and employee evaluation in the remote context.

As organizations deal with the complexities of this new dynamic, HR managers will face the challenge of evaluating performance for remote workers. Some businesses relied on measuring physical presence but now have to deal with output evaluation. The important question for individual organizations is; how capable are its performance measurement systems in evaluating workers’ contribution and providing the right rewards?

For managers to deal with such a challenge, they have to develop evaluation tools capable of dealing with the complexities of the new business environment. Importantly, there can be no standardized approach to performance evaluation due to the unique needs of different industries.

What should HR managers expect in a post COVID19 business environment?

Reward management challenges HR will face post COVID19?

Mental health issues   

With the demands, uncertainties, and stress linked to the pandemic, most employees suffer from mental health issues that affect their performance. The new work culture disrupted common processes and increased organizational complexities. On the other hand, employees have had to deal with loss, grief, and uncertainty while still ensuring they provide for their families. The outcome of such factors has been negative impacts on overall health and wellbeing. Much as employees were dealing with mental health issues prior to the pandemic, such issues

 

Figure 1: response by organizations to economic decline (KPMG, 2020)

have become prominent in the recent past. Mental health issues affect individual output and organizational performance.

In light of the exacerbated mental health issues in organizations, HR managers will have to ensure that reward management addresses some of these concerns. In the current remote working environment, mental health issues may be unnoticeable for some time by the organization. For the organization, performance evaluation that informs reward management should consider the mental health problems that employees face. Essentially, performance standards and reward management need not impose further pressures that exacerbate existing mental health concerns.

Rewarding skills rather than roles

With the existing resource constraint due to the COVID-19 pandemic, organizations appreciate that there are critical skills needed to drive productivity. Previously, much of the focus was on the ability to meet the defined roles in the workplace. The need to separate critical skills from roles is essential as it informs an effective reward management approach. Managers face the challenge of defining measurement standards that will help separate skills from roles and reward accordingly.

For HR managers, the post-COVID-19 business environment will require a restructuring of the organization’s reward management. The shifts in the business environments are significant and hence the need to ensure that the rewards are reflective of such changes. The ability to address such concerns will define the organization’s productivity.

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References

Baker, M. (2021). 9 Future of Work Trends Post-COVID-19. https://www.gartner.com/smarterwithgartner/9-future-of-work-trends-post-COVID-19

KPMG. (2020). COVID-19 and Employee Rewards. https://assets.kpmg/content/dam/kpmg/ng/pdf/advisory/COVID-19-and-employee-rewards.pdf