TRANSFORMING Teams By Susan Pale
Compensation planning during a pandemic Why it’s more important than ever 020 has sure been a challenge. Employers have struggled to keep businesses open and have been challenged to develop new markets, products, and services in record time. If your business is food service, hospitality or leasing office space, 2020 may have been a dismal year. At the other end of the spectrum, grocery stores and home improvement stores have enjoyed hugely successful years. And, of course, the number of tech jobs continues to increase. Most economists predict the economy will continue to rebound throughout 2021, but at an uneven pace. The varying impacts of 2020 and all the unknowns of 2021 make compensation planning more important than ever. Here are the things you need to do now to effectively plan for 2021 and beyond.
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1. Get (and Stay) Up to Date on Legislative Changes States and municipalities have enacted legislation that impacts compensation at breakneck speed. This represents a unique challenge for employers doing business in multiple locations. The changes are too numerous to list, but some of the most significant include: • 23 states have minimum wage increases scheduled for 2021. • 10 states have approved a $15 minimum wage. • Nine states now offer paid family and medical leave. At the federal level, Biden has vowed to take several actions to support workers. When and how these
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might be implemented has yet to be determined, but these include: • End the tax cuts enacted in the 2017 Tax Cuts and Jobs Act. • Increase income taxes for high income earners (>$400,000). • Restore federal workers’ rights to unionize. • Remove the Social Security Payroll Tax Deferral option.
2. Review Paid Salaries
If you hired new employees during 2019 and early 2020, chances are you had to hire them at higher salaries – maybe higher than the salaries of current employees doing the same work. This issue, known as salary compression, can occur throughout an organization but is most common when entry-level employees, hired at $14 to $15 an hour because of competition for candidates, make the same or more than lead or first-level supervisors. If you typically give year-end salary increases, now is the time to make the determination of whether you’ll award them and the amounts necessary to maintain both external competitiveness and internal equity.
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3. Review Compensation and Related Policies and Procedures The legislative changes described above require that you review and update your minimum wage and paid family and medical leave policies to comply with state and local requirements. Not all of these changes occur on January 1. And some of your other policies and procedures may be outdated. For example: • 15 states have now legalized recreational marijuana. Your drug testing policies may require review/revision as a result. • If you have written policies regarding work at home or flexible schedules, COVID-19 may have made them irrelevant or, worse, inaccurate. Now is the time to review those as well.
4. Plan Year-End Bonuses and Incentives Because of COVID-19, many organizations and individuals will not achieve their 2020 business objectives. Building-Products.
